“Significant Progress”
Schnitzer Steel Industries Inc., headquartered in Oregon, recently reported a positive net income figure at the end of Q2 Fiscal Year 2023 (December 1st, 2022 – February 28th, 2023).
The financial results revealed significant progress made during this period, due to higher demands for recycled metal products resulting in an increase of average net selling prices for both ferrous and nonferrous scrap by up to 10 percent.
With exceptional growth within its sales volumes, specifically for ferrous scrap materials, recorded at 48 percent versus September through November’s coverage period. This growth was attributed largely to multiple drawdowns on inventories which included various shipments running over from last quarter into December, resulting in full operations recommencement at Massachusetts’ Everett and California’s Oakland facilities, as early as mid-November.
Tamara Lundgren, Schnitzer Steel Industries Inc.’s CEO stated, “Our strong sequential performance improvement reflects strengthening demand and prices for recycled metals and the resolution of the operational disruptions we faced in the first quarter.”
Total Profits Decrease
Despite facing unexpected supply flows, Schnitzer Steel reported promising results in its recently released Q2 earnings report for 2023. The company secured a net income of $4 million and achieved a net income per ferrous ton amounting to $3 over the period; significant improvements from the previous quarter’s deficit valued at -$18m during September-November last year.
However, while overall revenue experienced steady growth, increasing by twenty-six percent and reaching approximately $756m, total profits saw a decrease when compared to data from last year, a decrease of 3.5 percent.
Comparing these figures with those recorded during December-February earlier this year, $38m, showcases a more significant drop of 89.5 percent.
Q3 Projections
Schnitzer has announced a positive business outlook recently, with Lundgren highlighting favorable market conditions. The company reports that there has been significant growth with regards to both domestic and export markets, resulting from strengthened demand for recycled metals due to increased global steel demands coupled with low scrap availability along with inventory restocking and robust rebar demands in Turkey.
Still, while these measures have seen positive gains towards improved margins within the industry segment, it is important to note that slight compression has been experienced because of primarily limited supply flow circumstances limiting further spread expansions. Consequently, the benefits from an average inventory accounting of approximately $8 per ton were reduced.
Looking forward to Q3 (March through May), Lundgren believes that the company will see further improvements.
The expansion of metal margins is anticipated, due to higher shipment contracting prices and improved supply flow during seasonal cycles, Lundgren states that this should help realize a stronger bottom line.
In conclusion, Lundgren is confident that the outlook remains positive. She cites transitioning to low carbon technologies and decarbonization efforts, along with infrastructure investment and jobs acting as contributing factors for the projected demand of recycled metals. Notably added in are provisions focusing on sustainable business practices including Buy Clean initiatives, which add another layer towards promoting greener economic sectors.
