Steel Producer Nucor Expects to Double Capital Expenditures this Year

Researched by Industrial Info Resources (Sugar Land, Texas)--Executives with Nucor Corporation (NYSE: NUE) (Charlotte, North Carolina) expect capital expenditures for the U.S.-based steel producer to be in the range of $1 billion this year, more than twice the amount as last year. The company said on Thursday its record second-quarter profits were driven in part by a jump in sales amid a robust economy and the 25% U.S. tariff on steel imports. Industrial Info is tracking more than $2.2 billion in active Nucor capital projects.

Click on the image at right showing Nucor's project spending activity by state.

Nucor reported second-quarter net earnings of $683.2 million, up from $323.0 million in the same quarter of 2017. It said the profits were the highest second-quarter earnings in the company's history. Consolidated net sales for the just-ended quarter were $6.50 billion, a 25% increase from $5.17 billion in second-quarter 2017.

The average sales price per ton in the second quarter increased 17% compared with the second quarter of 2017. Total tons shipped to outside customers were 7,197,000 tons in the second quarter, a 7% increase from the second quarter of 2017. Total steel mill shipments increased 6% from the second quarter of 2017.

The company reported the main driver for the improved earnings was its steel mills segment, which saw higher average selling prices and increased profitability across all of its steel mill product groups. Nucor's steel products and raw materials segments also experienced higher profits. Total steel mill energy costs in the second quarter of 2018 decreased by about $1 per ton compared to the second quarter of 2018, primarily due to lower natural gas unit costs and higher productivity resulting from increased steel production.

Nucor Chief Executive Officer John Ferriola said during the company's earnings conference call that the steel industry is benefiting from lower corporate taxes, the improved economy, the successful outcome of several international steel trade cases and the 25% tariff on steel imports. He voiced support of President Donald Trump's trade initiatives, adding the U.S. "is done asking nicely" that other countries play fair in the trading arena. For related information, see June 28, 2018, articles - U.S. Tariffs Make More Waves on Steel, Auto Fronts and Tariffs Boost U.S. Steel Companies' Expansion Plans.

Ferriola said Nucor has increased its workforce by 18% and invested $8 billion since the last cyclical peak in 2008. He cited eight major expansion and grassroot projects worth a combined $1.5 billion that are in various stages of development, with planned completions from 2019 to 2021.

In May, Nucor announced plans to build a $240 million galvanizing line at its sheet mill in Arkansas to support growth into a wider and more diverse end-market applications. The new line will have an annual capacity of 500,000 tons. For more information, see Industrial Info's project report.

In March, the company said it would build a $240 million rebar micro mill in Florida, with an estimated capacity of 350,000 tons per year. For more information, see Industrial Info's project report and March 13, 2018, article - Nucor to Build Steel Rebar Micro Mill in Florida.

Looking to the future, Ferriola said the company's steel plate business stands to benefit if and when Congress passes a bill to fund infrastructure improvements.

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