Question-and-Answer Session
Operator
(Operator Instructions) Our first question is from Arnold Ursaner – CJS Securities.
Arnold Ursaner – CJS Securities
My first question relates to obviously you had a fair amount of inventory hopefully going in to the quarter, you’ve had massive steel increases. Can you give us a sense for the volume of steel that you have, the tonnage of steel you have in inventory now so we can get a sense perhaps how much you may have benefited from inventory gains in the quarter on your steel?
Robert C. Warren, Jr.
That’s a good question. I’m going to give you a non quantitative answer. Ernie, I think we benefited actually pretty significantly about it. We purchased, the build up that you’ve seen in this last quarter has been predominately in North America as we bought ahead of known price increases of about 10%. So, I would say that our current steel inventory in North America is at about 10% below market if we had to replace it today. What that does is we are unable to pass through price increases as rapidly to our customers as our suppliers pass them on to us so that actually helps us prevent a dip coming. Then in Asia, I think we’ve benefitted over the past couple of quarters from a significant build up as well in China. What that has done is it has softened the dip, you’re seeing a dip but the reason I say its softened is because when you look at the price of Chinese sourced steel, which we’ve always known was inappropriately or poorly priced on a world market, year-over-year steel in China is up about 75% and over a two year period it’s up 82% per ton for the basic steel we buy. So, that buildup you saw the last two or three quarters has cushioned us somewhat. I wouldn’t say it’s cushioned us completely but its cushioned us somewhat. Then in Europe, our ability again to pass pricing through is not perfect. The buildup in Europe has been more in finished goods in our Chinese produced forks than it has been in actual raw material.
I don’t know if that helps you but I guess in about a two or three sentence answer I would say in North America what it’s down is prevent a more significant dip than we would have seen if we hadn’t been purchasing a head. Clearly, it’s prevented us from seeing a more precipitous drop in our Chinese production than we would have seen.
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