Chesterton Tribune

US Steel reports strong 2Q net income of $222 million

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By KEVIN NEVERS

U.S. Steel Corporation (USS) is reporting a net income in the second quarter of $222 million or $1.33 per diluted share, compared to a net loss in the first quarter of $86 million or 60 cents and a net loss in the year-ago period of $25 million or 17 cents.

“Our operating results improved significantly from the first quarter, driven primarily by higher average realized prices and stable raw material costs in our Flat-rolled segment,” USS Chair and CEO John Surma said in a statement released after deadline on Monday. “U.S. Steel Europe segment results were slightly lower, reflecting significantly lower shipments and capacity utilization and increased raw materials costs, partially offset by higher average realized prices. Tubular segment results were in line with the first quarter of 2011.”

Post-retirement benefit expenses increased year over year—from $57 million in the second quarter of 2010 to $96 million in the second quarter of 2011—due to a lower market-related value of assets “caused by the recognition of remaining deferred 2008 investment losses.”

The second quarter 2011 results included a foreign currency gain which increased net income by $37 million or 21 cents per diluted share, compared to a gain in the first quarter which increased net income by $81 million or 56 cents and a foreign currency loss in the year-ago period which decreased net income by $96 million or 62 cents.

Outlook

“The United States and Europe continue to face an uneven economic recovery,” Surma said. “The continuing fiscal uncertainty in the U.S. and Europe is not helping the situation. Reflecting the effects of a slowing economy, we expect to report an overall lower operating profit in the third quarter; however, we expect significant improvement in our Tubular operating income compared to the second quarter 2011.”

“Flat-rolled results in the third quarter are expected to decline compared to the second quarter 2011, reflecting lower average realized prices on our monthly index-based contracts and our spot market business as increasing capacity and imports have placed pressure on current transaction prices,” USS said. “Raw materials costs are expected to remain relatively stable, reflecting our iron ore, coke, and coal positions. Shipments and raw steel utilization are expected in be in line with the second quarter.”

2Q Income from Operations

by Reportable Segment

•Flat-rolled reported an income from operations of $374 million, compared to a loss of $36 million in the first quarter and an income of $111 million in the year-ago period. Note: “Amounts prior to the second quarter 2011 have been restated to reflect a change in our segment allocation methodology for post-retirement benefit expenses,” USS said. “Under the revised allocation methodology, only service cost and amortization of prior service costs for active employees are allocated to segments. Interest cost, expected return on plan assets, and actuarial gains and losses, a portion of which was historically allocated to segments, are no longer allocated to segments.”

•U.S. Steel Europe (USSE) reported a loss from operations of $18 million, compared to a loss of $5 million in the first quarter and an income from operations of $19 million in the year-ago period.

•Tubular reported an income from operations of $31 million, compared to an income of $32 million in the first quarter and an income of $97 million in the year-ago period.

•Other business reported an income from operations of $9 million, compared to an income of $13 million in the first quarter and an income of $28 million in the year-ago period.

•USS reported a total income from operations of $300 million, compared to a loss from operations of $91 million in the first quarter and a loss of $57 million in the year-ago period.

More Numbers 2Q

•The average realized price per net ton for flat-rolled was $803, compared to $720 in the first quarter and $700 in the year-ago period.

•Flat-rolled steel production was 4.984 million net tons, compared to 4.598 million in the first quarter and 4.979 in the year-ago period.

•Flat-rolled raw steel capability utilization was 81 percent, compared to 77 percent in the first quarter and 82 percent in the year-ago period.

•USS and USSE shipped a total of 5.498 million net tons, compared to 5.824 million in the first quarter and 5.88 million in the year-ago period.

•USS reported net sales of $5.12 billion, compared to $4.864 billion in the first quarter and $4.681 in the year-ago period.

•Flat-rolled capital expenditures were $142 million, compared to $125 million in the first quarter and $74 million in the year-ago period.

•On June 30, USS had $393 million in cash and $1.8 billion in total liquidity, compared to $421 million in cash and $2.0 billion in total liquidity on March 31.

 

 

 

 

Posted 7/26/2011