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US Steel, AK Steel post weaker 3Q results

US Steel, AK Steel post weaker 3Q results

Two American steelmakers posted sharply lower third-quarter results Tuesday, as demand for the metal used in manufacturing and construction remained muted amid the global economic downturn.
But orders improved from historically low levels earlier in the year, helped by rising demand from the auto industry.
Still, the market for steel _ used in consumer goods ranging from pickup trucks to soup cans _ pales in comparison to levels seen during much of last year, when surging prices helped steel makers reap record profits.
That rally ended abruptly last fall, when the global recession devastated some of the steel industry's biggest customers in the auto, construction and industrial equipment markets. Orders vanished, forcing companies like United States Steel Corp. and AK Steel Holding Corp. to scale back production and lay off workers.
The companies' results disappointed investors and some analysts, sending their shares down more than 7 percent. Shares of U.S. Steel fell $3.17, or 7.8 percent, to close at $37.41, while AK Steel shares sank $1.61, or 8.6 percent, to $17.18.
U.S. Steel, the largest U.S.-based steelmaker, reported its third consecutive quarterly loss and predicted another loss, though narrower, in the fourth quarter. It forecast stronger demand in North America, mainly due to orders from the auto industry and continued strong demand for tin. But it said output would remain flat compared with the third quarter.
While the Pittsburgh-based company said production and shipments rose significantly in the three months through September, Chairman and Chief Executive John Surma cautioned that orders have dropped in North America and Europe in recent weeks, partly due to seasonal slowdowns at factories.
"We currently have more of our facilities operating and more of our people back to work," Surma said in a conference call. But "demand trends remain uncertain as both the U.S. and global economies struggle to recover."
Although U.S. Steel expects better results in the fourth quarter, it also said it plans to idle two blast furnaces _ one at its Gary Works in Indiana and one at its Granite City Works in Illinois _ to adjust for weaker demand.
That was a disappointment, said industry analyst John Tumazos. Although U.S. Steel's improvement from the second quarter was "very good," he said, "the blueprint for profitability is not obvious unless the market strengthens more."
AK Steel, meanwhile, returned to profitability after three straight quarterly losses and said it expects shipments to rise in the final three months of the year. But its average selling price is expected to fall because it forecasts a higher percentage of carbon steel sales relative to more expensive stainless and electrical steels.
AK Steel, based in West Chester, Ohio, is a supplier to the U.S. auto industry, which accounted for about a third of its revenue last year. Automakers ramped up production in recent months in response to the government's wildly successful Cash for Clunkers program.
In a note to investors, Morgan Stanley analyst Mark Liinamaa wrote that AK Steel's projection of a 24 percent increase in shipments in the fourth quarter indicates "auto production level will indeed hold up through the quarter even though auto sales will decline from artificially inflated (third quarter) levels, resulting from Cash for Clunkers."
U.S. Steel posted a loss of $303 million, or $2.11 per share, for the three months ended Sept. 30. That compares with a profit of $919 million, or $7.79 per share, in year-earlier period. Revenue tumbled 61 percent to $2.82 billion.
AK Steel earned $6.2 million, or 6 cents per share, for the quarter, compared with a profit of $188.3 million, or $1.67 per share, during the same period a year earlier. Revenue slid 52 percent to $1.04 billion.


Updated : 2021-04-15 14:33 GMT+08:00