Steel service center Worthington Industries, Inc., Columbus, OH, saw sales growth of 12% for the first quarter ended Aug. 31, 2006, with sales of $778.7 million. First quarter 2007 net earnings were $43.2 million, up 52% from the same period last year.
Outlook
Demand in two of Worthington id=bwanpa5>’s key end markets, commercial construction (especially office buildings) and automotive, may continue to soften. Recent announcements of production cuts by General Motors, Ford and Chrysler will create a more challenging environment for the Steel Processing segment.
Uncertainty regarding the economy and interest rates, coupled with relatively high material prices, has contributed to delays in planned commercial construction starts by customers of the Metal Framing segment. Other end markets served by the Pressure Cylinders segment and certain of the company’s joint ventures continue to be strong and stable.
Segment Results
In the Steel Processing segment, quarterly sales rose 14%, or $49.4 million, to $401.0 million from $351.6 million in the comparable quarter of fiscal 2006. The increase in net sales was due to higher pricing (up 6%) and higher volumes (up 7%) relative to the prior year.
In the Metal Framing segment, net sales increased 3% or $7 million, to $212.3 million from $205.3 million in the comparable quarter of fiscal 2006. Average selling prices improved 15%, more than offsetting an overall volume decline of 10%, as measured in tons. A portion of the tonnage decline was attributable to increased sales of the new Ultrasteel product which is lighter than traditional framing products per linear foot. Operating income for the quarter rose 71% compared to the prior year as a result of a better spread between selling prices and material costs.
In the Pressure Cylinders segment, net sales increased 13%, or $14.4 million, to $121.5 million from $107.1 million in the comparable quarter of fiscal 2006. Average selling prices improved significantly due to product mix and price increases in certain product lines, to cover increased material costs. Strong results in Europe, improved volumes in several North American product lines, and plant consolidation savings led to a doubling in operating income from the prior year.
