Irving, Texas-based Commercial Metals Company announced Monday its financial results for fiscal Q1 2013, ended November 30, 2012. Net earnings attributable to CMC for the first quarter were $49.7 million on net sales of $1.8 billion. This compares to net earnings of $107.7 million on net sales of $2.0 billion for the three months ended November 30, 2011.
The Americas Recycling segment recorded an adjusted operating profit of $4.5 million for Q1 2013 compared with $20.8 million in the prior year's first quarter. Compared to the prior year's first quarter, there was lower demand, which negatively affected ferrous and nonferrous pricing and volumes. Lower domestic mill operating rates and general economic uncertainty contributed to reduced demand in the first quarter of fiscal 2013.
The Americas Mills segment recorded an adjusted operating profit of $52.5 million for Q1 2013, down $5.4 million from the prior year's first quarter adjusted operating profit of $57.9 million. Compared to the prior year's first quarter, increased conversion costs offset improvements in both shipping volumes and metal margins. The primary factor contributing to higher costs was an extended outage at our South Carolina melt shop where CMC installed a new electric arc furnace and related components. The company said that it incurred approximately $5.5 million of expenses associated with the outage, which were included in this quarter's results.
The Americas Fabrication segment improved significantly, recording an adjusted operating profit of $10.2 million for Q1, an increase of $17.6 million over the prior year's first quarter adjusted operating loss of $7.4 million. The segment continued to benefit from stable material pricing and improved backlog margins.
The International Mill segment had an adjusted operating profit of $0.9 million for Q1, compared with an adjusted operating profit of $9.8 million in the prior year's first quarter as a result of declining volumes and margins as market conditions in Europe continued to erode.
Meanwhile, the International Marketing and Distribution segment recorded an adjusted operating profit of $40.2 million for Q1, compared with an adjusted operating loss of $4.1 million in last year's first quarter.
Joe Alvarado, Chairman of the Board, President, and CEO, commented, "Our second fiscal quarter is normally our weakest period of the year due to holiday slowdowns and winter weather conditions curtailing construction activity. However, there is growing evidence of an emerging recovery in domestic construction end markets, which is encouraging for future quarters. Our customers remain cautious, and stocking levels are low. Within our segments, we expect our Americas Recycling segment to benefit from scrap price improvements, which historically occur during our second fiscal quarter. We believe the scrap price improvements will likely result in near term downstream margin compression in our Americas Mills and Fabrication segments. We believe our International Mill segment will remain challenged by deteriorating conditions in the Euro zone. Further, we expect the International Marketing and Distribution segment to exhibit continued softness until there is more clarity around the economic direction in both domestic and international markets."
