May 12, 2010 / 6:26 PM / in 8 years

UPDATE 1-Russel Metals posts Q1 profit on better steel prices

* Q1 EPS C$0.28 vs yr-ago loss/shr C$0.92

* Q1 rev down 18 pct

# Says inventory levels drop

May 12 (Reuters) - Russel Metals Inc (RUS.TO) posted a quarterly profit helped by increasing steel prices and better volumes at its metal service centers.

The metals distribution company said excess inventory levels in the industry that led to price declines and margin pressures have dropped.

“We are optimistic based on the current price of steel and the improving environment,” Chief Executive Brian Hedges said in a statement.

For the first quarter, the company earned C$16.5 million ($16.16 million), or 28 Canadian cents a share, compared with the year-ago quarter’s net earnings of 10 Canadian cents a share, excluding inventory write-downs, it said.

Including inventory write-downs, the company had posted a loss of C$55 million, or 92 Canadian cents a share a year ago.

Revenue fell 18 percent to C$525.9 million, hurt by a 41 percent decline in the steel distributors segment.

Analysts on average were expecting earnings of 26 Canadian cents a share, before special items, on revenue of C$523.8 million, according to Thomson Reuters I/B/E/S.

Russel Metals posted a 14 percent rise in volumes at its service center operations.

Shares of the Toronto-based company were down 7 Canadian cents at C$19.77 Wednesday afternoon on the Toronto Stock Exchange. ($1=1.021 Canadian Dollar) (Reporting by Gowri Jayakumar in Bangalore; Editing by Don Sebastian)

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