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Nucor Profit Beats Estimates as Auto Demand Recovers

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Oct. 17 (Bloomberg) -- Nucor Corp., the largest U.S. steelmaker by market value, reported third-quarter earnings that beat analysts’ estimates amid supply disruptions in the industry and a recovery in U.S. auto demand.

Net income increased to $147.6 million, or 46 cents a share, from $110.3 million, or 35 cents, a year earlier, the Charlotte, North Carolina-based company said today in a statement. Profit excluding a $14 million writedown after an accident at a new factory was 49 cents a share, surpassing the 39-cent average of 19 estimates compiled by Bloomberg. Sales climbed 2.9 percent to $4.94 billion, exceeding the $4.8 billion average estimate.

Nucor said it benefited from higher prices for sheet steel after competitor supply disruptions, customer inventory restocking and improved demand. Customers also restocked stores of structural steel during the quarter, the company said.

“The strong results are driven by higher volumes and steel prices and clearly the overall end market demand continues to improve,” Kuni Chen, an analyst at Wellington Shields & Co. LLC, said today in a telephone interview. “It was a solid quarter driven by the core steel operations.”

Shipments to customers rose 6.9 percent to 6.17 million, the company said today. Average operating rates at Nucor’s steel mills in the third quarter increased to 78 percent from 71 percent a year earlier.

Capacity Rates

Carmakers are on track this year for the most deliveries in the U.S. since 2007, according to researcher Autodata Corp. That’s helping demand at Nucor and other U.S. steelmakers, with domestic plants operating at an average of 78 percent of capacity in the third quarter, compared with 75 percent a year earlier, according American Iron and Steel Institute data.

Nissan Motor Co. and Bayerische Motoren Werke AG are among Nucor customers, according to data compiled by Bloomberg.

The average price of hot-rolled steel coil, a benchmark product used in automobiles and appliances, increased 1.7 percent in the third quarter from a year earlier to $646 a ton, according to data from The Steel Index.

Nucor rose 1.9 percent to $50.79 at the close in New York. The shares have gained 18 percent this year.

The company expects fourth-quarter earnings will be “moderately” lower because of extended planned outages at three mills and seasonal factors such as lower shipping volumes. Metal margins are expected to be stable, Nucor said today.

Nucor is starting up a plant in Louisiana to refine iron ore with natural gas instead of the traditional coke made from coal, creating a product that can be used in Nucor’s electric furnaces. One of the storage domes at the factory collapsed in September, delaying startup until the end of the year, Nucor said in a Sept. 26 statement.

(Nucor scheduled a conference call at 2 p.m. New York time, which can be accessed at the company’s website http://www.nucor.com.)

To contact the reporters on this story: Liezel Hill in Toronto at lhill30@bloomberg.net; Sonja Elmquist in New York at selmquist1@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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