CMC starts financial year on downbeat note

Written by CRU

Longs producer and recycler Commercial Metals Company expects its fiscal Q1’s consolidated financial results to be lower than the $104 M (€95.3 M) achieved in fiscal Q4, which ended August 31, according to president and CEO Peter Matt.

Continued macroeconomic uncertainty and temporary, dampened sentiment within some areas of the construction industry are to blame, he said.

“Finished steel shipments within the North American steel group are anticipated to follow normal seasonal trends … [while the] underlying financial performance for the European steel group is likely to remain similar to fourth-quarter levels,” he added.

However the European business, based on a longs mill in Zawiercie, Poland, is expected to gain between $35 M and $40 M from the annual CO2 credit.

Looking longer term, Matt is more optimistic: “We believe current market conditions represent a transient period of softness created by uncertainty regarding important factors that influence any major capital investment: the cost of funding and future government policy. Clarity will emerge in the coming months, and we believe, renewed strength in our core markets will follow.”

He also said: “ We believe the underlying near and long-term demand fundamentals remain strong based on customer conversations and continued healthy downstream bid activity underpinned by the structural trends of infrastructure investment, re-shoring of manufacturing, electrification, and the need to address a chronic housing shortage in the U.S.”

His comments follow a fiscal 2024 in which the Texas-based company’s net profit shrank by 43.6% to $485 M on a turnover 9.9% lower at $7.93 M.

Matt stated: “Though strong by historical standards, our financial results were hampered by weaker sentiment that negatively influenced steel product pricing and margins. Certain contemplated construction projects appear to be on hold until greater clarity emerges regarding the future path of interest rates and the outcome of U.S. elections.”

This article first appeared in CRU.