Corporation (USS) is reporting a net loss in the second quarter of 2016 of
$46 million or 32 cents per diluted share, compared to a net loss in the
first quarter of $340 million or $2.32 and a net loss in the year-ago period
of $261 million or $1.79.
results improved significantly from the first quarter as our European
segment posted its best results since the third quarter of 2008 and our
flat-rolled segment returned to profitability,” USS President and CEO Mario
Longhi said in a statement released on Tuesday. “Our improving cost
structure continues to drive increases in our margins and the recent
increases in steel prices started to be reflected in our results.”
successful debt offering, continued reductions in working capital, and
increasing cash generation significantly improved financial flexibility and
our cash and liquidity position,” Longhi added. “While market conditions
have improved recently, we remain focused on lowering our break-even point
and working closely with our customers to improved our market position and
create value for all of our stakeholders.”
that the company’s belt-tightening and rationalization strategy dubbed the
Carnegie Way will show more fruit as market conditions continue to rebound.
“The significant improvements we have made to our earnings power through our
Carnegie Way transformation will become more apparent as market conditions
recover from the very low levels of 2015,” he said. “While we began to
realize some benefit from recent price increases in the second quarter, we
will see better average realized prices, primarily in our flat-rolled and
European segments, in the second half of the year.”
Still, Longhi said,
“the steel industry continues to face challenging conditions as a result of
global overcapacity and unfair trade practices. We remain focused on
improving our trade laws and their enforcement, and we are encouraged that
final affirmative determinations in the recent trade cases have been a
catalyst for increasing steel prices. Our Carnegie Way journey continues to
create improvements in our business model that will enable us to be
profitable across the business cycle.”
flat-rolled segment is reporting segment earnings of $6 million, compared to
a segment loss in the first quarter of $188 million and a segment loss in
the year-ago of $64 million.
USS is attributing
the improvement result to increased steel prices. “The increase in average
realized prices reflects the flow-through of higher index prices to our
monthly contracts and increased pricing on spot business,” the company said.
results also improved sequentially as the first-quarter results included a
$50-million unfavorable effect from planned liquidations of inventory,” USS
outage costs were higher in the second quarter due to planned and unplanned
outages at Gary Works early in the quarter,” the company noted.
Other 2Q Segment
* U.S. Steel Europe
(USSE): earnings of $55 million, compared to a loss of $14 million in the
first quarter and earnings of $20 million in the year-ago.
* Tubular: a loss
of $78 million, compared to a loss of $64 million in the first quarter and a
loss of $66 million in the year-ago.
* Other businesses:
earnings of $10 million, compared to earnings of $14 million in the first
quarter and $6 million in the year-ago.
More 2Q Numbers
* Average realized
steel price per ton of flat-rolled: $642 ($611 in 1Q, $695 in year-ago).
* Total USS and
USSE shipments: 3.88 million net tons (3.59 million in 1Q, 3.89 million in
capability: 65 percent (66 percent in 1Q, 58 percent in year-ago).
inter-segment shipments to tubular: none (42,000 net tons in 1Q, 96,000 in
* Raw flat-rolled
production: 2.73 million net tons (2.77 million in 1Q, 2.8 million in
capital expenditures: $28 million ($46 million in 1Q, $56 million in
* Net sales: $2.58
billion ($2.34 billion in 1Q, $2.9 billion in year-ago).