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U.S. Steel Posts Loss but Beats Forecasts

August 05, 2003|From Reuters

U.S. Steel Corp. on Monday reported a second-quarter net loss of $49 million, partly reflecting high pension and health-care costs. The results were a reversal from a year-earlier profit but better than Wall Street expected.

During the quarter, the company contended with its acquisition of rival National Steel Corp., a new labor contract, higher natural gas costs and a weak economy.

Pittsburgh-based U.S. Steel, the largest U.S. steelmaker, said its loss for the quarter, which included a charge for health-care costs, amounted to 51 cents a share. Year-earlier profit was $27 million, or 28 cents. Revenue rose more than 30% to $2.36 billion, due in part to the addition of National Steel's results.

U.S. Steel expects some improvement in the second half. The company said in recent weeks it has seen a surge in orders. The steelmaker expects shipments of flat-rolled products in the third quarter to rise more than 18% from the second quarter, to 3.8 million tons.

The company, which completed its $850-million acquisition of National Steel in May, said it expects significant savings starting in the fourth quarter because of the deal, with $400 million in annualized savings by the end of next year. U.S. Steel said it would take a $500-million charge in the second half for job cuts announced after its National Steel acquisition.

Also in May, the company's workers ratified a labor contract under which U.S. Steel would trim staffing and give workers incentives to retire early.

The contract protects U.S. Steel from ballooning pension and retiree health-care costs that have helped drive more than 36 domestic steelmakers into bankruptcy since 1997.

U.S. Steel said second-quarter results included a $52-million charge related to health-care costs for workers at a coal mining business it sold in June. The company also cited a rise in pension and retiree benefit costs, as well as higher energy costs.

Excluding the charge, the company reported a loss of 1 cent a share. That was 4 cents better than analysts' estimate, according to Reuters Research.

U.S. Steel shares rose 73 cents to $16.31 Monday on the New York Stock Exchange.

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