U.S. Steel Corporation (USS) is reporting a net loss last year of more than
According to a statement released today, USS posted a net loss of $1.401
billion or $10.42 per diluted share in 2009, compared to a net income in
2008 of $2.112 billion or $17.96 per share.
USS also posted a net loss of $267 million of $1.86 per diluted share in the
fourth quarter of 2009—its fourth consecutive quarterly loss—compared to a
net loss of $303 million or $2.11 per share in the third quarter and a net
income of $290 million or $2.50 per share in the year-ago period.
“We reported a modest improvement in fourth quarter results as compared to
the third quarter mainly due to higher average realized prices, increased
shipments, and higher utilization rates for our flat-rolled operations,
primarily driven by North American automotive and service center markets,
and the return to profitability of our tubular operations,” USS Chair and
CEO John Surma said.
Items not allocated to segments in the fourth quarter of 2009 consisted of a
pre-tax charge of $49 million related to the accrual of estimated
environmental remediation costs at a former production site; this item
reduced net income by $31 million or 21 cents per diluted share, the company
said. A foreign currency loss also decreased net income in the fourth
quarter of 2009 by $11 million of 7 cents per share, the company added.
“We expect to report an overall first quarter 2010 operating loss in line
with the fourth quarter 2009 as gradually improving business conditions are
not yet fully reflected in our operating results,” Surma said. “We continue
to experience improved order rates from several of our end markets.
Automotive, service center, converter, and appliance customer order rates in
North America and Europe are at or near their highest levels in the last 12
months, while in other markets, such as construction in North America,
demand remains soft, but due to low levels of inventory and the anticipated
seasonal increases in activity at the end of the first quarter, our
construction order book remains stable.”
“A gradually strengthening economy should result in improvements in real
demand, while apparent demand will likely be positively influenced by the
restocking of the manufacturing supply chain, which we believe is underway,”
Surma added. “Relatively low levels of flat-rolled products, if continued,
are also expected to support improved order rates. Our tubular operations
are also continuing to experience favorable demand trends, most notably in
alloy product at our welded operations in East Texas. At the same time, spot
market prices are increasing across all of our segments in response to
increased order rates and global raw material cost pressures.”
“We continue to believe that the U.S. and global economies are in the early
stages of a gradual recovery,” Surma concluded. “While we are becoming more
optimistic, primarily due to improvements we are starting to see in the
manufacturing sector, we remain cautious in our outlook for end-user
•Flat-rolled results for the first quarter of 2010 are expected to be
comparable to those of the fourth quarter “as the benefits of increases in
average realized prices and shipments are reduced facility repair and
maintenance costs are expected to be offset by the absence of approximately
$55 million of favorable effects from LIFO inventory liquidations and
adjustments to employee layoff benefits,” the company said.
•Average realized prices are expected to increase from the fourth quarter
“as we expect to begin realizing the impact of increased spot market prices
later in the first quarter.”
•“In response to increased order rates,” the company said, USS is currently
making steel at six of its seven North American steelmaking locations. The
exception is Lake Erie Works, which represents around 10 percent of the
company’s annual flat-rolled raw steel capability. “Our Lake Erie Works is
not operating because our labor agreement has expired and we have not yet
reached a successor agreement,” the company said.
•Maintenance work on the company’s largest blast furnace, No. 14 at Gary
Works, should be complete late in the first quarter, at which point all
North American blast furnaces with the exception of the one at the Lake Erie
Works, will be operational.
•Overall, raw steel capability utilization rates are expected to increase
from the fourth quarter.
•The company has re-started its Keetac iron ore operations.
4Q Income from
•Flat-rolled reported a loss from operations of $284 million, compared to a
loss of $370 million in the third quarter and a loss of $21 million in the
•U.S. Steel Europe (USSE) reported a loss of $3 million, compared to an
income of $7 million in the third quarter and a loss of $141 million in the
•Tubular reported an income of $39 million, compared to a loss of $21
million in the third quarter and an income of $559 million in the year-ago
•Other businesses reported an income of $3 million, compared to an income of
$5 million in the third quarter and an income of $21 million in the year-ago
•Total segment losses from operations were $245 million, compared to $379
million in the third quarter and an income of $418 million in the year-ago
•Total loss from operations was $329 million, compared to $412 million in
the third quarter and a total income from operations of $522 in the year-ago
•The average realized price per net ton for flat-rolled was $633 in the
fourth quarter ($605 in the third quarter, $805 in the year-ago period) and
$651 for the year ($780 in 2008.)
•USS and USSE shipped a total of 4,654 net tons in the fourth quarter (4,158
in the third quarter, 4,198 in the year-ago period) and a total of 14,981
net tons for the year (24,448 in 2008).
•USS reported net sales of $3.354 billion in the fourth quarter ($2.817 in
the third quarter, $4.502 in the year-ago period) and $11.048 billion for
2009 ($23.754 for 2008).
•Capital expenditures in 2009 totaled $472 million and consisted of largely
non-discretionary environmental and other infrastructure projects.
“Only limited progress was made on certain projects of long-term strategic
importance, as we substantially reduced our planned capital spending from
$740 million to conserve liquidity,” the company said. “This compares to
capital expenditures of $735 million for 2008 and $692 million for 2007.”