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U.S. Steel Corp. posts third straight quarterly loss
PITTSBURGH - United States Steel Corp. lost money for a third straight quarter as the global economic downturn dragged down demand for the metal used in everything from cars to office furniture.
The loss highlights an industrywide slump that began when the economy faltered late last year. Key customers in construction, car making and industrial equipment scaled back buying and steel makers like U.S. Steel, based in Pittsburgh, responded by winding down production and laying off thousands of workers.
Although prices and production rose during the third quarter as steel distributors scrambled to fill orders after depleting their stockpiles, the market for the metal remained far weaker than it had been a year earlier, when U.S. Steel notched record profits.
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Still, output and shipments of steel rose significantly compared with the spring, the company said Tuesday. And it expects a narrower loss in the final months of the year as North American automakers order more steel for vehicles.
U.S. Steel's products include sheet steel used in big ticket consumer goods. Its tin is used in items such as food cans, while its tubular steel, or pipe, is used in oil and gas drilling.
CEO John Surma said the company remains cautious about its outlook as order rates have dropped in recent weeks, partly due to seasonal slowdowns at factories.
"Despite these concerns and uncertainties, we believe that the U.S. and global economies are in the early stages of a gradual recovery," he said.
He said the recovery has been aided by global stimulus policies and may be supported by continued improvement in credit markets and restocking of inventories.
U.S. Steel's flat-rolled, or sheet steel, business lost $370 million, down from a profit of $846 million a year earlier. Its tubular steel business also lost money - $21 million - compared with a profit of $420 million in last year's quarter. Its European operations also fell sharply, but turned a profit of $7 million, versus $173 million a year earlier.
While U.S. Steel expects somewhat better results in the fourth quarter, it also said it plans to idle two blast furnaces - one at its Gary Works in Indiana and one at its Granite City Works in Illinois - to adjust for weaker demand.
That was a disappointment, said industry analyst John Tumazos. Although U.S. Steel's improvement from the second quarter was "very good," he said, "the blueprint for profitability is not obvious unless the market strengthens more."
In April, U.S. Steel posted its first quarterly loss in more than five years. After reporting a second quarterly loss in July, the company said it expected all of its businesses to post operating losses for the July-September period. The largest U.S.-based steel maker said it lost $303 million, or $2.11 per share, for the three months ended Sept. 30. That compares with a profit of $919 million, or $7.79 per share, in year-earlier period.
U.S. Steel said its operating loss amounted to $412 million, down from an operating profit of $1.33 billion a year earlier. Revenue tumbled 61 percent to $2.82 billion.
Analysts expected a loss of $2.87 per share on revenue of $2.72 billion, according to a survey by Thomson Reuters. Wall Street estimates typically exclude one-time items.
