U.S. Steel Corp. posted a better-than-expected third-quarter profit, sending its stock up, but the company warned its fourth-quarter profit would weaken due to the soft economies in Europe and North America.
In premarket trading, the steelmaker’s stock was almost 3 per cent higher at $25.50 (U.S.).
Although it turned a profit after a net loss in the year-ago quarter, overall results were down sharply from the second quarter of this year, with steel prices decreasing.
“Results continue to reflect the difficult economic situation in Europe, particularly in Southern Europe,” Chairman and Chief Executive Officer John Surma said in a statement.
Although the company’s flat-rolled segment performed well in the third quarter, Mr. Surma said there was “a less than robust economy in North America.”
The quarter-over-quarter decrease was driven largely by lower average realized prices due to weaker spot market prices and volume, reflecting increased capacity in the United States and the effects of high import levels,” Mr. Surma said.
He said U.S. Steel’s tubular business expected fourth-quarter results to be in line with the third quarter.
“(But) We expect to report lower operating results in the fourth quarter for our North American flat-rolled and European operations as a result of the slow and uneven economic recovery in those regions.”
Mr. Surma said average realized prices and shipments are expected to decline as a result of “cautious purchasing patterns created by the uncertain economic outlook and increasing domestic supply.”
The expected lower fourth-quarter prices reflect lower average realized prices on spot market business and U.S Steel’s index-based contracts.
These market factors are expected to bring down operating results to around a break-even level prior to the effects of increased maintenance outages, a labor agreement at its Hamilton, Ontario plant and restart costs, Mr. Surma said.
Net income in the third quarter was $22-million, or 15 cents per share, compared with a net loss of $51-million, or 35 cents per share, a year earlier, the Pittsburgh-based company said. Excluding one-time items, earnings per share were 72 cents, well above the 52 cents per share that analysts had forecast, according to Thomson Reuters I/B/E/S.
Sales rose 13 per cent to $5.08-billion,
U.S. Steel’s second-quarter profit and sales both missed Wall Street estimates and it had warned then that third-quarter earnings would fall.
In August, the steelmaker said it was raising prices because of soaring raw material costs. Analysts reported a hike of about $60 per ton -- or roughly 10 per cent.
Mr. Surma said then that although underlying demand was fine, costs were still relatively high and inventories low.Report Typo/Error
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