US Steel turns quarterly profit on stronger sales
Tuesday, July 26, 2011
United States Steel Corp. said Monday that it posted a profit in the second quarter as higher steel prices and stable raw material costs offset a 6.5 percent drop in shipments.
The Pittsburgh steelmaker also said it expected operating profit to drop in the current quarter.
U.S. Steel’s net income was $222 million, or $1.33 a share, for the April-to-June quarter. That compared with a net loss of $25 million, or 17 cents per share, a year ago.
Sales rose 9.4 percent to $5.12 billion as U.S. Steel recorded higher prices for both flat-sheet and tubular products.
Shipments totaled 5.5 million tons, down 6.5 percent from a year ago, primarily because of weaker demand in Europe that caused a 21 percent drop in shipments. The company said it faced stiff competition from low-priced imports there.
Analysts surveyed by FactSet predicted earnings of $1.22 per share on revenue of $5.56 billion.
The results snapped a streak of nine quarterly losses going back to 2008, stemming from the recession in which demand for steel dropped.
The pace of the nation’s economic recovery can be gauged in part from the sales that U.S. Steel makes to its broad customer base; which includes makers of appliances, automobiles, industrial equipment, construction materials and pipes.
Like other steel companies, U.S. Steel believes its third-quarter results will be affected by the sluggish global economy.
The company said its operating profit should fall in the third quarter, because it expects lower prices for flat-rolled steel used to make a range of products. Shipments are expected to be similar to the second quarter.
“The United States and Europe continue to face an uneven economic recovery,” Chairman and CEO John P. Surma said in a statement. “The continuing fiscal uncertainty in the U.S. and Europe is not helping the situation.”
Last week, steel manufacturer Nucor Corp. also cautioned that stiffer competition could affect its third-quarter performance.
U.S. Steel said its average realized price for flat-rolled steel was $803 per net ton in the second quarter, compared with $700 in the year-ago quarter. Tubular prices rose to $1,565 per ton from $1,496 per ton.
U.S. Steel released its earnings after the market closed. Its shares closed down 52 cents at $44.29 and fell an additional 37 cents in after-hours trading.