Reliance Steel Cuts Earnings Forecast
Reliance Steel & Aluminum Co. slashed its fourth-quarter earnings forecast Monday, saying it had been hurt by soft metal prices and a slow economy
The Los Angeles-based metal processing and distribution company said it expects to earn 4 cents to 6 cents a share in the fourth quarter, a fifth of the 20 cents to 30 cents a share the company estimated in October.
Analysts were expecting earnings of 23 cents a share, according to a survey by Thomson First Call. Reliance has not issued an earnings estimate for the first quarter of this year.
After the announcement, Reliance shares fell $1.06, or 6%, to close at $16.75 on the New York Stock Exchange.
David H. Hannah, Reliance’s chief executive, said the company’s previous earnings estimate was based on the assumption that the fourth quarter would be similar to the third quarter.
“Unfortunately, business conditions did deteriorate during the 2002 fourth quarter,” Hannah said. “However, we still believe that we are well positioned to benefit from the eventual improvement in the industrial economy.”
Through its 98 metals processing and distribution centers nationwide and in a handful of foreign countries, Reliance acts as a middleman for manufacturers that need specialty metals for producing everything from airplane wings to steel beams used in construction. The company purchases the metal -- including steel, aluminum, brass, copper and titanium -- and then cuts and shapes it to meet customers’ specifications.
“December just stopped,” company spokeswoman Kim Feazle said. “It wasn’t just us. Nobody was buying throughout our industry.”
Sales have rebounded since then and “January looked a lot better,” Feazle said.
Reliance said it will post fourth-quarter sales of about $435 million, compared with $382 million in the same period a year ago. Still, that’s well below the $455 million in revenue posted in the third quarter and only on par with the $430 million in sales posted in the third quarter of 2001.
The company’s gross profit margins during the fourth quarter decreased more than 1.5% from the 2002 third quarter.
Reliance plans to issue its financial results for the fourth quarter and all of 2002 on Feb. 20.
