Nucor Q1 Revenue Drops, Expects Q2 Earnings to Increase Sequentially

Nucor Corporation (NYSE: NUE) reported mixed results for its first quarter of 2025, with revenue declining year-over-year but surpassing market expectations, while signaling optimism for a sequential rebound in Q2. The steel producer’s Q1 revenue totaled $7.83 billion, down 4% from the same period in 2024 but up 11% from Q4 2024. Adjusted earnings per share (EPS) came in at $0.77, narrowly missing revised consensus estimates but marking a slight improvement over initial guidance. The results underscored both near-term challenges and strategic levers Nucor is pulling to navigate industry headwinds.

Q1 Performance: A Decline Amid Structural Pressures

The year-over-year revenue dip stemmed from lower average selling prices across key segments, particularly in Nucor’s Steel Products division, which saw earnings fall due to pricing pressures. Meanwhile, Steel Mills segment performance held steady compared to Q4 2024, though margins were constrained by higher corporate expenses and non-cash charges tied to facility closures. Raw Materials segment earnings also weakened as reduced margins at direct-reduced iron (DRI) facilities weighed on results.

The company’s adjusted EPS of $0.77 contrasted sharply with the $3.46 reported in Q1 2024, reflecting broader industry struggles. Nucor attributed part of the decline to $16 million in non-cash charges for shuttering two facilities. However, management emphasized that operational discipline—such as cost controls and selective capital expenditures—had mitigated deeper losses.

Shareholder Returns Remain a Priority

Despite the earnings slump, Nucor prioritized shareholder returns, repurchasing 2.3 million shares for $316 million while paying $112 million in dividends. Combined, these actions totaled $428 million in capital returns, underscoring the company’s commitment to maintaining investor confidence even during cyclical downturns.

Q2 Outlook: Pricing Gains and Demand Drivers

Looking ahead, Nucor anticipates sequential improvement in Q2, citing stronger average selling prices for sheet and plate products—a critical part of its Steel Mills segment. Shipments to external customers rose to 6.83 million tons in Q1, a 10% year-over-year increase, driven by construction and manufacturing demand. Management highlighted that improved pricing in Q2 could offset lingering margin pressures, particularly as the company leverages its low-cost, scrap-based production model to outperform competitors.

Sustainability and Long-Term Resilience

Nucor’s emphasis on sustainability continues to differentiate it in an industry under environmental scrutiny. As North America’s largest recycler of steel, it processes over 90% of its raw materials from scrap, reducing emissions by 60% compared to global peers. The company reiterated its net-zero greenhouse gas emissions target by 2050, aligning with growing investor and consumer demands for ESG (environmental, social, and governance) accountability.

Risks Lurking in the Steel Sector

However, the road ahead remains fraught with risks. Volatile steel prices, trade policy shifts, and global economic uncertainty could disrupt Nucor’s recovery. For instance, a resurgence in steel imports or a prolonged slowdown in construction could pressure margins. Additionally, the company’s reliance on scrap prices—a key input—leaves it exposed to fluctuations in commodity markets.

Analyst View: A Wait-and-See Stance

Analysts remain cautiously optimistic. While Nucor’s stock has tumbled 43% over the past year, underperforming the S&P 500’s 5.5% gain, the consensus “Moderate Buy” rating reflects faith in its operational strength. A $151.73 price target (implying a 37% upside from current levels) suggests investors believe Nucor can capitalize on its cost advantages and market position once demand stabilizes.

Conclusion: Navigating Cycles with Steel in Its Bones

Nucor’s Q1 results highlight the cyclical nature of the steel industry, where pricing and demand swings can quickly reshape profitability. Yet the company’s Q2 outlook—bolstered by pricing power and strong domestic demand—points to a path toward recovery. With $7.4 billion in EBITDA in 2023 and a track record of resilience, Nucor appears positioned to weather current headwinds.

Long-term investors should weigh its sustainability commitments and capital-light strategy against near-term macro risks. If Nucor can sustain its cost discipline and leverage its recycling advantage, the Q2 rebound could signal a turning point. For now, the stock’s valuation offers a compelling entry point for those betting on a steel sector rebound—a bet that hinges on whether construction and manufacturing demand can pick up the slack.

In a sector where volatility is the norm, Nucor’s blend of operational agility and environmental leadership makes it a stock worth watching as 2025 unfolds.