By Josh Beckerman And John W. Miller
U.S. Steel Corp. swung to a loss and lowered its pretax 2015
earnings forecast by around $500 million, citing "massive" amounts
of imports, low oil prices and excess inventories.
The results were worse than expected and pushed the
Pittsburgh-based steelmaker's stock down more than 6% in
after-hours trading.
Across the board, steelmakers in the U.S. are reeling as prices
have dropped to their lowest levels since the 2009 financial
crisis. The benchmark hot-rolled coil index has declined 26% since
the start of the year, to $444 per ton.
U.S. Steel Chief Executive Mario Longhi called market conditions
"extremely difficult" as the company, in a statement, blamed
imports and oil prices.
Overall steel imports into the U.S. rose 14% to 7.9 million tons
during the first two months of 2015, according to Global Trade
Information Services. The U.S. imported 397,062 tons of steel from
China during that time, up 24% from the same period a year
before.
Oil prices have fallen over 40% in the past year to under $60 a
barrel, leading to a pullback by energy producers and lower demand
for steel pipe for drilling.
Under Mr. Longhi, who took over as CEO in 2013, U.S. Steel has
been aggressive about laying off workers and cutting costs. Already
this year, U.S. Steel has issued layoff warnings to more than 9,000
workers, laying off around 2,800 of them. It has cut back
operations at nine plants.
Last month, the company said it would temporarily idle an
Illinois plant as it consolidates its North American flat-rolled
steel operations, reflecting weakened demand from the energy
sector. It also said it would temporarily idle a portion of its
Minntac iron ore operations in Minnesota.
The company Tuesday lowered its full-year forecast for adjusted
earnings before interest and taxes to between $115 million and $315
million, from a prior projection of between $550 million and $850
million.
For the quarter, U.S. Steel posted a loss of $75 million, or 52
cents a share, compared with a profit of $52 million, or 34 cents a
share. Overall, net sales fell 26% to $3.27 billion in the first
quarter.
Earlier Tuesday, AK Steel Holding Corp. posted a loss of $306.3
million, or $1.72 a share, compared with a loss of $86.1 million,
or 63 cents a share, a year earlier. Last week, Nucor Corp. said
first-quarter earnings fell 39%.
The curtailing of capacity by U.S. Steel and others should soon
have an impact on prices, say analysts. ArcelorMittal this week
sent a letter to customers announcing a price increase of $20 per
ton. "The mills are at a point of exhaustion and are starting to
draw a line in the sand," says Phil Gibbs of Keybanc in Cleveland.
"And the mills have been good about taking the pain and reducing
capacity."
U.S. Steel also said market conditions should "improve during
the second half of 2015."
Write to Josh Beckerman at josh.beckerman@wsj.com and John W.
Miller at john.miller@wsj.com
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