Higher Prices Drive Pipe Sales To Record Levels
IPSCOIPSCO Inc. announced record second quarter sales of $667 million, an increase of $119 million over the second quarter of 2004. Net income of $126 million was nearly double the $66 million in last year's second quarter. Net income was $281 million for the first six months of 2005, compared to $98 million for the first six months of 2004. (Results are reported in U.S. dollars.)
IPSCO's enhanced sales performance was driven by higher pricing in all product lines and strong energy tubular shipments, partially offset by volume reductions in the steel mill product and large diameter pipe product lines. IPSCO's second quarter average pricing was $830 per ton, inclusive of surcharge, compared to $620 per ton a year ago. Second quarter shipments were 803,000 tons, down 9% or 81,000 tons from the second quarter of 2004.
The company believes that end user demand will remain strong throughout the second half. Surcharge related pricing declines will be largely offset by scrap cost declines; however, there will be timing differences between revenue changes and the cost of scrap consumed.
The market for large diameter pipe has improved significantly in the second half. IPSCO has booked in excess of 100,000 tons for delivery in the remainder of the year. North American OCTG shipments in general and small diameter line pipe shipments in Canada are expected to be at historically high levels, as strong as weather will allow, through the balance of 2005.
Northwest PipeNorthwest Pipe Co. announced record sales of $86.4 million for the second quarter of 2005, compared to $69.6 million in the second quarter of 2004. Quarterly net income was $3.4 million, compared to $3.0 million in the same period a year ago.
Sales in the Water Transmission Group were $60.0 million in the second quarter of 2005, compared to $37.6 million for the second quarter last year. The gross profit for this group was $12.4 million, or 20.8% of sales, compared to $7.2 million, or 19.2% of sales, last year. The Water Transmission Group's gross margin improved due to a combination of improved pricing in the market, higher volumes leveraging fixed costs and a favorable mix of projects produced during the quarter.
The Tubular Products Group's sales were $26.4 million in the second quarter of 2005, compared to $32.0 million reported for the second quarter last year. “Sales were lower than we had forecasted. Contrary to original expectations, our markets in 2005 have generally been sluggish. Several of our products are used in non-residential construction activities, for example, and this market has remained soft through the first half of the year,” noted President/CEO Brian Dunham.
The company reported a backlog at June 30, 2005 of $150.0 million, compared to $101.9 million at June 30, 2004. While the backlog was down from the record $162.3 million reported at the end of the first quarter of 2005, it is still the second highest backlog Northwest Pipe has ever reported.
NS GroupNS Group reported net sales for the second quarter were a record $167.8 million, a 21% increase over sales for the first quarter of 2005. Net income for the second quarter of 2005 was a record $37.2 million, compared to net income of $19.3 million in the first quarter of 2005.
Net sales for the six months ended June 30, 2005 were $306.8 million, compared to $194.0 million for the six months ended June 30, 2004. Net income for the six months ended June 30, 2005 was $56.6 million, compared to net income of $25.6 million in the prior year period.
President and CEO Rene J. Robichaud stated, “The outlook for the second half of 2005 continues to be good. Oil and natural gas prices are at high levels. Drilling for oil and natural gas remains strong both domestically and internationally. Total inventories of oil country tubular goods, although rising, are still at relatively healthy levels in relation to the rising drill rig count. Imports continued to rise, capturing over 36% of the total U.S. market for the first half of 2005, compared to approximately 27% in the first half of 2004. We expect imports will continue to be a significant factor going forward. The cost of steel coil and scrap is expected to be relatively stable through the rest of the year.”
Maverick TubeMaverick Tube Corp. reported net income for the second quarter of $38.7 million, compared to net income of $31.2 million for the first quarter 2005. Net income for the second quarter of 2005 included a gain on the sale of the company's hollow structural sections (HSS) business of $11.2 million, along with a loss from discontinued operations. Net sales from continuing operations were $405.4 million for the second quarter compared to $417.1 million for the first quarter 2005.
Sales of energy products recorded in the second quarter 2005 were $319.6 million compared to $333.6 million in the first quarter 2005, reflecting the normal seasonal slowdown in Canadian activity largely offset by robust U.S. and international activity.
Sales of industrial products recorded in the second quarter 2005 were $85.9 million compared to $83.5 million in the first quarter 2005. This 2.9% revenue increase is attributable to a 14% increase in shipments partially offset by lower average selling prices.
Crane Fluid HandlingCrane Co.'s Fluid Handling segment realized second quarter sales of $245.9 million, compared with $217.9 million in the same quarter of 2004, a 13% increase. The Fluid Handling segment backlog was $201.8 million at June 30, 2005, compared with $200.6 million at March 31, 2005 and $172.1 million at June 30, 2004.
Valve Group sales of $132.7 million increased $16.8 million, or 15%, from the prior year. Operating profit margin of 8% continued to improve from approximately 5% in the first quarter and 6% in the prior year.
Crane Pumps & Systems sales of $24.6 million decreased $3.1 million, or 11%, reflecting product shortages from production disruptions caused by a plant consolidation, lower sales due to customer inventory reduction initiatives and lower government demand compared with the prior year.
Crane Supply sales of $40.9 million increased $7.3 million, or 22%, of which 10% was from favorable foreign currency translation and the remainder was from increased demand for core PVF products, particularly in the commercial construction, industrial MRO, mining and petrochemical markets. Operating profit margin was approximately 10%, up from 9% in the prior year, as price increases fully offset higher raw material costs.
In other Crane news, the parent company announced that General Donald G. Cook (ret.) has been elected a director of Crane Co. Gen. Cook retired from active duty as a four-star general on Aug. 1, 2005 after 36 years with the U.S. Air Force. His career in the Air Force included command of the United States intercontinental ballistic missile force and director for expeditionary aerospace force implementation at U.S. Air Force headquarters. Most recently, General Cook served from 2001 to 2005 as Commander, Air Education and Training Command, leading the Air Force's recruiting, training and education efforts for nearly 500,000 people each year. General Cook was a command pilot and flew more than 3,300 hours in B-52, T-37 and T-38 aircraft.