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U.S. Steel Posts Loss, Forecasts ‘Modest’ Improvement

U.S. Steel Corp., the country’s largest producer of the metal by volume, reported an eighth straight net loss and forecast a “modest improvement” in first-quarter results because it won’t immediately benefit from rising steel prices.

The net loss narrowed to $249 million, or $1.74 a share, from a loss of $267 million, or $1.86, a year earlier, the Pittsburgh-based company said today in a statement. The loss excluding a gain from an asset sale and losses from a tax provision and revaluing a loan was $1.22 a share, trailing the average estimate for a loss of $1.15 from 11 analysts surveyed by Bloomberg.

“The weakness for the first-quarter guidance is the problem,” Michelle Applebaum, managing partner at industry consultant Steel Market Intelligence in Chicago, said in an e- mail. “The company doesn’t get the benefit of higher prices until later in the year. Costs for coal and scrap are moving higher.”

U.S. Steel, led by Chief Executive Officer John Surma, said it won’t fully realize some benefits from late-2010 price gains until the second quarter of 2011 for steel products it sells on index-based price contracts. The company also is facing climbing costs for iron ore and coking coal, key steel ingredients.

U.S. Steel rose $2.86, or 5.3 percent, to $57.30 as of 4:15 p.m. in New York Stock Exchange composite trading. The shares gained 6 percent in 2010.

One-Time Items

U.S. Steel reported a gain of $11 million, or 7 cents, from asset sales. The company posted a foreign-currency loss of $33 million, or 23 cents a share, as it revalued a $1.6 billion loan to a European unit. The company also said it recorded a charge of $52 million, or 36 cents, related to an increase in the effective tax rate.

Sales rose 28 percent to $4.3 billion from $3.35 billion a year earlier. U.S. Steel’s total steel shipments increased 18 percent to 5.48 million tons from 4.65 million tons in the year- earlier period. That compares with 5.56 million tons in the third quarter. The company’s cost of goods sold climbed 23 percent to $4.12 billion.

Iron-ore prices more than doubled in the past two years, according to the Steel Index, on a surge in demand from India and China.

AK Steel Results

AK Steel Holding Corp., the third-largest U.S. steelmaker by 2009 sales, reported a fourth-quarter loss excluding one-time items of 49 cents a share, which compared with the average estimate for a 63-cent loss from 12 analysts surveyed by Bloomberg. The company forecast it would post a break-even operating profit in the first quarter and said it is on the “road to recovery” as most of its markets are strengthening on improved demand.

The West Chester, Ohio-based company advanced $1.11, or 7.7 percent, to $15.57 in New York, the most in six months, after forecasting higher shipments and selling prices in the current quarter.

Steel Dynamics Inc., the Fort Wayne, Indiana-based producer of the metal, yesterday reported a profit, excluding a one-time asset impairment charge, of 7 cents a share, trailing the 9-cent average estimate of 11 analysts surveyed by Bloomberg and within the range of 5 to 10 cents the company forecast in December. Steel Dynamics said first-quarter profit will be “substantially improved” from the previous period as sales increase amid the economic recovery.

Nucor Corp., the biggest U.S. steelmaker by sales, forecast a loss of 10 cents to 15 cents a share in the fourth quarter after steel spot prices fell in October and November, the Charlotte, North Carolina-based company said in December.

Nucor is scheduled to report its fourth-quarter earnings on Jan. 27.

To contact the reporter on this story: Natalie Doss in New York at ndoss@bloomberg.net.

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net.

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