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After tax charge of $1.8B impacts USSs 3Q results

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By KEVIN NEVERS

U.S. Steel Corporation (USS) is reporting a net loss in the third quarter of $1.702 billion or $12.38 per diluted share, compared to a net loss in the second quarter of $78 million or 54 cents and a net income in the year-ago period of $44 million or 28 cents.

A after-tax non-cash goodwill impairment charge of $1.8 billion or $12.24 per diluted share accounted for the bulk of the net loss, USS said in a statement released today.

Excluding that charge, the adjusted net income for the third quarter was $20 million or 14 cents per diluted share.

“Total reportable-segment and other-businesses operating results of $113 million reflect a meaningful improvement in our flat-rolled operating results partially offset by an outage in our European segment,” USS CEO Mario Longhi said.

4Q Outlook

“We expect total reportable-segment and other-businesses income from operations to decrease compared to the third quarter due primarily to planned maintenance outages in our flat-rolled segment,” Longhi said. “Results from our European segment are projected to improve compared to the third quarter and tubular results are expected to be comparable to the third quarter.”

The flat-rolled segment, meanwhile, is expected “to be near break even,” the company said. Both “repairs and maintenance are expected to increase by approximately $60 million as compared to the third quarter due primarily to a reline of the blast furnace at Gary Works and a planned blast furnace maintenance project at Fairfield Works.”

Although the company is anticipating higher average spot and market-based contract prices in the fourth quarter, average realized prices for flat-rolled will be comparable to the third quarter “due to a higher percentage of hot-rolled shipments in the fourth quarter.” Shipments should increase “slightly” quarter over quarter.

3Q Income from Operations

*Flat-rolled reported a income from operations of $82 million, compared to a loss in the second quarter of $51 million and an income in the year-ago of $29 million. The company attributed the improvement to an increase in average realized prices and lower repairs and maintenance costs, partially offset by reduced shipments. Average realized prices increased in the third quarter due to high spot market prices. Shipments decreased sharply due to a planned blast furnace outage at the Great Lakes Works and the Lake Erie Works labor dispute. That dispute was resolved in August and blast furnace production resumed at Lake Erie Works earlier this month.

*U.S. Steel Europe (USSE) report a loss from operations of $32 million, compared to an income in the second quarter of $10 million and an income in the year-ago of $27 million.

*Tubular reported an income from operations of $49 million, compared to an income in the second quarter of $43 million and an income in the year-ago of $13 million.

*Other businesses reported an income from operations of $14 million, compared to an income in the second quarter of $43 million and an income in the year-ago of $13 million.

More 3Q Numbers

*The average realized price per net ton of flat-rolled was $752, compared to $725 in the second quarter and $741 in the year-ago.

*USS and USSE shipped 4.748 million net tons, compared to 5.246 million in the second quarter and 5.340 million in the year-ago.

*Flat-rolled raw steel capability was 70 percent, compared to 70 percent in the second quarter and 70 percent in the year-ago.

*USS reported net sales of $4.131 billion, compared to $4.429 billion in the second quarter and $4.652 billion in the year-ago.

*Flat-rolled capital expenditures were $72 million, compared to $80 million in the second quarter and $117 million in the year-ago.

*As of Sept. 30, USS had $697 million in cash and $2.4 billion in total liquidity, compared to $767 million in cash and $2.5 million in total liquidity as of June 30.

 

 

Posted 10/29/2013