NUE: Nucor Earnings Call Summary: demand is virtually non-existent (39.70 -4.37)
On its earnings call, co says these are the most challenging steel markets this management team has ever seen. Co reminds us that 2001-2003 was an economic downturn, NUE prepared itself for the eventual recovery. The severity of this downturn is unprecedented. Industry capacity utilization was just 41% in Q1 vs 90% a year ago. This is the first losing qtr in Nucor's history. Co has yet to see any evidence the economy has reached bottom. Business conditions have worsened each month so far in 2009. It's extremely ugly out there. .. Co says it has the strongest balance sheet in the US steel industry. Nucor is among the lowest cost steel producers in the world. It is the most diversified steel producer in the US. Co says Q1 imports continue to enter the market... Co says its liquidity position remains very strong, it has no borrowings on its unsecured credit facility and it has no outstanding commercial paper... In its steelmaking operations, Q1 shipments declined 53% yr/yr; utilization rate was just 45% in Q1, vs 92% in Q108. .. Demand was very weak for fabricated steel products... Co was asked why its Q2 guidance was more pessimistic than its competitors. Co says it has a very realistic view of the world, not based on best wishes. Co has seen a deterioration in pricing in Q1 and into Q2. Co says the industry has to go through the automotive and supplier market changes.... Co says it has never seen utilization levels so low. Country has not seen this low since the Great Depression... There is enough business fallout that prices could go lower from here. Also, imports are higher than the co would like to see. Demand is virtually non-existent... Co thinks steelmaking capacity throughout the industry will be reduced in the coming years. Fewer cars are going to be made and there are other factors. The lack of demand should reduce capacity in the US... Co says Q2 will not be stronger than Q1.
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