DENVER United States Steel Corp. continues to see improved demand for steel used in products such as appliances, automobiles and heavy industrial equipment.That improvement is slowly working its way to the steelmaker’s bottom line.The Pittsburgh manufacturer reported a narrower loss for the first three months of the year and its best result since it reported a profit in the last quarter of 2008. The company predicted more improvement in the current quarter as shipments increase and prices rise, although it cautioned that raw materials also continue to rise.
U.S. Steel is the latest steel maker to note a gradual improvement in business after struggling through a difficult 2009 when recession-battered customers cut back on orders.”Our operating results have been making a slow and steady recovery since hitting a low point in the first quarter of 2009 until this quarter, when the benefits of improved utilization rates and selling prices began to be realized in a more significant way,” John P. Surma, chairman and CEO, told analysts during a conference call.
Surma said all of the company’s operating segments should be profitable in the second quarter, a little sooner than Wall Street had been expecting.”Gradually improving business conditions should be reflected in our operating results,” he said in a statement.The results are an indication of both an improving global economy and a slow turnaround in the U.S., Argus Research analyst Bill Selesky said.He noted U.S. Steel is increasing production at some facilities. “They would not do that unless they thought they had a window here where demand was going up,” he said.
U.S. Steel reported a loss of $157 million, or $1.10 per share, for the quarter. A year ago, it lost $439 million, or $3.78 per share.Revenue rose 42 percent to $3.9 billion from $2.75 billion.Prices for flat-rolled steel, used in everything from automobiles to appliances, fell to $654 a net ton from $715 a net ton a year ago. But they improved from the fourth quarter.Prices also fell year over year in U.S. Steel’s European operations and in the tubular business, which produces pipe products.
Yet companywide, overall shipments jumped 67.5 percent from a year ago.Analysts polled by Thomson Reuters, on average, had predicted a loss of $1.43 a share on revenue of $3.75 billion. Such estimates typically exclude one-time items.U.S. Steel said cost-cutting measures that it has taken in the past year have made operations more efficient.
In the months ahead, the company expects to see higher costs for coal used in the steelmaking process and iron ore for its European operations. Although U.S. Steel has its own iron ore source for North American operations, it expects to pay more for the raw material in Europe.Manufacturers that buy iron ore in the marketplace are expected to pay more because of a new international system that allows prices to be set quarterly instead of annually.
Shares fell $3.44, or 5.7 percent, to close at $56.63.U.S. stocks fell overall after Standard & Poor’s downgraded the debt of Greece and Portugal. The move intensified investors’ fears that Europe’s debt problems are spreading.(AP)
Santosamaru 