ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, November 23, 1996 TAG: 9611250148
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
Lower prices for its mill products and delays in planned improvements caused a 23.8 percent earnings drop for Roanoke Electric Steel Corp., the company reported Friday.
The specialty steel products maker said earnings for the year ended Oct. 31 were $15.4 million, or $1.96 per share of common stock, compared with record profits last year of $20.2 million, or $2.51 per share.
Despite the drop, the recent results were still the second best on record, the company said.
Sales for 1996 of $246.3 million were also the second best on record, but were down 5.3 percent from last year's sales of $260 million.
Donald Smith, the company's chairman and CEO, attributed the lower earnings to reduced selling prices and margins for mill products because of lower demand and increased competition.
Also hurting profits, the company said, were construction problems that caused a longer than planned shutdown of the mill's melt shop. The shutdown was necessary to install a new ladle furnace and upgrade an electric arc furnace.
On the up side, however, the company reported that business conditions in the construction industry remained strong, margins for fabricated products improved, and the company's subsidiaries that make fabricated steel construction products had record earnings.
For its fourth quarter, RES's earnings were $5.2 million, or 67 cents per share, down 25.9 percent from last year's $7 million, or 86 cents per share. Sales for the quarter were $68.2 million, a 4.9 percent decrease from $71.7 million in 1995's fourth quarter.
Going into 1997, selling prices for mill products are still depressed, but the cost of scrap steel, the mill's raw material, is falling, which should result in increased profit margins for the company's first quarter, Smith said.
"With no signs of recession and with markets continuing to look favorable, the prospects are encouraging for another good year in fiscal 1997," he said.
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