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Reliance Steel: Nonresidential Markets Continue to Be Weakest

Los Angeles-based steel service center Reliance Steel & Aluminum Co. (NYSE:RS) reported its financial results for the third quarter and nine months ended Sept. 30, 2010. For the 2010 third quarter, Reliance reported profit of $48.7 million, up 17 percent.

Sales for the 2010 third quarter were $1.65 billion, up 33 percent from 2009 third quarter sales.

For the nine months ended Sept. 30, 2010, net income amounted to $154.9 million, up 176 percent compared to 2009 nine-month profit of $56.1 million. Sales for the 2010 nine months were $4.73 billion, up 17 percent.

Reliance’s tons sold for the 2010 third quarter were up 11 percent from the 2009 third quarter and up 1 percent from the 2010 second quarter. Average prices per ton sold in the 2010 third quarter were up 20 percent compared to the 2009 third quarter and up 1 percent compared to the 2010 second quarter.

For the 2010 third quarter, carbon steel sales were 52 percent of net sales; aluminum sales were 18 percent; stainless steel sales were 16 percent; alloy sales were 8 percent; other sales were 4 percent and toll processing sales were 2 percent.

Mill pricing declined more than anticipated, according to David Hannah, CEO, pressuring selling prices and narrowing gross profit margins. "Demand was a little better than we had expected as we typically see a seasonal decline in the third quarter compared to the second quarter," he said. "Overall we are pleased with our performance during the quarter in light of the existing market conditions.

“… The non-residential construction market is still our weakest end market, and below even last year’s poor levels. It appears, though, that we have reached bottom. Business activity in most all of our other markets is better than a year ago; especially in the semiconductor and electronics, energy, agriculture, and aerospace industries. Acquisition opportunities have also improved."

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