Reliance Steel posts sharp drop in 3Q profit

Reliance Steel & Aluminum Co., which processes and sells products to aerospace, energy and construction companies, said Thursday its third-quarter earnings plunged 73 percent, partly due to sharply lower sales.

Net income dropped to $41.8 million, or 57 per share, for the three months ended Sept. 30. That compares with profit of $152.5 million, or $2.07 per share, in the year-earlier period.

Sales plunged 52 percent to $1.24 billion from $2.57 billion.

The results include pre-tax income for inventory accounting of $67.5 million, down from $79 million in the year-earlier period.

Analysts expected profit of 46 cents per share on revenue of $1.34 billion, according to a survey by Thomson Reuters. Wall Street estimates typically exclude one-time items.

David H. Hannah, the company's chairman and CEO, said that customer demand had "improved slightly during the quarter from the low levels experienced in July" and that the company was pleased with its improved gross profit margins.

"However, we are uncertain as to business activity in the 2009 fourth quarter," he said in a statement. "Although we believe that demand is fairly stable at low levels, the fourth quarter is typically seasonally slower for us."

Pricing seems more stable than it was earlier in the year, but "we believe there may be some slight downward pressure on pricing for many of our products in the coming months," Hannah said.

The company declined to provide specific guidance for the fourth quarter, but Hannah said it "stands on solid financial footings and is well positioned for the eventual recovery in economic conditions."

Shares of the Los Angeles-based company dropped $1.79, or 4 percent, to $41.88 in afternoon trading.