U.S. Steel's 2Q loss $78M; locked out Canadian workers to vote on pact
U.S. Steel Corp. reported a second-quarter loss of $78 million, blaming costs from a labor dispute that shutdown its Lake Erie Works in Canada, slower economic growth and increased repair and maintenance costs.
Sales for the three-month period fell to $4.43 billion versus $5.02 billion a year ago.
The loss in the April-to-June period equaled 54 cents a share and compared to net income of $101 million, or 62 cents a share, a year ago.
The Pittsburgh-based steelmaker said it had expenses of about $70 million at the Lake Erie operations in Nanticoke, Ontario, and at its sister plant in Hamilton, Ontario. About 1,000 workers were idled at the Lake Erie Works when a lockout began on April 28 after members of the United Steelworkers union rejected a contract offer.
Union members at the Lake Erie Works are scheduled to vote on new contract offer from the company on Wednesday. “If the contract is approved, we plan to restart operations as soon as possible,” CEO John P. Surma said.
Surma said U.S. Steel's plants “operated well even with increased repairs and maintenance costs.”
Repairs and maintenance costs in the second quarter were about $30 million higher than the first quarter because of projects at Gary Works and Lake Erie Works. Shipments decreased because of the maintenance projects and the Lake Erie Works lockout, the company said.
Results by business segment included a loss at the company's flat-rolled unit, and profits at its tubular business and at U.S. Steel Europe. It also had a $30 million profit from a real estate sale.
Surma said the flat-rolled segment's operating loss of $51 million resulted from increased costs from repairs and maintenance, higher natural gas costs and decreased shipments. That compared with operating profit of $177 million a year ago.
Operating profit at U.S. Steel Europe was $10 million, down from $38 million in the first quarter and $34 million in the second quarter of last year because of higher iron ore costs and lower prices.
The tubular segment had operating profit of $45 million, which was below the first-quarter profit of $64 million and year-ago profit of $103 million because of lower prices caused by imports.
Nine steel producers including U.S. Steel filed a trade case with government regulators on July 2, claiming 11 nations dumped oil and natural gas pipe products in the United States at below cost. The case will be the largest and most important in steel industry history, said analyst Michelle Applebaum in Chicago.
For the third quarter, Surma forecast improved results for the flat-rolled and tubular segments. But a blast furnace outage at the Great Lakes Works in Hamilton, the Lake Erie Works labor dispute, and a scheduled blast furnace outage in Europe will affect shipments. Tubular segment results are expected to improve because of anticipated drilling activity
John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or email@example.com.