* Q1 adjusted loss 35 cts vs earnings 67 cts year earlier
* Sales drop to $4.60 billion from $5.17 billion
* Higher costs to weigh on flat-rolled business in Q2
* Says is meeting customer needs despite Lake Erie lockout
April 30 United States Steel Corp reported
a first quarter loss on Tuesday, but reassured investors it is
meeting its commitments to customers, despite a lockout at a
large facility in Canada.
The Pittsburgh-based steelmaker's shares, which were lower
until late afternoon, turned positive during a call with
analysts and investors that touched on the lockout several
U.S. Steel locked out unionized workers at its Lake Erie
works in Nanticoke, Ontario, on Sunday morning. The last lockout
at Lake Erie ran for eight months and shut down production.
"We're not making steel today in Canada, regrettably, but we
are selling steel in Canada," Chief Executive John Surma said on
The lockout does not affect processing facilities in nearby
"We're fulfilling all of our customers' requirements," he
said. "We have a plan to do that, plenty of inventory in the
line to do that, so we intend to continue to operate
commercially as we had before this unfortunate circumstance."
U.S. Steel's shares closed up 1.5 percent at $17.80 on the
New York Stock Exchange.
U.S. Steel reported a first-quarter loss compared with a
year-earlier adjusted profit and it expects operating results to
deteriorate further in the current quarter.
The flat-rolled segment, by far its biggest unit by
shipments, recorded an operating loss of $13 million, compared
with a year-earlier profit of $183 million, as prices and
Operating costs that rose from the fourth quarter of 2012
also held back flat-rolled results and the company forecast
"lower results" from that segment in the current quarter thanks
in part to higher repair, maintenance and natural gas costs.
Overall, it sees "total reportable segment and other
businesses operating results," a measure of operating
performance, near breakeven for the current quarter. It was $94
million in the first quarter.
European results improved and, in a note to clients,
Barclays analyst David Gagliano said that segment's performance
was better than he expected. But the second quarter outlook was
"With weak pricing compounded by what appears to be
stubbornly high operating costs and the adverse impact of rising
natural gas prices recently, the near-term outlook for (U.S.
Steel) now appears even worse than we expected," he said.
In the flat-rolled segment, lead times were short through
the quarter, which kept spot prices from rising. U.S. Steel and
its rivals announced price increases to customers during the
quarter, but could not reverse a slide in spot prices.
Hot-rolled coil prices, as estimated by The Steel Index,
which collects data on the market, were $620 per tonne at the
end of the first quarter, down from $644.60 at the end of
Imports have boosted competition in the U.S. steel market,
weighing on domestic producers' profits.
The first-quarter net loss narrowed to $73 million, or 51
cents a share, from $219 million, or $1.52 a share, a year
earlier. Net sales fell to $4.60 billion from $5.17 billion.
Excluding a charge related to the repurchase of some its
convertible notes and other items, U.S. Steel reported a loss of
$51 million, or 35 cents a share, compared with adjusted
earnings of $110 million, or 67 cents a share.
Analysts, on average, expected a loss of 19 cents a share on
revenue of $4.66 billion, according to Thomson Reuters I/B/E/S.