TORONTO – Russel Metals Inc. (TSX:RUS) is reporting a 34 per cent drop in profit for the first quarter, but recorded higher revenues due in part to the acquisition last year of Apex Distribution.
“The performance of Apex Distribution was the bright spot in the first quarter and validated our strategic acquisition of this operation,” said president and chief executive Brian Hedges.
But overall, the company said it felt the effects of less demand in their metals and energy sectors.
“The volume decline experienced throughout the service centre industry was also felt by Russel Metals,” he said.
“The decline in volume in the first quarter impacted most sectors and was exacerbated by fewer working days in 2013 due to the timing of the Easter holidays and inclement weather following the relatively mild weather experienced in 2012.”
The metals distributor earned $21.7 million or 36 cents per diluted share in the period ended March 31, compared with $32.9 million or 53 cents per diluted share in the year earlier period.
Revenue was up to $821.8 million from $802.9 million year over year.
The results missed analysts estimates for a profit of 44 cents per diluted share and $849.1 million of revenue, according to Thomson Reuters.
The company said revenues from its metals service segment dipped by 16 per cent compared with a year ago to $359 million, while revenue from its steel distributors fell 26 per cent to $74 million.
However, the energy products business increased 42 per cent from a year ago to $389 million in the quarter, boosted by Apex Distribution.
Apex also helped the company improve its operating margins and operating profit figures.
Russel Metals said it was particularly hurt by a drop in volume in Canada, which was exacerbated by a slowdown in Alberta for oilsands and conventional gas drilling activities.
It said its energy profits will improve if the controversial Keystone XL pipeline eventually gets approved in the U.S.
Russel Metals sells steel and pipe to the construction and oil and gas industries as well as many other customers.
It operates metals service centres, oil and gas pipe products and steel distributors, under various names including Russel Metals, A.J. Forsyth, Acier Leroux, Acier Loubier, Arrow Steel Processors, Leroux Steel, McCabe Steel.
Shares in Russel Metals were down three cents to $26.98 Thursday on the Toronto Stock Exchange.