Shares of steel manufacturers slipped Wednesday after an analyst lowered his estimates for three companies' earnings, citing their own outlooks for higher raw materials costs, weaker demand and bigger inventories during this year's first quarter than last year's.
JP Morgan analyst Michael Gambardella revised his estimates after Nucor Corp., AK Steel Holding Corp. and Steel Dynamics Inc. issued first-quarter earnings outlooks that fell short of expectations.
The steel industry has been coping with weaker demand and high costs for raw materials used to manufacture products. There also has been more competition from domestic mills and imports.
Gambardella told clients in a research note that steel prices fell to $680 per ton recently but remained higher than last fall range of $600 per ton, an overall improvement.
"Looking forward, however, we think recently announced steel price increases ranging from $30 to $50 per ton will at least partially stick," he wrote.
AK Steel forecast a first-quarter net loss of 11 cents to 15 cents per share, compared with earnings of 8 cents per share it reported for the first three months of 2011.
Gambardella lowered his first-quarter 2012 forecast for AK Steel to a loss of 14 cents per share from a loss of 1 cent per share. Analysts surveyed by FactSet on average predict a loss of 7 cents per share.
Nucor forecast first-quarter earnings of 30 cents to 35 cents per share, compared with earnings it reported for last year's first quarter of 50 cents a share.
Gamberdella's revised estimate for Nucor is for earnings of 38 cents per share, down from 55 cents a share. Analysts have predicted earnings of 42 cents per share.
Steel Dynamics sees first-quarter earnings of 15 cents to 20 cents per share. That compares with earnings of 46 cents per share it reported for the first three months of 2011.
Gamberdella has predicted earnings of 22 cents per share at Steel Dynamics, down from his previous estimate of 31 cents per share. Analysts on average expect earnings of 24 cents per share, according to FactSet.
In midday trading, shares of AK Steel fell 5 cents to $8.25, Nucor dropped 27 cents to $43.56 and Steel Dynamics declined 19 cents to $15.07.
United States Steel Corp. shares declined 12 cents to $31.24.
Source: http://news.yahoo.com/steel-companies-fall-disappointing-1q-forecasts-172256533.html
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