SDI sees reduced consumer confidence affecting earnings in Q3 2012

US steelmaker Steel Dynamics Inc (SDI) expects its earnings to fall in the third quarter as global economic and political uncertainty continues to dent consumer confidence.

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The Fort Wayne, Indiana-based company said, on Tuesday September 11, that it forecast third-quarter earnings in the range of 1 cent to 5 cents per diluted share, down from 20 cents per diluted share in the second quarter and 19 cents per diluted share in the third quarter of 2011.

Lower consumer confidence is likely to lead to reduced third-quarter steel shipments, SDI said. Special bar quality (SBQ) operations are expected to be particularly hard hit as buyers destock inventories, the company added.

In addition, SDI predicts impairment charges of $5-9 million, or 1 cent to 20 cents per diluted share, related to a decision to terminate two small joint ventures.

The biggest impact on earnings is expected to be related to refinancing activities of $27 million, or 7 cents per diluted share, SDI said.

The company said its recycling business should see better financial results in the third quarter compared with the second quarter thanks to improved metal spreads. And while non-residential construction markets remain weak, fabrication operations are also expected to show improved profitability in the third quarter, it added.