Nucor Executives Ramp Capex With Economic Winds at Their Backs
Steel manufacturer Nucor Corp. will devote about $3.5 billion to capital projects this year, a jump of nearly 60% from 2023, as its executives seek to capitalize on the investment sprees reshaping the infrastructure, semiconductor and energy sectors.
Among the projects underway or on tap for Charlotte-based Nucor are a sheet mill in West Virginia, two plants making utility towers and a rebar micro mill in North Carolina. Those projects and others will look to meet some of the incremental 5 million to 8 million tons of annual demand for steel that Nucor Chairman, President and CEO Leon Topalian and his team expect federal spending programs will generate in the next several years.
“As our results demonstrate, Nucor is a growth company,” Topalian said on a Jan. 30 conference call. “And given our investment plans and the long-term outlook for steel in the U.S., we see more opportunities for growth in the years ahead.”
It should be noted that the $3.5 billion capex forecast for this year is slightly inflated because some planned 2023 spending was delayed. But the expansions now underway will keep capex above $3 billion in 2025 as well, CFO Steve Laxton said.
Building on Nucor’s recent strong results, Topalian and his team also are stashing cash to make more acquisitions in industries adjacent to core steel manufacturing and reduce the volatility of Nucor as a whole. In recent years, the company has paid billions for companies that make heavy garage doors and utility equipment, among other things.
“We are firmly committed to growing our portfolio,” Laxton said on the conference call in language that typically presages deal announcements. “We are actively fostering a pipeline of acquisition candidates.”
Nucor produced a fourth-quarter net profit of $785 million on sales of $7.7 billion, numbers that were down slightly from late 2022 due to lower average selling prices. The company shipped more than 5.9 million tons to outside customers, a year-over-year increase of 3%. Laxton noted that volumes rose as the quarter progressed and prices started to rebound; those trends, he added, should continue this quarter.
It’s not all cloudless blue skies for Nucor in the near term, though: Customers in the company’s offshore wind and warehouse end markets are pausing some investments. But executives said they expect those sectors to also be good growers over time.
Taking a different route with capex is the team at Cleveland-Cliffs Inc., which also reported Q4 results Jan. 30 and which last year catalyzed the process that ended with Nippon Steel Corp. agreeing to buy U.S. Steel Corp. The company’s Chairman, President and CEO Lourenco Goncalves and CFO Celso Goncalves said their plans call for 2024 spending to be between $675 million and $725 million versus $646 million last year.
“I would note that this is by far the lowest amongst our peers with our equipment in very good shape and no plans to add any capacity,” Celso Goncalves said.
Cliffs’ main uses of cash in the coming year will be to buy back shares—“I like to buy things on sale,” Lourenco Goncalves said to cap the conference call—and retire more of the debt taken on a few years when the company bought AK Steel and the U.S. arm of ArcelorMittal.
Shares of Nucor (Ticker: NUE) rose 7% to nearly $189 after reporting earnings. The move accented a big run from around $140 in October that has grown the company’s market capitalization to more than $46 billion.
