Chesterton Tribune



USS posts 1Q net loss of $391M

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U.S. Steel Corporation (USS) is reporting a net loss of $391 million or $2.30 per diluted share in the first quarter of 2020, compared to a net loss of $680 million or $4 in the fourth quarter of 2019.

In the year-ago, USS posted a net income of $54 million or 31 cents per diluted share.

“Our goal during these unprecedented circumstances is to protect lives and livelihoods, which means keeping our employees and communities safe and healthy and the business resilient,” USS President and CEO David Burritt said in a statement released after deadline on Thursday. “Over the past several weeks, we have announced a series of actions in response to the coronavirus pandemic (COVID-19) and the significant changes in the global oil and gas markets. We continue to serve customers and the stakeholders who count on us as an essential business.”

"Challenging days are ahead, but I am confident in the men and women at U.S. Steel who are continuing to make steel as a critical part of our nation’s infrastructure and progress our ‘best of both’ integrated and mini mill technology strategy. We remain calm and focused to ensure a stronger U.S. Steel for all of our stakeholders.”

With respect specifically to Q1, Burritt said, “Market activity was beginning to improve prior to the emergence of COVID-19 and the sudden changes in global oil and gas markets. As the impacts from these unprecedented market dynamics became apparent, we adjusted our footprint, fortified our balance sheet, and aggressively cut costs. While these decisive actions helped us to exceed our first-quarter guidance, we have quickly turned our attention to the second quarter to not only ensure the safety and health of our employees but also to preserve cash and liquidity.”

Minntac Mining Ops

On Thursday, USS granted Stelco Inc., at a purchase price of $100 million, the option to acquire a 25-percent interest in the company’s Minntac iron ore mining operations for an aggregate purchase price of $600 million.

Under the agreement, Stelco paid USS $20 million upon signing the option agreement and will pay the balance of $80 million ratably over the remainder of the 2020 calendar year. Once Stelco has paid the balance of $80 million, it may exercise the option at any time before Jan. 31, 2027, and upon exercise will pay an additional $500 million to acquire its 25-percent interest in the new cost-sharing venture.

“This agreement ensures that U.S. Steel will continue to be the operator and majority owner of the Minntac mine and implies a $2.4-billion enterprise value for the Minntac operation,” the company said.

“This transaction shows that while we will be nimble and flexible in executing our world-competitive ‘best of both’ strategy, we will not be deterred,” Burritt said. “In October of last year, we announced our acquisition of our 49.9-percent interest in Big River Steel and our goal of extracting incremental value from our iron ore assets. Today’s annoucement demonstrates the continued execution of our strategy and delivers $100 million of incremental cash to the balance sheet in 2020. We are pleased that this transaction validates the competitive advantage of our iron ore mining assets and gives us a path to an additional $500 million of capital to support continued execution of our strategy.”

First Quarter Numbers

-- Average realized price per net ton of flat-rolled: $711 ($798 year-ago).

-- Total USS and U.S. Steel Europe shipments: 3.49 million net tons (3.99 million year-ago).

-- Flat-rolled capability at U.S. facilities: 74 percent (73 percent year-ago).

-- Raw flat-steel production: 3.14 million net tons (3.07 million year-ago).

-- Flat-rolled capital expenditures: $192 million ($247 million year-ago).

-- Intersegment shipments of flat-rolled to tubular: 92,000 net tons (81,000 year-ago).

-- Net sales: $2.74 billion ($3.49 billion year-ago).

-- Flat-rolled segment loss before interest and income tax: $35 million (earnings of $95 million year-ago).

-- U.S. Steel Europe segment loss: $14 million (earnings of $29 million year-ago).

-- Tubular segment loss: $48 million (earning of $10 million year-ago).

-- Other segment earnings: $1 million ($8 million year-ago).

-- Total segment loss before interest and income tax: $96 million (earnings of $142 million year-ago).


Posted 5/1/2020




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