(Adds analyst quote; updates with closing stock price)
By Michael Erman
NEW YORK, April 24 (Reuters) - Nucor Corp. , the largest U.S. steel producer, said on Thursday first-quarter earnings fell slightly as the company faced higher costs for raw materials and energy as well as weaker demand from commercial construction and manufacturing.
Nucor, which raised its dividend 5 percent, also said second-quarter earnings would be well below analyst expectations.
Chief Executive Dan DiMicco said in a conference call that softer flat-rolled steel prices will be one of the biggest factors working against the company in the second quarter, offset by improving prices for steel bars and beams and possibly lower energy costs.
"While the flat-roll area is definitely a negative, there are other aspects of our business now that are actually beginning to turn around and beginning to have a positive impact on earnings," said DiMicco.
The company, based in Charlotte, North Carolina, said net income fell about 14 percent to $17.8 million, or 23 cents. Sales rose to $1.48 billion from $1.08 billion last year.
In February, Nucor had forecast earnings of 20 cents to 25 cents per share, far below the 44-cent average outlook of analysts polled by Thomson First Call. Analysts then lowered their estimates to a mean of 22 cents.
The company said it expects second-quarter earnings to be similar to first-quarter earnings, which would be far lower than the average analyst estimate of 35 cents per share and last year's earnings of 77 cents.
It also expects weak economic conditions and depressed levels of non-residential construction will hurt second-quarter results.
"There's nothing out there that's really positive or really negative," said Merrill Lynch analyst Daniel Roling, who has a "hold" rating on the stock. "There's a lot of uncertainty ... so the fact that second quarter is looking like first quarter isn't much of a surprise."
The poor environment for steel companies in the United States -- including a surge in health-care and pension costs -- has pushed more than 30 steelmakers into bankruptcy since 1997, leading to a wave of consolidation within the industry.
Most recently, United States Steel Corp. won a bidding war to take over the assets of bankrupt National Steel Corp. , and International Steel Group Inc. is set to acquire Bethlehem Steel Corp. .
International Steel and U.S. Steel have also signed labor deals with the steelworkers union to vastly lower labor costs.
HSBC analyst Peter Bures said the consolidation will create more intense competition for Nucor.
"Nucor has very low labor costs ... but from a cost-cutting perspective, it's going to be difficult for Nucor to cut any further," said Bures, who has a "reduce" rating on Nucor.
"They will remain profitable going forward, though not as profitable as they have in the past, because these mills now with the lower labor costs will be able to continue producing even as steel prices go down."
Shares of Nucor, which fell 7.6 percent during the quarter, closed down 93 cents, or more than 2 percent, at $40.36 on the New York Stock Exchange Thursday.