Nucor Corporation, one of the largest steel producers in North America, has issued its earnings guidance for the fourth quarter of 2024, forecasting earnings in the range of $0.55 to $0.65 per diluted share. This is a noticeable decline compared to the $1.05 per share reported in the third quarter of 2024 and the $3.16 per share achieved in the fourth quarter of 2023.
The main factors behind the reduced earnings expectations for Q4 2024 are lower volumes and declining average selling prices in Nucor's steel mills segment. The company’s forecast indicates that the steel products segment will also experience a reduction in earnings due to the same issues, decreased demand for steel and falling prices.
Nucor is expecting a moderate increase in earnings from its raw materials segment, which should offset some of the losses in other areas. However, this growth is calculated on a comparative basis from the third quarter of 2024 and excludes the non-cash impairment charges taken during that period.
The third-quarter results were heavily impacted by non-cash charges totaling $83.0 million (or $0.27 per diluted share) related to the impairment of non-current assets in Nucor’s raw materials segment. An additional $40.0 million (or $0.17 per diluted share) was charged for impairments in the company’s steel products segment. These charges contributed to a weaker financial performance in Q3 and have been factored into the adjusted expectations for Q4 2024.
Despite the projected decline in earnings, Nucor has remained committed to returning value to its shareholders through share repurchases. As of the fourth quarter, the company repurchased approximately 2.1 million shares, at an average price of $149.81 per share. Year-to-date, Nucor has bought back 13.1 million shares at an average price of $168.75 per share.
In total, Nucor has returned more than $2.73 billion to shareholders in 2024 through both share buybacks and dividends. This underscores Nucor’s ongoing commitment to maintaining a strong relationship with its investors, even during periods of fluctuating earnings.
The steel industry has faced significant challenges in 2024, especially due to weaker demand and lower prices. The slowdown in global economic growth, particularly in the construction and manufacturing sectors, has reduced the demand for steel products. Additionally, the softening of steel prices has pressured the margins of steel producers like Nucor, who depend on volume and pricing for profitability.
Nucor’s steel mills segment, which includes flat-rolled and long steel products, has been particularly affected by these market conditions. The company’s efforts to maintain profitability amid these challenges will depend on its ability to adapt to the fluctuating market and continue innovating to keep production costs in check.
Looking ahead, Nucor will need to carefully manage its operations in the face of a volatile market environment. While the company’s strong balance sheet, coupled with its share repurchase program, demonstrates a healthy financial position, Nucor faces headwinds as the steel industry adjusts to lower demand and pricing pressures.
Despite the projected decline in earnings for the fourth quarter, Nucor’s diversified portfolio, including its raw materials segment, offers a degree of resilience. The company has made strategic moves to mitigate risks associated with the cyclical nature of the steel industry and to improve operational efficiency.
Nucor’s dedication to returning value to its shareholders through stock buybacks and dividends remains a key part of its strategy, even in the face of challenging market conditions. The company’s ability to maintain a strong cash flow and deploy capital in a way that benefits its stakeholders will likely continue to be an essential part of its long-term success.
