Schnitzer’s cost-reduction push yields early rewards

United States – Financial results for the three months ended May 31 reveal that Schnitzer Steel Industries’ metals recycling arm recorded a 29% quarter-over-quarter increase in ferrous volumes to 971 000 tons – ‘primarily due to an increase in export sales and timing of shipments’.

In total, export customers accounted for 68% of the US group’s ferrous sales volumes during the quarter, an increase from 55% in the previous three months. Average selling prices declined by US$ 56 per ton or 19% as a result mainly of ‘the sharp drop in ferrous selling prices during February’. Compared to the same quarter last year, average selling prices were US$ 107 per ton or 31% lower, ‘reflecting the weaker export demand and excess steel production globally’.

Meanwhile, Schnitzer’s non-ferrous sales climbed 21% over the previous quarter to some 130 million pounds, driven by resolution of the labour slowdown at US West Coast ports. Non-ferrous prices declined 9% from the previous quarter and 14% from the same three months in 2014, again a reflection of ‘weaker global demand’. Compared to the same quarter last year, both ferrous and non-ferrous volumes were slightly lower.

Schnitzer’s latest results package also highlights early gains from the cost-reduction and productivity initiatives announced in April. About half of the approximately US$ 60 million in targeted benefits is expected to come from its metals recycling business through a combination of equipment idling – including reduced depreciation – and selling, general and administrative expense reductions.

President and ceo Tamara Lundgren also confirms: ‘We expect to complete the consolidation of our auto parts and metals recycling businesses during the fourth (current) quarter, creating the opportunity to benefit from further commercial and operational synergies.’