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…

Looking to other profits margins, Operating profit margin and Net profit margin, we can see the same tendencies and characteristics in 1996-2000. If we draw a graph, it would look alike to the Gross profit margin graph. Standards for the Operating profit margin and Net profit margin ratios depending on business are 10 percent and 4 percent. Nucor’s five year average of OPM is 10.3 percent and 6.61 percent in NPM.

We can see that Nucor is doing quite well in converting its Sales dollars to Net Profit. Five years average of 6.61 percent shows why the company is one of the leading ones in U.S steel industry. Stable and effective strategy of “no nonsense” works well. Nucor is using its resources wisely avoiding unnecessary expenses; they do not have huge offices, planes, luxury company cars and etc.

Nucor’s profit margins indicate the year 1997 was the most efficient and had the highest GPM, OPM, and NPM ratios. The reason of this was twin shell furnace technology, which started to be used in 1996 and was widely adapted in the company.
Profit Margins Year 2000 Year 1999 Year 1998 Year 1997 Year 1996
Gross Profit margin 14,41% 13,19% 13,48% 14,47% 13,93%
Operating Profit margin 10,43% 9,46% 10,00% 11,00% 10,63%
Net Profit Margin 6,78% 6,10% 6,35% 7,04% 6,80%

Table 2

Such expenses as raw materials for steel products, labor costs and other remain quite stable in the company. Nucor’s financial performance is highly dependent on new