Thursday, May 04, 2006
Steel Technologies Stuck in the Middle
This article is written from the perspective of a stock investor but still contains some insight into current problems in the steel service center sector.
The Motley Fool via Yahoo! News
These aren't the best of times to be a middleman in the steel sector. Though Steel Technologies is one of the largest North American processors of flat-rolled steel, it finds itself in a tough spot. On one hand, steel suppliers like U.S. Steel and Nucor are enjoying a pretty solid pricing environment. On the other, Steel Technologies is seeing some lag in passing those prices on to customers.
As you might imagine, that's a tough environment in which to prosper, and Steel Technologies isn't exactly prospering. Revenue was down 13% this quarter, and gross margins were cut in half. Given that the company wasn't able to cut operating expenses in tune with the gross profit drop, operating income dropped considerably.
The Motley Fool via Yahoo! News
These aren't the best of times to be a middleman in the steel sector. Though Steel Technologies is one of the largest North American processors of flat-rolled steel, it finds itself in a tough spot. On one hand, steel suppliers like U.S. Steel and Nucor are enjoying a pretty solid pricing environment. On the other, Steel Technologies is seeing some lag in passing those prices on to customers.
As you might imagine, that's a tough environment in which to prosper, and Steel Technologies isn't exactly prospering. Revenue was down 13% this quarter, and gross margins were cut in half. Given that the company wasn't able to cut operating expenses in tune with the gross profit drop, operating income dropped considerably.
