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Last Update: 19-Dec-11 09:34 ET
Schnitzer Steel Sharply Lower After Issuing Poor Earnings Guidance
Schnitzer Steel (SCHN $43.00 -2.73) is trading sharply lower after the company issued a weak first quarter earnings forecast earlier this morning.
Earlier this morning, the company announced that it expects to see earnings for the first quarter in the range of $0.18 to $0.25 versus the $0.56 Capital IQ Consensus Estimate.
The company expects first quarter results to be lower than the outlook provided in its fourth quarter fiscal 2011 earnings release due to weaker than anticipated global market conditions for recycled metals. Heightened global recessionary concerns, stemming primarily from the European debt crisis which escalated during the quarter, resulted in a significant slowdown in buying patterns and a sharp decline in sales prices.
During the quarter, operating margins contracted more than anticipated. The most significant factor affecting operating margins was the negative impact of average inventory costs which did not keep pace with the rapid decline in average net selling prices. With respect to the Metals Recycling Business, operating income per ferrous ton is expected to be ~50% lower than the $21 per ton recorded in the first quarter of fiscal 2011. In the Auto Parts Business, operating income is expected to be ~30% lower than recorded in the first quarter of fiscal 2011. Sales prices began to strengthen towards the end of the quarter, but the improvements are not expected to benefit results until later in the second quarter.
Earlier this morning, the company announced that it expects to see earnings for the first quarter in the range of $0.18 to $0.25 versus the $0.56 Capital IQ Consensus Estimate.
The company expects first quarter results to be lower than the outlook provided in its fourth quarter fiscal 2011 earnings release due to weaker than anticipated global market conditions for recycled metals. Heightened global recessionary concerns, stemming primarily from the European debt crisis which escalated during the quarter, resulted in a significant slowdown in buying patterns and a sharp decline in sales prices.
During the quarter, operating margins contracted more than anticipated. The most significant factor affecting operating margins was the negative impact of average inventory costs which did not keep pace with the rapid decline in average net selling prices. With respect to the Metals Recycling Business, operating income per ferrous ton is expected to be ~50% lower than the $21 per ton recorded in the first quarter of fiscal 2011. In the Auto Parts Business, operating income is expected to be ~30% lower than recorded in the first quarter of fiscal 2011. Sales prices began to strengthen towards the end of the quarter, but the improvements are not expected to benefit results until later in the second quarter.
