Nucor Case Analysis

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Individual Case Analysis BUS490 Comprehensive Examination Nucor Steel Corporation Written by: Lukas Kubilius Professors: Bonnie J. Straight Julian J. Prewitt Lithuania Christian College 2 March 2005 Overview of situation Nucor Corporation with 24 plants/divisions and 8,000 employees, operated in nine states recycling more than 10 million tons of scrap steel annually. Producing carboy and alloy steel in bars, beams, sheet, and plate; steel joists and joist girders; steel deck; cold finished steel; steel fasteners; and metal building systems, the corporation was known as the most modern and efficient, having streamlined organizational structure, incentive-based…show more content…
The COGS was only 85.53% of Nucor’s Net Sales in 1997, whereas in 1999 and 1998 it was one percent bigger. Also, we can see quite good financial ratios in 2000. Although there were no specific technologies implemented in Nucor operations, the increase in profit margins probably was due to bankruptcy of Benthlem Steel Corp. and LTV Corporation, which were for 25% of U.S. steel making capacity. Nucor’s financial statements indicate the fall of Gross profit margin in 2001. Even the sales are increasing (change is 11.7%), revenues are declining significantly (change is 7.6%) comparing to prior year. Worldwide excess of steel capacity have dropped composite sales price per ton for Nucor to $340. It was a big price-cutting because price per ton has been standing around $430 for the last five years. Therefore, Nucor’s projected EBIT for the year 2001 would be about 60% less than in 2000. Profit margin ratios indicate that Nucor’s finances are strong and healthy. The fact that company manages to operate profitably under the conditions of worldwide overcapacity of steel and huge price-cuttings talks for itself. However, if the prices keep decreasing Nucor will not be able to operate so profitable or even it can get bankrupt. Possible solutions for the problems in Finances.  The way that makes sense for Nucor to improve their finances is by decreasing COGS. It can be achieved by rearranging employee wages

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