NUE Nucor Corporation

NUCOR

Revenue Growth Disappoints

Nucor Corp. reported weaker-than-expected revenue growth its third-quarter even amid steel price trends that have improved after the U.S. government cracked down on low-price steel imports from China, and projected a downbeat view for its fourth quarter.

Shares fell 4.7%, to $45.77 in morning trading.

The company said earnings in the fourth quarter are expected to decrease "notably" compared with the third quarter because of lower margins in the steel mills segment, with the most significant impact being on the sheet mills. For the latest period, which ended Oct. 1, average sales price per ton increased 11% from the second quarter and increased 2% from the year-ago period.

Nucor has previously attributed higher steel prices in part to inventory reductions and weaker levels of imports since the U.S. Commerce Department's move to impose tariffs in response to a surge of low-price steel imports, especially from China. But the company has also said that since roughly half of its sheet steel shipments are under contract, there will be a lag before the company gets the full benefit of the improved pricing trends.

Nucor said earnings were helped in the third quarter because of stronger performance in its steel mills and raw materials segments, while market conditions for plate and bar mills remained pressured by high levels of imports.

Overall, Nucor reported a profit of $270 million, or 84 cents a share, up from $227.1 million, or 71 cents a share, a year earlier. The company expected per-share earnings of 85 cents to 90 cents.

Sales rose 1.5%, to $4.29 billion, as analysts were expecting 4.51 billion, according to Thomson Reuters.

--Joshua Jamerson

PULTEGROUP

Housing Demand Remains Healthy

PulteGroup Inc. said earnings rose 19% in the third quarter amid better-than-expected new order growth as demand in the U.S. housing market remained solid.

However, the company missed its gross margin guidance and doesn't see margins improving in 2017. Shares were down 4.2% at $19.06 in morning trading.

The results come after the home builder last month resolved a public dispute between management and the company's founder over PulteGroup's future. Ryan Marshall was named chief executive, replacing Richard J. Dugas Jr., who had been embroiled in a public battle with PulteGroup founder William J. Pulte over the direction of the company.

On Thursday's call, Mr. Marshall said he was happy the company has "removed any uncertainties related to company leadership."

"Now we can focus conversations on talking about the business," he said.

After hedge fund Elliott Management Corp. took a stake in the company earlier this year, executives also announced a plan to slow the company's growth in future land spending. Mr. Marshall said Thursday that he wants the company to continue bringing down its inventory of land to meet goals of "generating higher returns while managing our risk."

Based on the number of homes delivered, Mr. Marshall said the company currently owns about 5.2 years worth of lots. He said in the coming years he would like to get that number down to around three years worth of owned lots.

For the quarter that ended in September, new orders at PulteGroup grew by 17% to 4,775 homes. Analysts polled by FactSet had expected new unit orders of 4,546.

Gross margin in the latest period was 21.1%, 10 basis points below the company's guidance range, pressured by higher land and labor costs, and labor rate inflation. On a conference call with analysts, Chief Financial Officer Robert O'Shaughnessy said that "assuming those conditions continue," the company decided to lower its fourth-quarter margins guidance to a range of 20.5% to 21%. Mr. O'Shaughnessy said he expects that the trend to continue into 2017.

Citing an improving economy and more demand from first-time buyers, Mr. Marshall also said he expects the company to focus more on that segment than earlier in the recovery. "As the economy and, frankly, the housing-recovery cycle has continued to progress, we're seeing strength from the first-time buyers, and thus additional opportunities for us to put capital to work," he said.

In September, rival home builders KB Home and Lennar Corp. posted better-than-expected earnings amid gains in new orders. Home-building in the U.S. fell in September after a rebound in June. But builders received more permits, a sign that residential construction should pick up in the coming months amid steady demand.

Mr. Dugas left the CEO post in September but will remain chairman through the company's annual meeting, expected to be held in May 2017. He first said in April he would be retiring next year amid pressure from Mr. Pulte, the company's largest shareholder. But Mr. Pulte demanded Mr. Dugas's immediate resignation, arguing in a series of letters that PulteGroup's stock performance and sales volume have lagged behind rival home builders throughout the housing recovery.

Overall, PulteGroup reported a profit of $128.5 million, or 37 cents a share, compared with $107.8 million, or 30 cents a share, in the year-earlier period. The company said excluding certain items, such as those associated with a contract settlement and previously announced plans to reduce overhead expenses, the company earned 43 cents a share. Analysts had expected 44 cents a share in earnings, according to FactSet. Total revenue grew 29% to $1.94 billion, meeting expectations.

--Joshua Jamerson and Chris Kirkham

UNION PACIFIC

Commodities Slump Weighs on Earnings

Union Pacific Corp. said its third-quarter earnings fell 13% as the railroad operator, like others, said it continued to be hit by weak demand for commodities it transports.

The Omaha, Neb., company's shares, up 24% this year, fell 3.1% to $94.12 in recent premarket trading as the results missed expectations.

Union Pacific's total freight volume declined 5.8%, led by a 14% drop in coal volume. Shipments in its intermodal business, which moves freight using a combination of trains and trucks, declined 6.7% and industrial products volume dropped 11%. Agricultural volume, which rose 11%, was the only exception.

Freight revenue dropped 7.2% on the weaker freight volume and lower fuel surcharge revenue that offset benefits from higher prices.

The weaker demand was partly offset by lower operating expenses, which declined 4.2%.

In prepared remarks Thursday, Chief Executive Lance Fritz said sectors such as grain and energy "are showing signs of life" though challenges continue from the broader economy, a relatively strong U.S. dollar and soft demand for consumer goods.

Overall, Union Pacific reported a profit of $1.13 billion, or $1.36 a share, down from $1.3 billion, or $1.50 a share, a year earlier. Revenue decreased 7% to $5.17 billion.

Analysts polled by Thomson Reuters expected per-share profit of $1.40 and revenue of $5.18 billion.

Last week CSX Corp. reported weaker third-quarter results as slumping coal shipments continued to pressure its results, though cost-cutting efforts helped the company's performance beat expectations.

On Tuesday, Kansas City Southern's third-quarter results also declined as revenue was dented by weak freight volume, led by declines in crude and frac sand shipments. The company said events such flooding outages and service disruptions on its Mexican network also resulted in additional operating costs.

Norfolk Southern Corp. is set to report on Oct. 26.

--Tess Stynes

(END) Dow Jones Newswires

October 21, 2016 02:48 ET (06:48 GMT)

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