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Nucor Expects Q1 Profit to Beat 2008 Record and Top $900 Million

By Neha Chamaria - Updated Feb 9, 2021 at 2:32PM

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The steel giant is looking forward to an exceptionally strong quarterly earnings report as end markets revive.

Nucor's (NUE -3.26%) last quarterly numbers confirmed a recovery in key end markets, and management was confident the trend will continue. But what the largest steel manufacturer in the U.S. may not have expected is the magnitude of the recovery.

Demand is so robust that Nucor is not even halfway through its first quarter but is already projecting the potential net income it could earn in the quarter ending April 3. It just announced that its first-quarter net income could exceed (hold your breath) $900 million. That's a remarkably big number for several reasons.

A surprised boy looking at a laptop.

Image source: Getty Images.

"We currently expect our first-quarter 2021 results to significantly exceed Nucor's previous record for quarterly net earnings, set in 2008," CEO Leon Topalian said.

Nucor's first quarter has been pretty volatile since 2008, when the company turned in net income of $409.8 million.

That means two things: Projected net income of $900 million or more for the first quarter of 2021 should not only be the highest ever for the company but also beat its previous quarterly record by a huge margin. Also, just so you know, Nucor earned a paltry $20.3 million in the year-ago quarter, so you might as well brace for headlines screaming about a jaw-dropping year-over-year growth number when the company reports its earnings in April.

That $900 million is only a projected number for now, but it reflects Nucor's confidence. The company is witnessing strong business conditions across most of its end-user markets, particularly nonresidential construction and automotive, and it had a strong January in terms of operational performance.

Specifically, the ongoing strength in prices and volumes are expected to drive sales and earnings higher for Nucor's core steel mills segment, which manufactures sheet, bars, and beams.

Likewise, Nucor expects significantly higher earnings from its raw materials segment thanks to higher selling prices, such as for iron ore. Just days ago, Credit Suisse bumped up its iron ore price forecast for 2021-22 by nearly 50% on the back of tight supply.

Nucor's first-quarter outlook is hugely encouraging, and should particularly excite income investors who've parked their money into this Dividend Aristocrat, which yields a good 3% currently.

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