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U.S. Steel Posts Loss, Forecasts Another

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Printed Date: Oct 31 2024 at 7:06pm


Topic: U.S. Steel Posts Loss, Forecasts Another
Posted By: randy
Subject: U.S. Steel Posts Loss, Forecasts Another
Date Posted: Jan 27 2010 at 11:20am
By Joe Napsha, The Pittsburgh Tribune-Review

Jan. 27--U.S. Steel Corp. lost $1.4 billion in 2009, and its title as the nation's largest steelmaker by sales.

The Pittsburgh-based company on Tuesday reported a loss of $267 million in the fourth quarter, or $1.86 a share, bring it's total loss for the year to $10.42 a share.

U.S. Steel's annual losses have not topped $1 billion since 1992, when it lost $1.6 billion.

Sales in the October-December period decreased to $3.35 billion from $4.5 billion a year ago. Sales for the year reflected the steep drop in the global demand for steel, plunging more than 50 percent to $11.0 billion, from $23.75 billion in 2008, the company said.

In total sales, it was bypassed by a domestic competitor, Charlotte, N.C.-based Nucor Inc., which had annual sales of $11.19 billion. Nucor yesterday reported a $58.9 million profit for the fourth quarter, but a $293.6 millon loss for the year. In 2008, Nucor had annual sales of $23.6 billion.

U.S. Steel edged Nucor in steel shipments for 2009, 14.98 million tons compared to 14.03 million.

U.S. Steel's stock plunged to $49.61 a share, down $6.62, or 11.8 percent.

CEO John Surma said he expects losses will continue in the first quarter of this year because of the slow economic recovery.

The overall first quarter 2010 operating loss is likely to be in line with the fourth quarter, "as gradually improving business conditions are not fully reflected," Surma said.

Because of the downturn, U.S. Steel scaled back capital expenditures last year to about $470 million from an anticipated $740 million. In April, it postponed indefinitely its proposed $1.1 billion project to install two new coke batteries at its Clairton plant, and upgrade others to meet environmental standards.

"We may or may not decide to get back at it, in the same form," Surma said about the Clairton project.

Because of the changes in the global steel market since the project was announced in December 2007, Surma later explained that "we are re-evaluating everything to determine what direction to go."

Steel analyst Charles Bradford of Affiliated Research Group LLC of New York, said he believes U.S. Steel's costs estimates for the Clairton project may be too high. He said AK Steel Inc. is building a $340 million coke project in Middletown, Ohio, that will have half the capacity of the Clairton plant at one-third the cost.

Surma sees some good news on the horizon because the auto and service center markets are improving in North America and Europe, along with the restocking of manufacturing supplies and the low levels of tubular imports. Steel plant utilization has risen to about 65 percent, Surma said, from 2009 levels that were around 50 percent.

Bradford said U.S. Steel will be facing additional competition from ThyssenKrupp Steel in Alabama, which will produce a high-quality product, he added.

"It'd be a big task to do it (turn a profit) in one quarter," Bradford said.



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Replies:
Posted By: lrisner
Date Posted: Jan 27 2010 at 1:54pm
"AK Steel Inc. is building a $340 million coke project in Middletown, Ohio, that will have half the capacity of the Clairton plant at one-third the cost."


I will believe it when I see it! The Industry is still suffering, the current upswing has a lot to do with "Cash for Clunkers" and when the inventory is replaced, I see no reason for demand to stay up.




Posted By: Bill
Date Posted: Jan 27 2010 at 1:56pm
The coke plant project will not happen.  Too many delays, too much fighting with the EPA.  I predict SunCoke will pull out of project by end of the year.



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