PITTSBURGH-- U.S. Steel Corp. reported a wider loss in the
latest quarter, while indicating the road to sustainable
profitability was a long one.
Despite an improved pricing environment due to strong demand
from auto makers, U.S. Steel posted a net loss of $122 million, or
84 cents a share, as hefty maintenance costs in the quarter
compounded pressures of ongoing labor and pension costs. A year
ago, the company lost 35 cents a share in the fourth quarter of
2012. The latest quarter also includes a $302 million charge
related to closing operations in Hamilton, Ontario.
Both revenues and sales were lower in the quarter with the
company reporting $4.3 billion in sales on shipments of 4.9 million
tons. A year ago, the company reported sales of $4.5 billion on
shipments of 5.2 million tons.
It was the first full quarter under new chief executive Mario
Longhi, who took over from John Surma in September.
Beset by high labor costs and pension obligations, U.S. Steel
has now lost money in seven of the past nine quarters. In a
statement, Mr. Longhi said results would improve "moderately" in
the first quarter. "We are on a multiyear journey to grow by
improving our balance sheet and achieving sustainable
profitability," he said.
For the year, the net loss widened to $2.1 billion from $124
million while sales declined to $17.4 billion from $19.3 billion in
2012.
The outlook for the steel business is brightening in the U.S.,
mostly thanks to a healthy appetite for steel from auto makers, who
are expected to sell 16 million vehicles this year, up from 10.4
million in 2009. The benchmark price for U.S. hot-rolled coil is up
10% to around $675 per ton since the beginning of the year.
Mr. Longhi was hired to cash in on this wave of demand. In the
fall, he launched "Project Carnegie", a hat tip to steel baron
Andrew Carnegie, a cost-cutting program meant to trim $75 million.
"We are encouraged by our early progress' on the project, he said
Monday without offering specifics. He is scheduled to brief
analysts and reporters on Tuesday afternoon.
The market has viewed his performance favorably so far. U.S.
Steel stock is up 10% in the last three months. It closed Monday at
$25.28. It briefly edged above $30 at the beginning of the
year.
Investors have praised Mr. Longhi's cost-cutting measures, such
as permanently closing lines in Hamilton, and trimming production
in Gary, Indiana.
On Monday, U.S. Steel won a Supreme Court case that recognize
its right to not pay unionized employees for the time they spend
putting on safety gear before starting their shifts. The decision
is expected to have only a marginal impact on the company.
Write to John W. Miller at john.miller@wsj.com
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