Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Improved operating performance in Q2 2020 has enhanced the earnings guidance for Nucor, despite an expectation of lower revenue from steel and raw materials sale.


In Q1 2020, Nucor reported earnings of $20.3mn, which included losses of $287.8mn related to equity investment in Duferdofin Nucor. The steelmaker’s second quarter results will exclude this extraordinary loss. The company expects Q2 2020 earnings in the range of $29-43mn, translating to a 42-114pc increase compared with the previous quarter’s earnings.


However, the company’s revenue from steel and raw material is expected to deteriorate since the pandemic negatively impacted the sheet and plate mills because of plant shutdowns by automotive customers. Lower oil prices during the quarter, which resulted in oil and gas customers cutting capital expenditure, could also impact Nucor’s revenue from its tubes business. However, demand in nonresidential construction has been resilient through the quarter, which could help the company’s sales in Q2 2020. 


The raw materials business segment revenue during the period could be affected by decreased scrap prices and the outage at the company’s Trinidad DRI plant, Nucor noted in its outlook released on Thursday.


Nucor management believes the company’s financial flexibility was further enhanced with the recent issuance of $500mn in notes due 2025 and $500mn in notes due 2030. The company stated it will continue a strategy of conserving cash given the uncertainty surrounding COVID-19 and its effects on steel demand as the economy recuperates through 2020.

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