ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Wednesday, February 19, 1997 TAG: 9702190069
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
Roanoke Electric Steel Corp. on Tuesday reported a 34 percent drop in first-quarter earnings, telling shareholders it was due to competition's impact on company sales.
Company Chairman and President Donald Smith attributed the earnings decline mainly to lower selling prices for all its products brought on by stiffer competition in both the steel and construction industries.
Roanoke Electric Steel is a mini-mill producer of finished steel products for steel fabricators and service centers and of semi-finished steel billets, which are sold to other steel producers.
The company's sales in this fiscal year's first quarter, ended Jan. 31, were $58.35 million, slightly less than sales of $58.43 million during the same period a year earlier. The quarter's net earnings were $2.58 million, off more sharply from with $3.93 million for the first quarter last year. Profit on a per-share of common stock were 34 cents vs. year-ago 49 cents.
Smith said prospects for 1997 remain encouraging. The company's orders and shipments are good and price relief for mill products appears imminent, he said. Roanoke Electric Steel is performing as well or better than most of the steel industry and shareholder return compares favorably with that of the Standard & Poor 500 Index and the S&P Iron and Steel Index, he said.
The company released its quarterly financial results at its annual shareholders meeting Tuesday. At the session, in the American Electric Power Co. auditorium in downtown Roanoke, three members of the company's board - Smith, Thomas Robertson of Carilion Health System, and George Cartledge Jr. of Grand Piano and Furniture Co. Inc. - were re-elected at the meeting to terms expiring in 2000.
Last year's earnings of nearly $15.5 million were the second best in Roanoke Electric Steel's history. In 1995, the company earned a record $20.2 million. Sales of $246.3 million in 1996 were $13 million less than the previous year.
Profit margins narrowed last year because of lower selling prices for mill products brought on by reduced demand and increased competition, Smith said. The company was able to sustain its shipments, however, with an "exceptional" marketing effort, Smith said. Roanoke Electric Steel's fabricated steel subsidiaries, however, made record profits last year but not enough to offset declines in mill products, he said.
The company completed installation of a new ladle refining furnace and the upgrade of its electric arc furnace last year, accounting for nearly all of the $18 million spent on capital improvements during 1996. The new furnace and the upgrade, Smith said, are expected to increase raw steel production, improve quality, cut costs and improve efficiency.
Since 1986, the company has invested more than $100 million in its operations to improve efficiencies, increase production and make the most of earnings, Smith said.
Last year, the company board authorized the buyback of 750,000 shares common stock. At the end of fiscal 1996, the company had repurchased 550,000 shares at a cost of $7.7 million, Smith said.
LENGTH: Medium: 60 linesby CNB