Nucor crushed Q2 earnings estimates early Thursday, as it joined Steel Dynamics in posting record quarterly earnings. While both steelmakers indicated softer results in the quarter ahead, Nucor said it still expects a record profit for the full year amid resilient demand.
Alcoa and Steel Dynamics kicked off a busy week of earnings for the industrial metals space on Wednesday, perhaps rekindling some investor interest. Alcoa posted a solid beat and set a new $500-million buyback. However, cost issues and supply curbs continue to make for a "volatile year," the aluminum giant said.
Also on Thursday morning, copper major Freeport-McMoRan posted Q2 results that fell short of estimates amid diving copper prices. FCX also trimmed full-year output and bumped up its cost outlook.
"As we enter the third quarter, demand remains stable and resilient across the major end-use markets we serve, and customer inventory levels appear right-sized relative to economic conditions," Nucor said in its earnings statement.
NUE, STLD and AA stock all saw solid gains in early Thursday stock market action, while FCX stock was little changed.
However, BMO analyst David Gagliano trimmed his AA stock price target to 55 from 57, with a market perform rating. Gagliano also cut his Q3 EBITDA estimate to $340 million from $586 million, citing recent weakness in alumina and aluminum prices.
Earnings from Cleveland-Cliffs are due early Friday.
Nucor Earnings
Results: Nucor EPS surged 92% to $9.67, $1.02 ahead of analyst estimates. Revenue grew 34% to $11.79 billion, ahead of $11.6 billion views.
Outlook: The steelmaker expects lower sequential earnings in Q3, but still thinks "2022 will be the most profitable year in Nucor's history."
Steel mill earnings will slip in Q3 amid lower expected shipment volumes and prices. Steel product earnings should be "roughly in-line" with strong Q2 results. Raw materials segment earnings are seen rising amid higher pricing.
Steel Dynamics Earnings
Results: Steel Dynamics posted record EPS of $6.44 per share, up 94% from a year ago. Excluding start-up costs for its Sinton, Texas, flat-roll steel mill, Steel Dynamics earned $6.73. Analysts had forecast EPS of $6.05.
Revenue grew 39% to $6.21 billion vs. estimates of $5.78 billion.
Outlook: "Customer order entry activity continues to be healthy across all of our businesses, conflicting with the more pessimistic emotion in the marketplace," CEO Mark Millett said, while noting "softening flat roll steel pricing."
He also highlighted "near-record" order backlogs and forward pricing levels for the steel fabrication segment.
NUE, STLD Stock
Nucor stock jumped 9.15% to 128.52 on Thursday, while STLD rose 3.9% to 70.73.
Both steel stocks reclaimed their 200-day lines, with NUE stock also gapping above its 50-day line. STLD stock had pulled back 32% from its April high and NUE stock 37%.
Since breaking out in late April as Russia's invasion of Ukraine sent global steel prices higher, both NUE and STLD have done a round trip — just like steel prices, whose gains were fleeting.
Yet apart from that spring fling for steel stocks, NUE and STLD have been basically moving sideways for the past year.
Alcoa Earnings
Results: Alcoa earned $2.67 per share, 36 cents ahead of estimates and 79% ahead of year-ago results. Revenue also topped, growing 29% from a year ago to $3.644 billion. While Q2 revenue grew 11% from Q1, cost pressures pinched margins, leading to a 13% sequential decline in EPS.
Outlook: Alcoa stood by its plan to ship 2.5-2.6 million metric tons of aluminum, but reduced projected alumina shipments by 0.6 million metric tons, or about 4%. But the lower shipments primarily fell into the first half of 2022. Higher shipments of alumina and aluminum in Q3 "will not full offset higher costs for energy and raw materials," Alcoa said. However, bauxite profitability should improve in the quarter after a reduction in shipments in Q2.
AA Stock
Alcoa stock rose 0.2% to 45.15 after an up and down session.
Alcoa stock has been on a downward slide since warning with its Q1 report that it would curb bauxite output and incur an extra $115 million in energy and materials costs in Q2.
AA stock is down 54% from its 52-week high in March, stuck well below its 50- and 200-day lines.
Freeport-McMoRan Earnings
Results: Freeport-McMoRan posted Q2 EPS of 58 cents, 3 cents below views and down 25% from a year ago. Revenue fell 6% to $5.42 billion, missing estimates north of $6 billion.
Outlook: The company said Q2 sales volumes were ahead of guidance, but it trimmed full-year sales guidance. It now expects full-year copper sales of 4.2 billion pounds, down from 4.25 billion, and 1.6 million ounces of gold sales, down from 1.7 million.
Average cash costs are now seen averaging $1.50 per pound vs. guidance of $1.44 in April.
The London Metal Exchange copper settlement price fell from $4.70 per pound at the start of Q2 to $3.74 per pound at the end of June, settling at $3.34 per pound on Wednesday. Weak demand out of China and new capacity are contributing to a copper surplus, but FCX still expects long-term deficits as investment fails to keep up with demand fueled by the energy transition.
FCX Stock
FCX stock rose 1.2% to 28.91 on Thursday. FCX has fallen 45% from its March high, wiping out all the gains as copper prices surged during 2021.
