Russel Metals Inc. announced second quarter 2012 earnings of $23 million on revenues of $719 million compared to earnings of $31 million in the comparative second quarter of 2011. Earnings in the second quarter of 2012 reflected the accelerated write-off of deferred costs and hedging costs relating to the early redemption of the U.S. Senior Notes. Net earnings for the six months ended 30 June 2012 were $56 million compared to earnings of $64 million in the comparative six months ended June 30, 2011.
Revenues in Russel’s metals service center segment increased 11% to $432 million in the second quarter of 2012 compared to the 2011 second quarter on stronger demand levels. Our gross margins, however, were 20.4% compared to 23.7% in the 2011 second quarter as inventory holding gains experienced last year were not repeated. The 2012 second quarter also included operating earnings arising from the acquisitions of Siemens Laserworks and Alberta Industrial Metals during the quarter, both of which were immediately accretive to earnings.
Revenues in the energy tubular products segment for the second quarter of 2012 increased 32% to $192 million compared to the 2011 second quarter as a result of large line pipe orders in our U.S. operations and strong demand in our operations servicing the Alberta oil sands. These large orders have lower gross margin percentages and consequently our margins in this segment were down to 13.9% in the 2012 compared to 16.2% in the 2011 second quarter. Strong demand resulted in operating profits in the 2012 second quarter consistent with the 2011 second quarter despite the decline in margins.
Revenues in our steel distribution segment increased 11% in the 2012 second quarter to $92 million compared to the 2011 second quarter. Gross margins in this segment were down to 13.9% compared to the 18.8% experienced in the 2011 second quarter. Currently, the steel market is experiencing tighter margins due to softening domestic prices in an extremely volatile world economy.
Brian R. Hedges, President and CEO, commented, "One of our main strategies has been to protect and grow our strongest asset, the Canadian service center franchise. During the quarter, we completed the acquisitions of Siemens Laserworks and Alberta Industrial Metals. Both of these operations, which are located in Western Canada, are leaders in the markets that they serve and the integration of these two acquisitions is progressing well. During the balance of 2012, we will strengthen our Canadian service center franchise by adding stretcher levellers to our existing cut-to-length equipment in Ontario and Manitoba to further enhance our processing capabilities. In addition in our steel distributors segment, we will be upgrading our cut-to-length line in the Port of Houston at our Arrow Steel Processors facility."
Russel Metals, headquartered in Mississauga, Ontario, is one of the largest metals distribution companies in North America. It carries on business in three metals distribution segments: metals service centers, energy tubular products and steel distributors, under various names including Russel Metals, A.J. Forsyth, Acier Leroux, Acier Loubier, Acier Richler, Alberta Industrial Metals, Arrow Steel Processors, B&T Steel, Baldwin International, Comco Pipe and Supply, Fedmet Tubulars, JMS Russel Metals, Leroux Steel, McCabe Steel, Mégantic Métal, Métaux Russel, Métaux Russel Produits Spécialisés, Milspec, Norton Metals, Pioneer Pipe, Russel Metals Specialty Products, Russel Metals Williams Bahcall, Siemens Laserworks, Spartan Energy Tubulars, Sunbelt Group, Triumph Tubular & Supply, Wirth Steel and York-Ennis.