The leaders of Nucor Corp. say big investment tailwinds will help the company put up 2023 numbers almost as good as its record performance last year.
Citing the passage of the CHIPS and Science Act as well as the Inflation Reduction Act as well as a wave of other investments in reshoring manufacturing capacity and energy transition projects, the team at Charlotte-based Nucor said it expects key customer segments such as the automotive industry and the utilities sector to show strong demand in 2023 along with nonresidential construction more broadly.
“There are so many positive signs,” Leon Topalian told analysts on a conference call discussing Nucor’s fourth-quarter results. “2022 was a historic year and, [while] we’re slightly off in terms of activity, we still expect it to be a very strong year.”
As an example of meaningful demand trends, Topalian pointed to Nucor's sheet group, which he said has over the last eight weeks seen bookings climb more than 40% and backlogs grow more than 15%. Infrastructure projects backed by the IRA, he said, are already being teed up and will generate massive demand for many of the products manufactured by Nucor and its peers.
Nucor posted a fourth-quarter profit of nearly $1.3 billion on sales of $8.7 billion. Both numbers were down from a bumper end to 2021 but still enabled the company to finish the year with record net income and cash flows.
Topalian and his team were quite a bit more muted in their near-term outlook late last year, when they were cautious about demand trends relative to a number of their peers, who were at the time calling a market bottom based not just on customers restocking but also on broader real demand returning. And while they aren’t yet providing a full-year profit outlook, the executives do expect Nucor’s Q1 operating profits to be better than Q4’s thanks in part to better margins at its steel mills and better overall performance from its raw materials division. (Net income will fall slightly, they added, because of higher intercompany accounting and because Nucor booked some tax credits late last year.)
On the capital spending front, Nucor’s leaders are planning to invest $3 billion in 2023, an increase of about 50% from last year. Some of that spending will be catch-up projects initially slated for 2022 and roughly $2 billion is being allotted to product improvements and general expansion—with $800 million slated for a new sheet mill in West Virginia that also will get about $1.4 billion in 2024.
Investors liked what they heard from Topalian and his lieutenants: Shares of Nucor (Ticker: NUE) were up more than 8% to more than $169 in afternoon trading Jan. 26. Over the past six months, they have climbed more than 35%, growing the company’s market value to more than $43 billion.
