Russel Metals Inc has announced second quarter 2012 earnings of USD 23 million or USD 0.38 per share on revenues of USD 719 million as compared to earnings of USD 31 million or USD 0.52 per share in the comparative second quarter of 2011.
Earnings in the second quarter of 2012 reflected the accelerated write off of deferred costs and hedging costs relating to the early redemption of the US Senior Notes. The effect of these charges plus additional interest costs for the period from the issuance of the 6% Canadian Senior Notes to the redemption of the US Senior Notes was a reduction in earnings per share of USD 0.07 for the quarter. Net earnings for the six months ended June 30th 2012 were USD 56 million or USD 0.93 per share as compared to earnings of USD 64 million or USD 1.07 per share in the comparative six months ended June 30th 2011.
Revenues in metals service center segment increased by 11% to USD 432 million in the second quarter of 2012 as compared to the 2011 second quarter on stronger demand levels. Gross margins, however, were 20.4% compared to 23.7% in the 2011 second quarter as inventory holding gains experienced last year were not repeated. The 2012 second quarter also included operating earnings arising from the acquisitions of Siemens Laserworks and Alberta Industrial Metals during the quarter, both of which were immediately accretive to earnings.
Revenues in energy tubular products segment for the second quarter of 2012 increased 32% to USD 192 million as compared to the 2011 second quarter as a result of large line pipe orders in US operations and strong demand in operations servicing the Alberta oil sands. These large orders have lower gross margin percentages and consequently our margins in this segment were down to 13.9% in the 2012 compared to 16.2% in the 2011 second quarter. Strong demand resulted in operating profits in the 2012 second quarter consistent with the 2011 second quarter despite the decline in margins.
Revenues in our steel distribution segment increased 11% in the 2012 second quarter to USD 92 million as compared to the 2011 second quarter. Gross margins in this segment were down to 13.9% compared to the 18.8% experienced in the 2011 second quarter. Currently, the steel market is experiencing tighter margins due to softening domestic prices in an extremely volatile world economy.
Mr Brian R Hedges president & CEO of Russel Metals Inc said that "One of our main strategies has been to protect and grow our strongest asset, the Canadian service center franchise. During the quarter, we completed the acquisitions of Siemens Laserworks and Alberta Industrial Metals. Both of these operations, which are located in Western Canada, are leaders in the markets that they serve and the integration of these two acquisitions is progressing well. During the balance of 2012, we will strengthen our Canadian service center franchise by adding stretcher levelers to our existing cut to length equipment in Ontario and Manitoba to further enhance our processing capabilities. In addition in our steel distributors segment, we will be upgrading our cut to length line in the Port of Houston at our Arrow Steel Processors facility."
Meanwhile, the board of directors of Russel Metals Inc approved a quarterly dividend of USD 0.35 per common share payable September 17th 2012 to shareholders of record as of August 27th 2012.
Source - Russel Metals
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