Why 20.5% more sales brought far more profit from the same mills

Commercial Metals, a US maker of steel and metal products, reported revenue of USD 9.4bn for FY2026, 20.5% more than the USD 7.8bn of FY2025. Revenue rose by USD 1.6bn over the year. Net profit rose to USD 656m from USD 84.7m, a gain of USD 571m. The net margin widened to 7.0% from 1.1%, an increase of 5.9 pp. Each dollar of sales left the company with noticeably more profit than a year before. Profit grew far faster than sales.

In a business like this one, a fixed base of mills and equipment means that extra revenue falls to profit at a higher rate once volumes and prices improve. That works in reverse too. The balance sheet moved the other way: total assets reached USD 10.3bn from USD 7.2bn, and the equity ratio, the share of assets funded by owners, fell to 45.8% from 58.5%, although equity itself rose to USD 4.7bn. The accounts do not show what the extra assets were bought with. I would watch that line next. Profit recovered sharply, and the balance sheet got heavier.