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US Steel narrows loss in 2nd quarter

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By KEVIN NEVERS

U.S. Steel Corporation (USS) is reporting a net loss in the second quarter of 2014 of $18 million or 12 cents per diluted share, compared to a net income in the first quarter of $52 million or 34 cents and a net loss in the year-ago period of $78 million or 54 cents.

“The Carnegie Way journey continues to drive improvements as we reported operating income for each of our reportable segments and Other Businesses despite significant operating inefficiencies and logistical issues in our Flat-rolled segment,” USS President and CEO Mario Longhi said.

The Carnegie Way, as introduced to investors in the 2013 annual report, is a “disciplined approach” to “earn the right to grow and drive and sustain profitable growth.” As part of the Carnegie Way, USS announced a reduction in employment numbers at all company locations in the world, though declined to say whether those reductions are being achieved through attrition, layoffs, or early buyouts.

The company did say that, in the second quarter, results for the Flat-rolled segment “decreased significantly from the first quarter,” and that the “impacts of the extraordinary weather conditions and operational issues that begin in the first quarter resulted in continuing operating inefficiencies; higher repairs and maintenance costs; and logistical issues that temporarily limited our production capabilities during the second quarter.”

“Market conditions in North America did improve versus the first quarter, resulting in higher average realized prices,” USS also said. “The benefit generated by our Carnegie Way efforts partially offset the impact of these events and allowed us to report positive results. As we exited the second quarter, we returned to normal operations.”

Outlook

“We expect operating income for our reportable segments and Other Businesses to increase significantly over the second quarter, as we return to normal operating levels,” Longhi said. “We continue to earn the right to grow as the Carnegie Way transformation allows us to better meet our customers’ needs and improves our earnings power.”

2Q Income from Operations

* Flat-rolled reported an income from operations of $30 million, compared to $85 million in the first quarter and a loss from operations of $51 million in the year-ago.

* U.S. Steel Europe (USSE) reported an income from operations of $38 million, compared to $32 million in the first quarter and $10 million in the year-ago.

* Tubular reported an income from operations of $47 million, compared to $24 million in the first quarter and $45 million in the year-ago.

* Other businesses reported an income from operations of $17 million, compared to $13 million in the first quarter and $43 million in the year-ago.

* Total income from operations was $35 million, after allowing for post-retirement benefit expenses, litigation reserves, and a loss on assets held for sale. Total income from operations was $122 million in the first quarter. There was a total loss from operations of $7 million in the year-ago.

More 2Q Numbers

* The average realized price per net ton of flat-rolled was $774, compared to $761 in the first quarter and $725 in the year-ago.

* USS and USSE shipped 5,029 net tons, compared to 5,124 net tons in the first quarter and 5,246 net tons in the year-ago.

* Flat-rolled raw steel capability for U.S. facilities was 73 percent, compared to 81 percent in the first quarter and 87 percent in the year-ago.

* USS reported net sales of $4.4 billion, compared to $4.448 billion in the first quarter and $4.429 billion in the year-ago.

* Flat-rolled capital expenditures were $47 million, compared to $55 million in the first quarter and $80 million in the year-ago.

* As of June 30, USS had $1.5 billion in cash and $3.2 billion in total liquidity, compared to $1.1 billion in cash and $2.7 billion in total liquidity on March 31.

 

Posted 7/30/2014