U.S. Steel Corp., the country’s largest steelmaker by volume, said it will take a writedown of about $1.8 billion on North American assets amid excess global production capacity and higher imports.
The non-cash goodwill impairment charge will be taken in the third quarter, Pittsburgh-based U.S. Steel said today in a statement. The writedown won’t have a tax benefit or affect liquidity and compliance with debt covenants, the company said.
U.S. Steel said its North American flat-rolled steel unit and its Texas operations carry almost all of its goodwill. The writedown at the flat-rolled business is largely attributable to the “protracted” economic recovery and surplus global capacity, the company said. The writedown in Texas was driven by a drop in prices for welded tubular steel following “high” import levels and plans for additional domestic capacity.
Steelmakers in the U.S. have struggled to be profitable amid low prices and competition from imports since the global financial crisis began in 2008. U.S. Steel has posted net losses for the past four years, according to data compiled by Bloomberg, and is expected to lose $226.6 million this year, according to the average of nine analysts’ estimates.