U.S. Steel Corporation (USS) is reporting a profit in all three of its operating segments for the second quarter of 2010 but nevertheless posted a loss for the period.

According to a statement released today, USS posted a net loss for the second quarter of $25 million or 17 cents per diluted share, a “considerable improvement” over the net loss off $157 million or $1.10 per diluted share in the first quarter and $392 million or $2.92 per diluted share in the year-ago period.

“Operating results improved significantly from the first quarter of 2010,” USS Chair and CEO John Surma said. “Sequentially, the most notable improvement was in our flat-rolled segment, which benefited from increased average realized prices and healthy order rates in most of our markets. In Europe, we had our second consecutive profitable quarter, and our tubular segment income form operations more than doubled as compared to the first quarter of 2010.”

Net interest and other financial costs in the second quarter of 2010, however, included a foreign currency loss which decreased net income by $96 million or 62 cents per diluted share,” USS said.

The foreign currency loss primarily resulted from the impact of significant weakening of the Euro against the U.S. dollar during the second quarter on the accounting re-measurement of a $1.4 billion U.S. dollar-denominated intercompany loan to a European subsidiary, partially offset by gains on Euro-U.S. dollar derivatives activity.

That foreign currency loss compares to one in the first quarter which decreased net income by $56 million or 39 cents per diluted share and a foreign currency gain in the year-ago period which increased net income by $41 million or 31 cents per diluted share.

“We expect to report an overall operating profit for the third quarter as the U.S. and European economies continue to work their way through a gradual and uneven recovery process,” Surma said. “Operating results are expected to be below the second quarter largely due to a decrease in shipping and production volumes for our flat-rolled segment, reflecting slower order rates, primarily from spot market customers thus far in the quarter, which likely includes some normal seasonal variations and the impact of shorter lead times. However, reported carbon flat-rolled inventory levels on a months-of-supply basis at North American service centers remain below historical averages and end-user demand appears stable. Similar market conditions prevail for our European operations.”

Third-quarter results for flat-rolled are anticipated to be near break-even levels, USS said, due to lower trade and intersegment shipments and production volumes, and increased costs for raw materials and energy. Meanwhile, the favorable effect due to the absence of Lake Erie Works repair and maintenance costs is anticipated to be offset by increased costs related chiefly to panned maintenance work on several blast furnaces and repairs of the transportation system used to deliver raw materials to the blast furnaces at Gary Works.

“We expect average realized prices for the third quarter to be in line with the second quarter as the benefits of a higher value-added mix of shipments and increased prices for both index-based contracts and recently negotiated contracts offset decreases in spot-market prices,” USS said.

•Flat-rolled reported an income of $98 million compared to a loss of $80 million in the first quarter and a loss of $362 million in the year-ago period.

•U.S. Steel Europe (USSE) reported an income of $19 million compared to an income of $12 million in the first quarter and a loss of $53 million in the year-ago period.

•Tubular reported an income of $96 million compared to an income of $45 million in the first quarter and a loss of $88 million in the year-ago period.

•Other business reported an income of $28 million compared to an income of $10 million in the first quarter and a loss of $7 million in the year-ago period.

•Total income from operations was $198 million compared to a total loss of $57 million in the first quarter and a total loss of $465 million in the year-ago period.

•The average realized price per net ton for flat-rolled was $700, compared to $654 in the first quarter and $677 in the year-ago period.

•USS and USSE shipped a total of 5,880 net tons, compared to 5,404 in the first quarter and 2,942 in the year-ago period.

•USS reported net sales of $4.681 billion, compared to $3.896 billion in the first quarter and $2.127 billion in the year-ago period.

•On June 30, 2010, USS reported $947 million in cash and $2.5 billion of total liquidity, compared to $1.4 billion in cash and $2.9 billion of total liquidity on March 31, 2010.

Posted 7/27/2010