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
results included an unfavorable adjustment of $14 million or 8 cents per
share, associated with the impairment of intangible assets.
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.”
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.
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
USS attributed the
improved results to stronger spot and contract prices, to an improved
product mix, and to Carnegie Way initiatives.
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
* 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
capability: 64 percent (65 percent in 2Q, 66 percent in year-ago).
inter-segment ships to tubular: 2 net tons (none in 2Q, 137 net tons in
* Raw flat-rolled
production: 2.73 million net tons (2.73 million in 2Q, 3.2 million in
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).