Reliance Steel Profit Falls 23% - Update

(RTTNews) - Metal processor Reliance Steel & Aluminum Co. (RS), Thursday reported a 23 percent drop in profit for the fourth quarter, hurt mainly by increased costs and lower selling price.

Los Angeles, California-based Reliance Steel's fourth-quarter profit slid to $61.8 million or $0.79 per share from $80.4 million or $1.06 a year ago.

On an adjusted basis, earnings dropped to $0.92 per share from $1.08 per share last year. On average, 11 analysts polled by Thomson Reuters expected earnings of $0.98 per share for the quarter. Analysts' estimates typically exclude one-time items.

Reliance Steel's fourth-quarter sales rose 22.1 percent to $2.31 billion from $1.89 billion a year ago. Ten analysts had a consensus revenue estimate of $2.36 billion for the quarter.

Tons sold rose 38.7 percent to 1.41 million tons year-over-year, but the average selling price per ton sold dropped 11.4 percent to $1,645 from last year.

Carbon steel sales, Reliance's key commodity segment, increased 36.5 percent, Aluminum sales rose 12.8 percent, and stainless steel sales was up 12.4 percent. Alloy sales fell 12.9 percent.

Costs of sales rose to $1.70 billion from $1.36 billion last year.

"During the fourth quarter we experienced a normal seasonal slowdown in demand," Chief Executive David Hannah said.

Looking forward to the first quarter, Reliance now expect earnings of $1.20 - $1.30 per share. Analysts now project earnings of $1.37 per share.

"As the U.S. economy continues its slow but steady recovery into 2014, metals pricing and demand are expected to demonstrate a measured improvement throughout the first quarter," the company noted.

RS is currently trading at $71.35, down $1.03 or 1.43%, on the NYSE.