Schnitzer Reports Strongest First Quarter Earnings Since 2011
Schnitzer Steel Industries, Inc. reported results for its first quarter of fiscal 2018 ended November 30, 2017. Its Auto and Metals Recycling (AMR) division achieved its best first quarter performance since fiscal 2011 with operating income of $35 million, or operating income per ferrous ton of $44, both of which are more than double the results of the first quarter of fiscal 2017. AMR’s higher year-over-year operating income and operating income per ferrous ton reflect the benefits of operating leverage from 11 percent higher ferrous sales volumes and expanded metal margins as well as higher average net selling prices and contributions from sustained productivity improvements.
Its steel and scrap division also showed improvement. Cascade Steel and Scrap (CSS) delivered first quarter operating income of 8 million representing a significant improvement from the prior year first quarter operating loss of $3 million which included an adverse impact of approximately $2.5 million from downtime associated with a major equipment upgrade. CSS’s improved operating performance was driven primarily by higher finished steel sales volumes and metal spreads and also benefited from lower levels of rebar steel imports, increased selling prices driven by higher raw material costs, and productivity improvements from the recent integration of our steel manufacturing and Oregon metal recycling operations.
“In the first quarter of fiscal 2018, we delivered our strongest first quarter performance since fiscal 2011. AMR’s operating income per ferrous ton exceeded $40, a level last reached during fiscal 2011 when both volumes and scrap prices were significantly higher than today. This performance demonstrates our continuous focus on increasing productivity and efficiency in our core operations which, combined with the success of our commercial initiatives to grow volumes, allowed us to take full advantage of the stronger market conditions,” commented Tamara Lundgren, President and Chief Executive Officer. “Our Cascade Steel and Scrap business also achieved significantly improved performance compared to the prior year first quarter, with operating margin expansion driven by higher volumes, reduced pressure from low-priced rebar imports, and continuing productivity improvements.”