General Steel Net Down 49% On 2008 Gain; Results Top Views

Nov 6, 2009 06:27:12 (ET)

DOW JONES NEWSWIRES

General Steel Holdings Inc.'s (GSI) third-quarter profit dropped 49% on a year-earlier gain as increased shipment volumes from a joint-venture project helped the steelmaker weather the economic downturn.

Earnings well passed analysts' expectations as the steelmaker posted record revenue and shipments, topping the records set in the prior quarter on the back of Chinese government spending plans.

The latest results come as lower demand and falling prices led steelmakers around the world to restructure operations. In the U.S., government stimulus spending isn't expected to help jump-start the economy until next year.

General Steel said profit fell to $10.4 million, or 22 cents a share, from $20.5 million, or 57 cents a share, a year earlier. The prior year included a $29.9 million derivative-related gains. Revenue jumped 18% to a record $484.8 million, helped by increased shipment volumes at the company's Shaanxi Longmen Iron & Steel Co. joint venture and an acquisition.

Analysts polled by Thomson Reuters were expecting earnings of 10 cents on revenue of $456 million.

Aggregate shipment volume rose 67%.

Gross margin was 8.2% as increased shipment volume offset lower selling prices. A year earlier, revenue didn't exceed production costs.

General Steel's shares closed at $3.92 and didn't trade premarket. The stock is down 0.5% for the year.

-By Mike Barris and Nathan Becker, Dow Jones Newswires; 212-416-2330; mike.barris@dowjones.com;

(END) Dow Jones Newswires

November 06, 2009 06:27 ET (11:27 GMT)