Dec 20 (Reuters) - Shares of United States Steel Corp fell 10% on Friday after the company forecast a wider-than-expected loss for the fourth quarter and cut its dividend by 80% due to weak steel demand in the domestic market as well as Europe.
U.S. steel producers raised capacity to meet demand after President Donald Trump imposed tariffs on imports from countries including China, but that created surplus supply at a time when manufacturing demand weakened, suppressing prices.
“The current realities of the markets we serve are having a significant impact on our short-term results,” Chief Executive Officer David Burritt said in a statement.
U.S. Steel said it plans to “indefinitely idle a significant portion” of its operations at its Great Lakes Works facility near Detroit.
“While steel markets in North America are recovering, the Europe and its tubular segments remain weak,” U.S. steel said in a statement.
The company expects to post a loss of $1.15 per share in the fourth quarter ending December, compared with analysts’ average expectations of a loss of 60 cents per share, according to IBES data from Refinitiv.
U.S. Steel lowered its quarterly dividend to just 1 cent per share from 5 cents.
“We view further rationalization of sheet supply as a near to intermediate term positive for pricing sentiment,” Cowen & Co analyst Tyler Kenyon said, adding the dividend cut would result in $25 million in annual cash savings for the company. (Reporting by Abhishek Manikandan and Ankit Ajmera in Bengaluru; Editing by Shinjini Ganguli)
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