On the Line: Nucor CEO Daniel DiMicco
The steel sector has taken its share of lumps recently, and the trend continued Thursday after Nucor offered third-quarter guidance below Wall Street expectations.
Despite reporting strong Q2 earnings, Nucor announced a guidance range that was at least 10 cents below the analyst consensus. As a result, Nucor shares dropped more than $7, or 11%, by the end of Thursday trading.
But Nucor Chairman, CEO and President Dan DiMicco told Cramer, “Our business is still very strong,” saying he is expecting the third quarter to be strong as well. DiMicco emphasized the fact that his firm is traditionally conservative, which accounts for the lower guidance.
DiMicco offered some numbers for those who doubt his company: $580 million in profit for the second quarter, a 68% increase of last year’s Q2 and a 42% increase of 2008’s Q1; and the first six months of 2008 are up 36% over the first six months of 2007.
“We are firing on all cylinders,” DiMicco said.
And all that talk of high commodity costs causing problems for Nucor? Not true.
“Since 2004 people have been saying that very thing,” the CEO said. “And since 2004 we’ve proved them wrong every quarter for the entire time period through this quarter of 2008.”
“Raw material costs, historically,” DiMicco continued, “when they go up, we make more money.”
Cramer said it’s been hard to own steel stocks over the past few weeks, but he’s not willing to give up on Nucor yet. He’s betting buyers of this stock will fare better than sellers over the long term.
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