U.S. Steel Posts $51 Million Loss On Slow Demand
PITTSBURGH (AP) — U.S. Steel said Tuesday it continues to lose money because demand for its products remains weak due to the uneven global economic recovery.
The Pittsburgh manufacturing giant reported a third-quarter loss of $51 million. In late July the company was predicting a profit for the quarter, but it tempered that outlook as the period progressed. The company shipped less steel than in the second quarter, which it attributed to "a lack of recovery" in the construction market and seasonal factors.
The quarterly loss amounted to 35 cents per share. A year ago, U.S. Steel had a loss of $303 million, or $2.11 a share. Sales jumped 60 percent to $4.5 billion from a year ago, although they slipped 4 percent from this year's second quarter.
U.S. Steel, which sells steel for use in autos, appliances and other products, hasn't posted a quarterly profit since the final three months of 2008.
Chairman and CEO John P. Surma said the results reflect "the uncertain economic situation in North America and Europe." Customers that are not under supply contracts are reducing inventory levels, while orders from those under contract reflect the "traditional downtime taken late in the fourth quarter," Surma said in a statement.
The company also saw "significantly higher" repair and maintenance costs following a structural failure in July at the company's Gary Works facility in Gary, Ind. U.S. Steel paid $80 million in the third quarter on repairs and inspection activities, an increase of $60 million over the second quarter.
About half of those expenses were related to a blast furnace raw material transportation system at the plant. The company also saw $30 million in expenses related to operating inefficiencies from disruptions caused by the problem at Gary Works.
Last week, Nucor Corp. reported a third-quarter profit but said demand had slowed for many steel products, such as those used in the still-weak housing and commercial construction sectors.
U.S. Steel shares dropped $1.87, or 4.4 percent, to $40.40 in pre-market trading.