Chesterton Tribune



US Steel posts improved results in 2Q

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U.S. Steel 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.

“Our second-quarter 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.”

“Also, our 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.”


Longhi predicted 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.”

2Q Flat-rolled

The company’s 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.

“Second-quarter results also improved sequentially as the first-quarter results included a $50-million unfavorable effect from planned liquidations of inventory,” USS also said.

“Maintenance and 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 Results

* 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 year-ago).

* Flat-rolled capability: 65 percent (66 percent in 1Q, 58 percent in year-ago).

* Flat-rolled inter-segment shipments to tubular: none (42,000 net tons in 1Q, 96,000 in year-ago).

* Raw flat-rolled production: 2.73 million net tons (2.77 million in 1Q, 2.8 million in year-ago).

* Flat-rolled capital expenditures: $28 million ($46 million in 1Q, $56 million in year-ago).

* Net sales: $2.58 billion ($2.34 billion in 1Q, $2.9 billion in year-ago).



Posted 7/27/2016





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