Multiple price increases in the finished steel segments on improving demand and a modest improvement in oil prices and rig counts are projected to increase Russel Metals’ sales and revenue in 2021.
The Canadian steel distributor indicated in its earnings report on Feb 10 that while its overall revenue and earnings for the year fell in 2020 due to the impact of the COVID-19 pandemic. The recovery of demand in the steel sector saw revenues improving in Q4 2020 against the previous quarter even though they remained subdued compared to Q4 2019.
John G. Reid, president and chief executive officer of Russel Metals, noted that the supply chain in the oil and gas sector was still rebalancing, because of which, the company will continue to redeploy its capital from its oil country tubular goods (OCTG) and line pipe operations into more profitable segments of the business.
In 2020, despite the slump in the oil and gas sector, Russel’s OCTG stocks decreased by $73mn after it merged its two Canadian line pipe and OCTG operations and shut down and liquidated its US line pipe and OCTG business.
Russel reported revenue of C$2.68bn ($2.11bn) in 2020, down from C$3.67bn in 2019. In Q4 2020, revenue tallied at C$671mn, a decline from C$837mn in the same quarter of the previous year, but up from $615mn in Q3 2020.
The company’s adjusted EBITDA in 2020 stood at C$159mn against C$203mn in the previous year. In Q4 2020, adjusted EBITDA was at C$41mn down from C$18mn in the same quarter of the previous year and from C$47mn in Q3 2020.