Chesterton Tribune

 

 

USS posts strong 3Q, but downgrades annual expectations

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By KEVIN NEVERS

U.S. Steel Corporation (USS) is reporting its strongest quarterly result in two years but has still downgraded its projected annual results from a solid profit to a considerable loss.

After deadline on Tuesday, USS posted third-quarter net earnings of $51 million or 32 cents per diluted share, compared to a net loss of $46 million or 32 cents in the second quarter and a net loss of $173 million or $1.18 in the year-ago period.

The third-quarter results included an unfavorable adjustment of $14 million or 8 cents per share, associated with the impairment of intangible assets.

“Our third-quarter results improved significantly from the second quarter as each of our segments improved, resulting in our highest quarterly segment income since the fourth quarter of 2014,” USS President and CEO Mario Longhi said. “We faced some operational challenges that limited our ability to realize the full benefits of an improved pricing environment, but we continued to make progress in our Carnegie Way transformation efforts. With our very strong cash and liquidity position, we remain focused on the investments that we need to continue to make to revitalize our facilities and deliver value-enhancing solutions for our customers.”

Outlook

In July the company was projecting total net earnings in 2016 of approximately $50 million or 34 cents per share. On Tuesday it issued a new expectation: a total net loss in 2016 of $355 million or $2.26 per share-- “if spot prices, customer demand, import volumes, supply-chain inventories, rig counts, and energy prices remain at their current levels.”

“As we move through the rest of 2016, operational issues remain a headwind for us, as we continue to recover from unplanned outages in the third quarter, while also completing our planned maintenance outages,” Longhi said.

“We have identified the critical assets that require additional capital investment and increased maintenance spending in order to improve our reliability and quality and to lower costs,” Longhi added.

USS does expects total annual results for its flat-rolled segment to be improved over last year’s but those for tubular to be weaker.

3Q Flat-rolled

The company’s flat-rolled segment is reporting segment earnings of $114 million, compared to $6 million in the second quarter and a loss of $18 million in the year-ago.

USS attributed the improved results to stronger spot and contract prices, to an improved product mix, and to Carnegie Way initiatives.

But operational issues--“unplanned outages at several of our steelmaking and finishing facilities”--adversely impacted shipments by 125,000 tons, “as our streamlined plant operating configuration extends the time it stakes to recover volumes from unplanned outages,” the company said.

“A planned outage and lower operating rates at our mining operations also negatively impacted our results,” USS added.

Other 3Q Segment Results

* U.S. Steel Europe (USSE): earnings of $81 million, compared to $55 million in the second quarter and $18 million in the year-ago.

* Tubular: a loss of $75 million, compared to a loss of $78 million in the second quarter and a loss of $50 million in the year-ago.

* Other businesses: earnings of $18 million, compared to earnings of $10 million in the second quarter and earnings of $10 million in the year-ago.

More 3Q Numbers

* Average realized price per ton of flat-rolled: $718 ($642 in 2Q, $674 in year-ago).

* Total USS and USSE shipments: 3.74 million net tons (3.88 million in 2Q, 3.85 million in the year-ago).

* Flat-rolled capability: 64 percent (65 percent in 2Q, 66 percent in year-ago).

* Flat-rolled inter-segment ships to tubular: 2 net tons (none in 2Q, 137 net tons in year-ago).

* Raw flat-rolled production: 2.73 million net tons (2.73 million in 2Q, 3.2 million in year-ago).

* Flat-rolled capital expenditures: $23 million ($28 million in 2Q, $63 million year-ago).

* Net sales: $2.68 billion ($2.58 billion in 2Q, $2.8 billion in year-ago).

 

 

Posted 11/2/2016

 

 

 
 
 
 

 

 

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