PITTSBURGH, Pa. – US Steel said Tuesday that it lost $73 million in the first quarter because of tough competition and rising prices, and its outlook provided little hope that the current quarter will be any better.
The company lost money in its biggest segment, flat-rolled steel, which is used for things like appliances and cars. Production costs rose, but selling prices didn’t. US Steel said customers have been able to get steel on short notice, so there’s no incentive for them to place big orders in advance.
It predicted that results will get worse in the second quarter in Europe and for flat-rolled steel, which is the company’s biggest segment. It said its flat-rolled steel operations will see higher operating costs because of repairs and maintenance, as well as higher natural gas costs. The company expects selling prices for its flat-rolled steel will be about the same as in the first quarter.
On Sunday the company locked out union workers at its Lake Erie Works in Nanticoke, Ontario, after their contract expired on April 15. The plant employs about 1,350 workers, though not all of them are unionized, and accounts for 10 per cent of US Steel’s flat-rolled capacity.
A year ago, flat-rolled steel brought in an operating profit of $183 million. That turned into a loss of $13 million in the most recent quarter.
Total steel shipments fell 3 per cent to 5.5 million tons. Flat-rolled steel fell almost 2 per cent to 4 million tons.
US Steel didn’t provide earnings-per-share guidance for the second quarter but said it expects a near-breakeven quarter on an operating basis. Analysts expected profit of 19 cents per share.
Chairman and CEO John P. Surma said the company faced a “difficult global economic environment and very competitive steel market conditions.”
The first-quarter loss for United States Steel Corp. was 51 cents per share. The adjusted loss of 35 cents per share, excluding one-time items, was more than twice as big as the loss of 19 cents per share expected by analysts surveyed by FactSet.
A year ago it lost $219 million, or $1.52 per share, because of costs for selling a unit in Serbia.
Revenue fell 11 per cent to $4.6 billion, slightly less than analysts expected. A year ago revenue was $5.17 billion.
US Steel shares rose 26 cents, or 1.5 per cent, to close at $17.80 Tuesday, after falling as low as $16.70 in earlier trading.