Commercial Metals 1Q profit jumps on tax boost

Published January 7, 2012 | By admin

IRVING, Texas

Commercial Metals Co. said Friday its fiscal first-quarter profit soared, boosted by a hefty income tax benefit.

Billionaire investor Carl Icahn is attempting to buy the steel and metal company for $15 per share, an offer its board has rebuffed. Commercial Metals’ stock fell 7 cents to $14.35 Friday morning.

For the quarter ended Nov. 30, the steel and metal company earned $107.7 million, or 93 cents per share, up from $651,000, or 1 cent per share, in the same quarter last year.

Earnings from continuing operations rose to $125 million, or $1.07 per share, from $14.9 million, or 13 cents per share, in the year-ago period.

The recent quarter’s profit from continuing operations included an income tax benefit of $102 million, or 87 cents per share, related to worthless stock and bad debt deductions from its investment in its Croatian subsidiary.

Excluding that benefit, the company posted an adjusted profit from continuing operations of 20 cents per share.

Revenue rose 12 percent to $1.99 billion from $1.78 billion in the same quarter last year.

Icahn’s offer would value the company at about $1.7 billion. Earlier this week, the company’s board urged shareholders to reject what it called “an opportunistic, low-ball price” from Icahn.

Icahn, who already owns about 10 percent of the company’s shares, said Wednesday that if more than 40 percent of shares are tendered — giving him at least 50 percent control — the investment firm will extend its tender offer.

Commercial Metals, which makes and recycles steel and metal products, said that while the second quarter is traditionally its slowest, it expects global scrap metal prices to rise, which should boost its recycling operations.

But the company, based in Irving, Texas, warned that metal margins at its mills and fabrication operations could face temporary pressure and that its backlog remains somewhat higher than the last quarter.

Article source: http://www.businessweek.com/ap/financialnews/D9S3H5Q00.htm