U.S. Steel Corporation (USS) is reporting a profit in all three of its
operating segments for the second quarter of 2010 but nevertheless posted a
loss for the period.
According to a statement released today, USS posted a net loss for the
second quarter of $25 million or 17 cents per diluted share, a “considerable
improvement” over the net loss off $157 million or $1.10 per diluted share
in the first quarter and $392 million or $2.92 per diluted share in the
“Operating results improved significantly from the first quarter of 2010,”
USS Chair and CEO John Surma said. “Sequentially, the most notable
improvement was in our flat-rolled segment, which benefited from increased
average realized prices and healthy order rates in most of our markets. In
Europe, we had our second consecutive profitable quarter, and our tubular
segment income form operations more than doubled as compared to the first
quarter of 2010.”
Net interest and other financial costs in the second quarter of 2010,
however, included a foreign currency loss which decreased net income by $96
million or 62 cents per diluted share,” USS said.
The foreign currency loss primarily resulted from the impact of significant
weakening of the Euro against the U.S. dollar during the second quarter on
the accounting re-measurement of a $1.4 billion U.S. dollar-denominated
intercompany loan to a European subsidiary, partially offset by gains on
Euro-U.S. dollar derivatives activity.
That foreign currency loss compares to one in the first quarter which
decreased net income by $56 million or 39 cents per diluted share and a
foreign currency gain in the year-ago period which increased net income by
$41 million or 31 cents per diluted share.
“We expect to report an overall operating profit for the third quarter as
the U.S. and European economies continue to work their way through a gradual
and uneven recovery process,” Surma said. “Operating results are expected to
be below the second quarter largely due to a decrease in shipping and
production volumes for our flat-rolled segment, reflecting slower order
rates, primarily from spot market customers thus far in the quarter, which
likely includes some normal seasonal variations and the impact of shorter
lead times. However, reported carbon flat-rolled inventory levels on a
months-of-supply basis at North American service centers remain below
historical averages and end-user demand appears stable. Similar market
conditions prevail for our European operations.”
Third-quarter results for flat-rolled are anticipated to be near break-even
levels, USS said, due to lower trade and intersegment shipments and
production volumes, and increased costs for raw materials and energy.
Meanwhile, the favorable effect due to the absence of Lake Erie Works repair
and maintenance costs is anticipated to be offset by increased costs related
chiefly to panned maintenance work on several blast furnaces and repairs of
the transportation system used to deliver raw materials to the blast
furnaces at Gary Works.
“We expect average realized prices for the third quarter to be in line with
the second quarter as the benefits of a higher value-added mix of shipments
and increased prices for both index-based contracts and recently negotiated
contracts offset decreases in spot-market prices,” USS said.
2Q Income from
Operations by Reportable Segment
•Flat-rolled reported an income of $98 million compared to a loss of $80
million in the first quarter and a loss of $362 million in the year-ago
•U.S. Steel Europe (USSE) reported an income of $19 million compared to an
income of $12 million in the first quarter and a loss of $53 million in the
•Tubular reported an income of $96 million compared to an income of $45
million in the first quarter and a loss of $88 million in the year-ago
•Other business reported an income of $28 million compared to an income of
$10 million in the first quarter and a loss of $7 million in the year-ago
•Total income from operations was $198 million compared to a total loss of
$57 million in the first quarter and a total loss of $465 million in the
More 2Q Numbers
•The average realized price per net ton for flat-rolled was $700, compared
to $654 in the first quarter and $677 in the year-ago period.
•USS and USSE shipped a total of 5,880 net tons, compared to 5,404 in the
first quarter and 2,942 in the year-ago period.
•USS reported net sales of $4.681 billion, compared to $3.896 billion in the
first quarter and $2.127 billion in the year-ago period.
•On June 30, 2010, USS reported $947 million in cash and $2.5 billion of
total liquidity, compared to $1.4 billion in cash and $2.9 billion of total
liquidity on March 31, 2010.