July 29--U.S. Steel Corp. on Tuesday reported better second-quarter results that beat analysts' estimates, citing cost-cutting and improvements in a unit that makes flat-rolled sheet for autos and appliances.
CEO Mario Longhi forecast even better results in the quarter that began July 1 as the Pittsburgh-based steelmaker returned to normal operating levels after completing repairs from a roof collapse and the end of shipping delays caused by winter weather.
Longhi said flat-rolled results in the July-September period are expected to improve by about $150 million because of increased efficiency and shipments.
The company previously said cost savings from its Carnegie Way initiative to improve performance would result in 2014 benefits of $290 million, but it did not disclose new savings in its report.
"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," Longhi said in a statement. Even so, market conditions improved and iron ore costs declined, the company said.
The company is battling to overcome a prolonged slump in annual earnings and stock price.
Before results were released, shares fell 17 cents to $27.67. After-hours shares rose $2.13, or 7.7 percent, to $29.80.
Executives scheduled a conference call for Wednesday to discuss details.
"This is more like what they should be doing," said analyst Charles Bradford with Bradford Research Inc. in New York. "They should be doing better because the company has a huge advantage in raw materials costs. And now the third quarter will be dramatically better."
In April, the company forecast reduced income from operations and a loss in the flat-rolled segment for the quarter beginning April 1. But it had operating profit of $30 million compared to a loss of $51 million a year ago. Other segments also improved, with operating income at U.S. Steel Europe rising to $38 million from $10 million a year ago, and tubular edging up to $47 million compared to $45 million last year.
Overall, U.S. Steel said its second-quarter loss was $18 million, or 12 cents a share, and compared to a year-ago loss of $78 million, or 54 cents a share, when it blamed costs from a labor dispute that shutdown its Lake Erie Works in Canada, slower economic growth and increased repair and maintenance costs.
"The loss of 12 cents was a great achievement in view of the mishap at the Great Lakes (plant in Ecorse, Mich.) and the iron ore delivery delays due to Lake Superior's prolonged ice blocks," said John Tumazos of Tumazos Very Independent Research of Holmdel, N.J.
Sales were $4.4 billion, compared to $4.43 billion last year.
"This is good to see. It looked a lot better than I expected in flat-rolled; they were looking for a loss in Europe and did better. And they were nicely profitable in tubular," said Bradford, who forecast a loss of 38 cents a share.
Analysts surveyed by Bloomberg News forecast an adjusted loss of $50.9 million, or 31 cents share, on revenue of $4.2 billion. The company reported adjusted net income of $25 million, or 17 cents a share, which excluded expenses of $46 million after taxes for litigation reserves, a loss on assets held for sale of $9 million, offset by a gain of $12 million.
John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or email@example.com.
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