Weak Demand, Low Prices Take Toll on U.S. Steel Earnings
07/30/2015 - U.S. Steel Corp. posted a second-quarter net loss of $261 million, or $1.79 per diluted share, partly on account of low demand and prices.
For the quarter, which ended June 30, the Pittsburgh-based company reported net sales of $2.9 billion, down 34 percent over the same period last year. It recorded nearly $3.3 billion in operating expenses, down from $4.4 billion in the year prior.
"We've taken aggressive and decisive actions to address the extremely challenging conditions we continue to face in North America. Our Carnegie Way efforts, combined with short-term cost improvements, have helped to partially offset the continued depressed volumes and low prices in both the tubular and flat-rolled markets as well as the negative impact of tremendously high levels of imports," said President and CEO Mario Longhi in a statement.
"U.S. trade laws have been strengthened by the signing of the Trade Adjustment Assistance bill, which will improve the means by which domestic companies may seek relief from unfairly traded imports. We are also maintaining our customer focus and our flexibility to respond as market conditions change," he said.
Market conditions aside, the company said its losses also were partly attributable to a noncash write-down of its retained interest in U.S. Steel Canada and noncash restructuring charges.
The company said second-quarter results for its flat-rolled segment were comparable to the first quarter, despite what it said are unfairly traded volumes of sheet imports. That situation, it said, is aggravated by the continued strength of the U.S. dollar, which is encouraging more imports overall.
But some countries are unfairly dumping certain products, U.S.Steel contends, and it has joined with four other producers to seek trade actions on cold-rolled imports from eight countries.
Meanwhile, results from its European segment remained positive, but decreased, compared to the first quarter, U.S. Steel said, as planned maintenance outages reduced shipments and drove up repair and maintenance costs.
"These negative effects were partially offset by a slight increase in averaged realized euro-based prices and a reduction in raw materials costs," the company said in its earning release.
U.S. Steel's tubular segment saw a significant decrease -- it lost $66 million during the quarter -- primarily due to lower shipments. Shipments fell by nearly 80 percent from Q2 2014 to 92,000 tons.
"Shipments continue to be adversely impacted by reduced drilling activity caused by low crude oil prices and the near record levels of tubular imports, much of which we believe are unfairly traded. The decrease in results is also attributable to operating inefficiencies as a result of reduced production levels," the company said.
The company said it is looking for a better second half as supply chain inventories continue to rebalance, primarily in the flat-rolled markets.
For more details on U.S. Steel Corp.'s second-quarter results, click here.
"We've taken aggressive and decisive actions to address the extremely challenging conditions we continue to face in North America. Our Carnegie Way efforts, combined with short-term cost improvements, have helped to partially offset the continued depressed volumes and low prices in both the tubular and flat-rolled markets as well as the negative impact of tremendously high levels of imports," said President and CEO Mario Longhi in a statement.
"U.S. trade laws have been strengthened by the signing of the Trade Adjustment Assistance bill, which will improve the means by which domestic companies may seek relief from unfairly traded imports. We are also maintaining our customer focus and our flexibility to respond as market conditions change," he said.
Market conditions aside, the company said its losses also were partly attributable to a noncash write-down of its retained interest in U.S. Steel Canada and noncash restructuring charges.
The company said second-quarter results for its flat-rolled segment were comparable to the first quarter, despite what it said are unfairly traded volumes of sheet imports. That situation, it said, is aggravated by the continued strength of the U.S. dollar, which is encouraging more imports overall.
But some countries are unfairly dumping certain products, U.S.Steel contends, and it has joined with four other producers to seek trade actions on cold-rolled imports from eight countries.
Meanwhile, results from its European segment remained positive, but decreased, compared to the first quarter, U.S. Steel said, as planned maintenance outages reduced shipments and drove up repair and maintenance costs.
"These negative effects were partially offset by a slight increase in averaged realized euro-based prices and a reduction in raw materials costs," the company said in its earning release.
U.S. Steel's tubular segment saw a significant decrease -- it lost $66 million during the quarter -- primarily due to lower shipments. Shipments fell by nearly 80 percent from Q2 2014 to 92,000 tons.
"Shipments continue to be adversely impacted by reduced drilling activity caused by low crude oil prices and the near record levels of tubular imports, much of which we believe are unfairly traded. The decrease in results is also attributable to operating inefficiencies as a result of reduced production levels," the company said.
The company said it is looking for a better second half as supply chain inventories continue to rebalance, primarily in the flat-rolled markets.
For more details on U.S. Steel Corp.'s second-quarter results, click here.
