Russel Metals Reports Profitable Second Quarter
By Metal Center News Staff
on Aug 10, 2020
Russel Metals managed to remain profitable in the difficult second quarter, reporting net income of $5 million. The Mississauga, Ontario-based service center company reported net income of $31 million in the same quarter of 2019.
Net revenues in the quarter declined sharply in the quarter, falling 37.2 percent to $588 million. First-half revenues were down 28.7 percent to $1.4 billion.
"During the second quarter, the pandemic along with low energy prices created intense business conditions. Demand at our service center and distribution operations appeared to bottom out in April followed by a modest, yet steady, increase throughout the balance of the quarter,” said John Reid, president and CEO.
Revenues in the company’s metals service centers decreased 30 percent to $373 million for the quarter, with average selling prices down 14 percent. Tons shipped were approximately 19 percent lower than the 2019 second quarter. Operating profits were $25 million compared to $23 million in the 2019 second quarter and $18 million in the first quarter of 2020, as expense reductions and government wage support programs offset the reduction in gross margin dollars.
“I want to commend our service centers for their performance as the segment generated higher earnings from operations in the 2020 second quarter than the comparable period last year. In addition, the service center segment continued to gain market share when compared to the Metal Service Center Institute's statistics."
In the steel distributors segment, the company’s segment revenues declined 36 percent to $64 million on lower demand and steel prices.
The energy products segment was hit particularly hard, with revenues down 50 percent to $149 million. Historically low North American rig counts and the wet Western Canadian spring contributed to the significant decline.