Chesterton Tribune



Imports and low prices continue to hit US Steel bottom line in 2nd quarter

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U.S. Steel Corporation (USS) is reporting a net loss in the second quarter of 2015 of $261 million or $1.79 per diluted share, compared to a net loss of $75 million or 52 cents and a net loss of $18 million or 12 cents in the year-ago period.

“We’ve taken aggressive and decisive actions to address the extremely challenging conditions we continue to face in North America,” USS President and CEO Mario Longhi said in a statement released on July 28. “Our Carnegie Way efforts, combined with short-term cost improvements, have helped to partially offset the depressed volumes and low prices in both the tubular and flat-rolled markets as well as the negative impact of tremendously high levels of imports. U.S. trade laws have been strengthened by the signing of the Trade Adjustment Assistance bill, which will improve the means by which domestic companies may seek relief from unfairly traded imports. We are also maintaining our customer focus and our flexibility to respond as market conditions change.”


“We currently expect commercial conditions to improve in the second half of 2015 from the conditions we experienced in the first half, as supply chain inventories continue to re-balance, primarily in our flat-rolled markets,” the company said. “Based on increasing benefits from our Carnegie Way transformation and our aggressive efforts to reduce operating costs to align them with our utilization levels, we currently expect to be within our full-year adjusted EBIT (earnings before interest and taxes) of $115 million to $315 million or full-year adjusted earnings before interest, income taxes, depreciation, and amortization (EBITDA) of $700 million to $900 million, guidance range for 2015.”

“While we continue to find additional short-term cost reductions and generate additional Carnegie Way benefits, if the current pace of commercial improvement in our markets does not increase, we would expect to be near the low end of the range,” the company noted. “Consistent with our Carnegie Way transformation process, we are focused on converting as much of the short-term cost reductions as possible into permanent improvements in our cost structure.”

2Q Segment Income

Before Interest and Taxes (EBIT)

* Flat-rolled: a loss of $64 million (a loss of $67 million in 1Q; an income of $30 million in year-ago).

* U.S. Steel Europe (USSE): an income of $20 million (an income of $37 million in 1Q; an income of $38 million in year-ago).

* Tubular: a loss of $66 million (an income of $1 million in 1Q; an income of $47 million in year-ago).

* Other businesses: an income of $6 million (an income of $8 million in 1Q; an income of $17 million in year-ago).

* Total segment loss--including $104 million in post-retirement benefit expense and a $255-million write-down of retained interest in USSC--of $392 million (total segment loss of $187 in 1Q and a total segment income of $35 million in year-ago.

Analysis of Flat-Rolled

“Second-quarter results for our flat-rolled segment were comparable to the first quarter despite the adverse impact of significant and increasing volumes of unfairly traded sheet imports in addition to elevated import activity caused by the continued strength of the U.S. dollar, which have served to drastically depress both spot and contract prices in the second quarter,” the company said.

“The earnings power of Carnegie Way efforts, combined with our aggressive actions to reduce operating costs in alignment with our low utilization levels, enabled us to offset the effect of lower average realized prices, which declined by more than $70 per ton in the second quarter.”

More 2Q Numbers

* The average realized price per net ton of flat-rolled at U.S. facilities: $695 ($768 in 1Q; $788 in year-ago).

* USS and USSE shipped 3.8 million net tons (4.1 million in 1Q; 5.0 million in year-ago).

* Flat-rolled steel capability for U.S. facilities: 58 percent (60 percent in 1Q; 73 percent in year-ago).

* Net sales were $2.9 billion ($3.2 billion in 1Q; $4.4 billion in year-ago).

* Flat-rolled capital expenditures were $56 million ($132 million in 1Q; $47 million in year-ago).

* Total cash of $1.2 billion and total liquidity of $2.7 billion as of June 30 ($1.4 billion and $3.1 billion respectively on Dec. 31, 2014).



Posted 8/4/2015




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