Full-Year 2011 net income for US minimill Steel Dynamics Incorporated, increased 98% to $278M, compared to 2010 on net sales of $8.0bn, compared to the prior year net income of $141M on net sales of $6.3 billion.
Overall 2011 shipping volumes increased in each of the company’s operating segments when compared to the prior year, and record volumes were achieved in the steel and metals recycling operations. 2011 net sales of $8.0bn, increased $1.7bn, or 27%, over 2010 results, and were only 1% less than the company’s record net sales achieved in 2008.
The company’s operating income increased 60% versus 2010, driven primarily by significant margin improvement within the steel operations in both flat and long products. The average annual selling price per ton (US short ton) shipped for the company’s steel operations in 2011 was $897, an increase of $123 compared to 2010. The 2011 average ferrous scrap cost per ton melted increased $71. Key influences were:
− The Flat Roll and Engineered Bar Products divisions achieved record annual production and shipping volumes individually, as did the steel operations in total,
− Engineered Bar Products and Steel of West Virginia steel divisions achieved record annual operating income,
− There was a significantly increased in market share of the railroad rail business, shipping 117000 tons in 2011 (more than double the 55000 tons shipped during 2010),
− The metals recycling operations achieved record annual ferrous and nonferrous shipping volumes, as SDI leveraged improved market dynamics through additional retail yards and increased shredder capacity,
− A new production record of 53kt of iron units was reached in Q4 up 62% on Q3 at the Mesabi Nugget facility, with the lowest cost structure achieved to date, and
− SDI began operations at three fabrication facilities located strategically in the South and Southwest, USA providing market expansion.
Fourth Quarter Review
Fourth quarter volumes increased in each of the company’s operating segments when compared to the prior-year Q4 but decreased when compared to Q3 2011. While the company’s operating income increased 76% over Q4 2010, it decreased 24% compared to Q3 2011. The decrease in consecutive quarterly operating income was primarily the result of compressed flat roll margins and Iron Dynamics’ planned three week maintenance shutdown, which reduced operating income by $10M due to associated costs and reduced volume. Despite increased volumes, earnings from flat roll operations declined 26%, as lower selling prices in the first half of the quarter were not matched with corresponding declines in the cost of raw materials, resulting in margin reduction. However, beginning mid-quarter, increases in both order entry and pricing should benefit Q1 of 2012.