Harsco Wins Scrap Contract - Analyst Blog
March 13 2012 - 7:15AM
Zacks
Recently announced, Harsco
Corporation (HSC) received a six-year contract from Alfa
Acclai Group to provide steel mill services to the latter. The
total value of the contract exceeds a whopping $55 million.
Alfa Acclai Group is a reinforced
concrete steel manufacturer since 1950. It currently produces
around 2.5 million tonnes of steel per year with a global employee
database of 1,200 people. Through this contract, Alfa shall
effectively reuse its scrap smelting by-products, thereby
ameliorating energy consumption and dissolving pollution emission
issues.
Harsco will provide on-site scrap
and slag yard management services to Alfa’s steel mill in Brescia,
northern Italy. In this regard, the company shall create a new
scrap yard and also render support services for maintenance and
processing. A technologically advanced slag handling system coupled
with an improved weighing system and an advanced GPS detection
facility shall be installed at the unit which is expected to be
operational by 2012 end.
The company recently declared its
fourth quarter financial results of fiscal 2011, whereby it’s
Metals and Mineral segment faced a few challenges with which Harsco
had to grapple using its contract win gains. Operating margin was
also quite under pressure, coming in at 4% compared to 6.4% in the
previous comparable year quarter, primarily due to European demand
softness.
However, the company remains
optimistic with regard to its first quarter performance of 2012. We
believe that such contract awards along with the various
restructuring activities implemented largely would escalate
revenues and margins considerably in the upcoming quarters.
Formidable players in the industry
for Harsco to remain wary about are W.W. Grainger,
Inc. (GWW), TMS International Corporation
(TMS) and ScanSource Inc. (SCSC). We continue to
maintain a Neutral recommendation on Harsco. Our view is supported
with a Zacks #3 Rank on the stock which translates into a
short-term rating of Hold.
GRAINGER W W (GWW): Free Stock Analysis Report
HARSCO CORP (HSC): Free Stock Analysis Report
SCANSOURCE INC (SCSC): Free Stock Analysis Report
TMS INTL CP-A (TMS): Free Stock Analysis Report
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