Reliance Steel Sees Profit Rise

Reliance Steel & Aluminum Co., the largest U.S. metals processor and distributor, said Thursday that second-quarter profit surged to a quarterly record, helped by rising demand and high metal prices.

Net income climbed to $52.8 million, or $1.62 a share, from $6.39 million, or 20 cents, a year earlier. Sales increased 67% to a record $760.8 million, Los Angeles-based Reliance said.

Reliance is benefiting from tight metal supplies that have driven steel prices to historical highs, Chief Executive David Hannah said. The company buys metals such as aluminum, copper and steel in bulk, then modifies and resells the pieces to construction companies and equipment makers.

Although metal demand is likely to grow “at a modest rate” for the rest of the year and into 2005, prices will come down as supplies become more available, Hannah said. The company expects per-share profit in the third quarter of $1 to $1.20.

Reliance has been raising prices to keep pace with steelmakers, which have imposed surcharges for the escalating cost of raw materials such as scrap steel and coke. Shortages of those materials and an improving world economy are allowing steelmakers to pass higher production costs on to buyers, including Reliance.

Analysts had expected a per-share profit of $1.54, according to a survey by Thomson First Call. They expect Reliance to earn 93 cents a share in the third quarter.

Shares of Reliance fell 62 cents to $41 on the New York Stock Exchange.