More Caution from U.S. Steel on Earnings and Guidance

Commodities & Metals

Published: October 30, 2012 8:44 am

United States Steel Corp. (NYSE: X) has reported its third-quarter results and its income from operations came to $171 million. Net income was $44 million, or $0.28 per share, but that is said to include a $0.13 per share charge for employee lump sum-payments provided in the new labor agreement. Total net sales in the quarter came to $4.7 billion, and third-quarter shipments were listed as 5.3 million tons.

There are obviously items in the report because the Thomson Reuters consensus earnings estimates were $0.00 per share and $4.64 billion in total sales. When you read through the items included, it is hard to make heads or tails out of the actual EPS number. As of September 30, 2012, U.S. Steel had $536 million of cash and $2.4 billion of total liquidity.

The company talked up positive results for all three reportable segments, but also said that the economic environment was more challenging than the second quarter. Chairman and CEO John Surma said:

Our Tubular segment once again had solid results despite declining rig activity and pricing pressure caused by rising oil country tubular goods inventory and continued high levels of imports. Our Flat-rolled and European segments were profitable but continue to be challenged by difficult global economic conditions. In addition, our Flat-rolled segment continued to be adversely affected by increased import levels.

Guidance was given although it was not specific. The coming results ahead are expected to reflect continued weakness in the European and emerging market economies. Uncertainty is expected in North America as well. The company said:

We expect total reportable segment and Other Businesses operating results to be around breakeven for the fourth quarter with decreased results in all reportable segments.

Shares closed at $21.15 on Friday and the markets are closed today, but the 52-week trading range is $17.67 to $32.52.

JON C. OGG

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