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USX-U.S. Steel Loss for Quarter
Is Narrower Than Expected
Dow Jones Newswires
PITTSBURGH -- USX-U.S. Steel Group reported a narrower-than-expected loss for the second quarter as energy costs declined and prices stabilized during the period.
The country's largest steelmaker on Monday posted a net loss of $30 million, or 36 cents a share, compared with net income of $56 million, or 62 cents a share, a year earlier. Excluding $10 million in charges for certain environmental and legal contingencies, year-earlier earnings came to $66 million, or 72 cents a diluted share.
The latest result topped the loss of 55 cents a share forecast by analysts surveyed by Thomson Financial/First Call, as well as the company's own revised guidance earlier this month for a loss of 50 cents a share. USX-U.S. Steel previously had projected a second-quarter loss of 72 cents a share.
Revenue, meanwhile, rose 6.4% to $1.73 billion from $1.63 billion a year earlier.
Looking ahead, USX-U.S. Steel anticipates "somewhat higher" volume for the third quarter and flat to modestly higher realized prices and a continued decline in U.S. natural gas prices, which will provide "a significant positive impact" on the company's costs for the rest of 2001.
"While domestic commercial conditions remain difficult, demand and pricing appear to have bottomed out in the 2001 second quarter," Thomas J. Usher, chairman of parent USX Corp., said in a prepared statement. USX-U.S. Steel and oil company USX-Marathon Group are tracking stocks of USX, which doesn't trade publicly.
"Since that time, our order book has strengthened and prices have stabilized," Mr. Usher said. "A major positive on the cost side is that we are seeing a declining trend in natural gas prices and we have reduced our natural gas usage by approximately 25% this quarter compared to last year."
USX-U.S. Steel recorded a loss from reportable segments of $28 million, or $8 a ton, on shipments of 3.7 million tons during the quarter.
U.S. Steel Group's domestic steel segment recorded a loss from operations of $69 million, or $26 a ton, compared with earnings of $68 million, or $23 a ton, a year earlier.
Total domestic steel shipments in the second quarter were 2.6 million net tons, down 10% from 2.9 million tons in the year-earlier quarter. Average domestic steel prices were $429 a ton, down from $451 a ton a year earlier.
U.S. Steel Kosice, or USSK, the Slovak Republic steel operation USX-U.S. Steel acquired during the fourth quarter of 2000, reported second-quarter income of $41 million, or $38 a ton.
"USSK recorded another strong performance in the 2001 second quarter despite a difficult European commercial environment and recorded a significant increase in volume over the first quarter," Mr. Usher said.
Total USSK shipments were 1.1 million net tons, up 43% from 749,000 tons in the first quarter. Average USSK steel prices in the second quarter were $249 a ton, compared with $293 a ton in the previous quarter.
For USSK, USX-U.S. Steel expects third-quarter shipments to be slightly lower and realized prices to be flat compared with the second quarter.
"We believe conditions for our domestic steel operations have found the bottom of this steel cycle and that we have turned the corner," Mr. Usher said, adding that the company has seen volume improve over the last two quarters.
For the full year, the company expects total steel shipments of about 14 million to 14.5 million net tons, with domestic shipments of about 10.5 million to 11 million net tons and USSK shipments of about 3.5 million net tons.
Separately, USX-Marathon Group posted net income of $582 million, or $1.88 a basic share, up 59% from $367 million, or $1.18 a share, a year earlier. Revenue increased 5.4% to $9.18 billion from $8.71 billion.
In April, USX said it would reorganize its financial structure to separate its energy and steel businesses. Under the plan, USX-U.S. Steel will become a free-standing publicly traded company to be known as U.S. Steel Corp., while stockholders of USX-Marathon will become holders of Marathon Oil Co. USX expects to complete the transaction by the end of year.
The move brings USX back to its roots as the steel business United States Steel Corp., formed by business legends J.P. Morgan and Andrew Carnegie in 1901. |
