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Article Excerpt
REVENUES AMONG THE INDUSTRY'S Top 50 service centers jumped by an average of more than 40 percent in 2004, reflecting last year's sharply higher steel prices and healthy demand. Even though the price of steel has moderated considerably, and the pace of economic growth appears to be slowing, North America's leading service centers expect to surpass last year's robust sales by another 12 percent in 2005, according to the latest Metal Center News Top 50 survey.
MCN polled the industry's largest players in July and August and ranked them based on full-year 2004 revenues. The Top 50 ranged from $3.3 billion down to $149 million in annual sales. This compares to a high of $2.2 billion and a low of $101 million in last year's survey, reflecting the industry's considerable growth overall in the past year.
In total, the Top 50 generated revenues of $38.2 billion last year--nearly half of the $80 to $90 billion in total net sales by metals distributors in North America, according to industry estimates. This compares with $27.2 billion generated by the Top 50 in last year's MCN survey.
Asked in last year's poll to forecast their sales for 2004, the Top 50 predicted a total of $32.7 billion--$5.5 billion or nearly 17 percent shy of the actual mark. These figures serve to illustrate just how (pleasantly) surprised service center executives were by last year's historic run-up in the price of steel and other metals.
With 2005 more than half completed, executives at Top 50 service centers forecast an aggregate total of $42.9 billion in revenues for this year--a further 12 percent increase despite the fact that the benchmark hot-band price had dropped below $500 a ton from 2004 peak levels in excess of $750.
Service centers remain the largest single customer group for North American mills, buying, processing and reselling one-quarter or more of all the steel, aluminum, copper and brass produced each year.
The industry's leading service centers appear to be operating leaner than in the past despite their growing productivity. This year's Top 50 operate about 1,142 stocking locations totaling more than 95 million square feet of warehouse and processing space--down from nearly 1,200 facilities reported last year. They currently employ about 50,000 workers--down from about 55,000 reported in the 2004 survey.
Topping MCN's ranking once again this year is Ryerson Tull Inc., followed closely again by Reliance Steel & Aluminum Co. Canada's Russel Metals jumps from seventh in last year's poll to third place this year. Metals USA, which has come back strong following bankruptcy reorganization in 2003, jumps from No. 11 last year to No. 6 in 2005. O'Neal Steel breaks into the Top 10, advancing from No. 13 last year. Rounding out the Top 10 list are ThyssenKrupp Materials NA Inc., Samuel, Son & Co. Ltd., Macsteel Service Centers USA, Earle M. Jorgensen Co. and Carpenter Technology Corp.
Service centers' recent prosperity is expected to set off a new wave of merger and acquisition activity in the metals distribution market. Indeed, so far this year about 20 deals have been announced, including a few by members of the Top 10. Largest among them was the acquisition of Integris Metals by Ryerson Tull in January. Others of note include Reliance Steel & Aluminum's purchase of Chapel Steel; Macsteel's purchase of Alpha Steel; and the acquisitions of Schupan Aluminum Sales, Slitco Metal Processing and Sales, and Metalfast Services LLC by ThyssenKrupp's Copper and Brass Sales arm. MCN has tracked more than 200 mergers and acquisitions among service centers since 1996.
Top l0 Profiles
No. 1 Ryerson Tull, Chicago--Ryerson Tull remains the largest player in the market with $3.3 billion in annual sales of steel, aluminum and specialty metals, up from $2.2 billion the previous year. Much of this growth is attributable to the acquisition of Integris Metals, the industry's former No. 4 player, in January 2005. Rebounding from losses in 2002 and 2003, Ryerson reported net income of $54.5 million for the year ended Dec. 31, 2004.
"While metals prices softened as expected, particularly for carbon flat-rolled, our volume remained strong," said Neil S. Novich, Ryerson chairman, president and CEO, in his recent second-quarter report. "Our product diversification--with approximately half of sales from stainless and aluminum--has been beneficial. We feel very good about the way Ryerson Tull and Integris are coming together."
No. 2 Reliance Steel & Aluminum Co., Los Angeles--Reliance ranks second in MCN's Top 50 once again with $2.943 billion in sales, up from $1.883 billion...
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