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To: maceng2 who wrote (1476)	10/22/2002 11:05:38 AM
From: maceng2	Read Replies (2) \| Respond to of 1643

Steel benefits from tariff-based price rises By Caroline Daniel in Chicago Published: October 21 2002 21:31 \| Last Updated: October 21 2002 21:31 news.ft.com US Steel on Monday reported its second consecutive profitable quarter - beating analysts' expectations amid strong demand from automotive companies and as US steel tariffs continued to buoy the price of steel. The US steel tariffs, of up to 30 per cent, introduced in March on some imports, had been intended to accelerate consolidation of struggling US Steel companies. However, as prices have risen, weaker steel companies have demanded higher sales tags. In June Arcelor, the world's biggest steelmaker, walked away from a deal with Bethlehem Steel, after disagreeing on valuation. Tom Usher, chairman and chief executive, has said that US Steel intended to lead any consolidation, but has not yet concluded any deals. Nevertheless, last week US Steel said it planned to sell its materials and transportation businesses for about $500m to a group formed by affiliates of Apollo Management. US Steel will retain a 20 per cent stake, and hopes to complete the deal in the first quarter of 2003. It estimated the deal could result in a pre-tax loss of up to $300m. Mr Usher indicated that the $500m it hoped to raise from the disposal of non-strategic assets could be used for acquisitions. "Our priority is to do something on the consolidation front. There are great opportunities out there and we are aggressively pursuing that, and making good progress." The company is also considering overseas assets, such as in Hungary. In the third quarter adjusted net income of $103m, or $1.00 a share, up from the $17m, or 18 cents, in the second quarter and an adjusted net loss of $17m, or 19 cents a share, a year ago. Revenues increased to $1.9bn from $1.8bn the previous quarter and $1.7bn a year ago. The shares rose 3 cents to $12.86 in early trading. US Steel said it was ahead of its plans to deliver domestic cost savings of $10 per ton per year. It had also benefited from high utilisation levels. "For the second consecutive quarter, our steel production facilities operated at high levels with domestic and USSK [overseas] operations at 93.7 per cent and 90.8 per cent of capability, respectively." Mr Usher said demand for sheet products from the automotive industry had remained healthy, but demand from some industrial markets for plate products had been mixed. US Steel warned it would recognise a $100m charge in the fourth quarter related to a pension settlement based on the higher than expected number of retirements and last year's voluntary early retirement plan.