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U.S. Steel reports 3Q loss of $207M on special charges

Losses from U.S. Steel Corp.’s restructuring continued despite revenue and operating results that beat analyst’s expectations.

The loss was an improvement from a year ago and was helped by the company’s flat-rolled steel operation and other segments, which did their best since 2008. Operating profit from flat-rolled, tubular, U.S. Steel Europe and other units totaled $479 million, or $94 per ton of steel produced, the company said. That compared to $113 million, or $24 per ton a year ago.

“Steel market conditions in the United States have remained stable, and our operations have performed well, particularly our flat-rolled segment, where we returned to more normal operating levels and income from operations increased by over $300 million from the second quarter,” CEO Mario Longhi said. “Our results reflect the significant improvement in our earnings power from our Carnegie Way transformation efforts.”

Cost-cutting from the initiative has saved $435 million this year, as of June 30. U.S. Steel did not disclose new savings in the report. Executives scheduled a conference call for Wednesday to discuss details.

The company’s stock closed at $38.15, up $1.85, or 5.1 percent. Results were released after the market closed.

“They sure had a nice quarter in flat-rolled,” said John Tumazos of Tumazos Very Independent Research of Holmdel, N.J. “Historically, there have been good economic cycles where the profit in flat-rolled was not $94 a ton. So this is a very good performance.” The unit makes sheet for autos and appliances,

The Downtown-based steelmaker Tuesday reported a third-quarter loss of $207 million because of non-cash charges related to its decision to relinquish control of its money-losing Canadian subsidiary and other restructuring moves. The loss is equal to $1.42 a share and compared with a net loss of $1.79 billion, or $12.38 a share, in the same quarter of 2013, when a non-cash charge reflected the falling value of flat-rolled and Texas tubular operations.

Revenue increased to $4.59 billion compared with $4.13 billion a year ago.

The company is battling to overcome a prolonged slump in annual earnings and stock price. It has dealt with competition from foreign steel that the industry said was being dumped in the American market by companies from South Korea and eight other countries. The Commerce Department recently ruled in the industry’s favor and slapped tariffs on imported steel tubing from those countries. U.S. Steel said it expects a positive impact from the decision in the fourth quarter.

Adjusted net income was $325 million, or $2.16 a share, excluding after-tax charges for the Canadian and other strategic actions of $577 million, or $3.88 a share, and a gain of $45 million, or 30 cents a share, on the sale of real estate assets.

Results beat analysts’ consensus estimates of earnings per share of $1.20, and revenue of $4.54 billion. But U.S. Steel expects fourth-quarter segment income to decrease because of lower flat-rolled profits. Repairs and maintenance, including relining the blast furnance at its Mon Valley Works, are expected to increase by about $150 million.

John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or [email protected].


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