Chesterton Tribune                                                                                   Adv.

USS posts 3Q net loss of $51 million

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By KEVIN NEVERS

U.S. Steel Corporation (USS) is reporting a net loss for the third quarter of 2010 of $51 million or 35 cents per diluted share, compared to a net loss of $25 million or 17 cents per diluted share in the second quarter and a net loss of $303 million or $2.11 per diluted share in the year ago period.

“Results for the quarter were lower than the second quarter as all three of our segments had lower shipments and production as activity in most of our markets slowed,” USS Chair and CEO John Surma said in a statement released today. “Results were also affected by higher facility repair and maintenance costs, most notably for inspection and repairs of critical structures at our Flat-rolled facilities, lower Flat-rolled average realized prices, and higher raw material costs in our Flat-rolled and European operations. Our Tubular operations benefited from increased average realized prices and had improved income from operations for the fifth consecutive quarter.”

Items not allocated to segments in the third quarter consisted of a loss from the sale of the majority of the assets of Fintube Technologies, which decreased net income by $15 million or 11 cents per diluted share. No other items were not allocated to segment in the second quarter or in the year-ago period.

A foreign currency gain did, however, increase net income by $139 million or 96 cents per diluted share, compared to a foreign currency loss in the second quarter which decreased net income by $96 million or 62 cents per diluted share, and a foreign currency gain in the year-ago period which increased net income by $24 million or 16 cents per diluted share.

Outlook for Flat-rolled

“Our current order entry rates reflect the uncertain economic situation in North America and Europe, with spot customers reducing inventory levels in light of short lead times, while our contractual customers’ order rates are consistent with traditional downtime take late in the fourth quarter,” Surma said.

Fourth-quarter results for Flat-rolled are expected to be in line with the third quarter as reduced spending for facility repair and maintenance, including structural inspections and repairs, and the absence of operating inefficiencies at Gary Works due to the structural failure will be offset by decreased average realized prices and lower shipments and production volumes, the statement said.

The company also expects to continue to incur costs for structural repairs but anticipates that those costs will be lower than in the third quarter by approximately $40 million, as much of the significant repair work was completed in the third quarter.

The expected decrease in average realized prices is a result of lower spot market and index-based contract prices.

The company is also projecting a decrease in shipments as a result of normal seasonal patterns and will adjust blast-furnace configuration to coincide with order rates. “We expect to operate at an overall lower raw steel capability utilization rate than in the third quarter as our Hamilton Works bast furnace was idled in October in response to reduced order rates in Canada and the United States and we have completed some scheduled maintenance work in October. While the labor agreement covering our Hamilton Works operations has expired and we have not reached a successor agreement, we continue to operate the coke battery, cold mill, and one galvanizing line at Hamilton Works.”

3Q Income from Operations

by Reportable Segment

•Flat-rolled reported a loss of $174 million, compared to an income of $98 million in the second quarter and a loss of $370 million in the year-ago period.

•U.S. Steel Europe (USSE) reported a loss of $25 million, compared to an income of $19 million in the second quarter and an income of $7 million in the year-ago period.

•Tubular reported an income of $112 million, compared to an income of $96 million in the second quarter and a loss of $21 million in the year-ago period.

•Other business reported an income of $7 million, compared to an income of $28 million in the second quarter and an income of $5 million in the year-ago period.

•Total loss from operations was $138 million, compared to a total income from operations of $198 million in the second quarter and a total loss from operations of $412 million in the year-ago period.

More 3Q Numbers

•The average realized price per net ton for Flat-rolled was $688, compared to $700 in the second quarter and $605 in the year-ago period.

•USS and USSE shipped a total of 5,557 net tons, compared to 5,880 in the second quarter and 4,158 in the year-ago period.

•USS reported net sales of $4.497 billion, compared to $4.681 billion in the second quarter and $2.817 billion in the year-ago period.

•On Sept. 30, 2010, USS reported $643 million in cash and $2.2 billion in total liquidity, compared to $947 million in cash and $2.5 billion in total liquidity on June 30, 2010.

 

Posted 10/26/2010

 

 

 

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