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US Steel Profit Doubles, Expects Weak Quarter

Tuesday, 30 Oct 2012 09:54 AM

U.S. Steel Corp.'s third-quarter profit handily beat analysts' estimates, but the company warned that its current-quarter results would be affected by the global slowdown.

The company, the largest steel producer in the United States by volume, said it expects fourth-quarter results to decline in three of its businesses -- flat-rolled, tubular and U.S. Steel Europe.

"Our results are expected to reflect continued weakness in the European and emerging market economies, as well as economic uncertainty in North America," Chief Executive John Surma said in a statement.

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However, the company expects combined results from the three segments and other businesses to break even in the current quarter, compared with an income of $171 million in the third quarter.

Prices of steel have plummeted in recent months as a result of weak demand in China, the world's largest producer and consumer of steel.

The benchmark 62-percent grade iron ore index fell 22 percent for the three months ended September. Prices have bounced back after hitting a three-year low of below $87 last month, but remain 25 percent lower than the year-high of $149.40.

U.S. Steel's profit warning follows a string of weak forecasts from rivals such as Nucor Inc and AK Steel Holding Corp.

The company forecast a loss in its flat-rolled business in the fourth quarter due to lower shipments and prices, and higher operating costs. U.S. Steel said it expects its Slovakia-based European segment results to be around break even.

Both businesses posted a profit in the third quarter.

U.S. Steel expects lower fourth-quarter shipments of tubular steel, which is used for pipes in the oil and gas industry.

The company said the tubular business would remain profitable in the current quarter but well below the third quarter, with users decreasing drilling activity in order to operate within their 2012 capital budgets.

U.S. Steel has bid on U.S. and Brazilian steel mills, owned by Germany's biggest steelmaker ThyssenKrupp, Reuters reported, citing a source.

THIRD-QUARTER PROFIT DOUBLES

Net profit doubled to $44 million, or 28 cents per share, in the third quarter, from $22 million, or 15 cents per share, a year earlier.

Revenue fell 8 percent to $4.7 billion, while selling costs fell about 6 percent.

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Adjusted profit was 23 cents a share, while analysts' expected the company to break even per share, according to Thomson Reuters I/B/E/S.

The Pittsburgh-based company said total shipments slipped 4 percent in the third quarter to 5.3 million tons.

The stock, which has fallen 24 percent so far this year, closed at $21.15 on Friday on the New York Stock Exchange. Major U.S. stock markets were closed on Monday due to Hurricane Sandy.

© 2017 Thomson/Reuters. All rights reserved.

 
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U.S. Steel Corp's third-quarter profit handily beat analysts' estimates, but the company warned that its current-quarter results would be affected by the global slowdown.
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2012-54-30
Tuesday, 30 Oct 2012 09:54 AM
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