U.S. Steel (X) - Get United States Steel Corporation Report shares slumped to the lowest levels in more than three years Wednesday after the struggling industrial group said it plans further cost cuts and said its chief financial officer will resign.
U.S. Steel said late Tuesday Kevin Bradley will step down from his role as chief financial officer but will stay on in an advisory capacity to assist incoming finance chief Christine Breves, who is the firm's senior vice president and chief supply officer. US Steel also said it will kick-start an enhanced operating model, starting next year, that it hopes will save around $200 million in annual fixed costs by 2022.
"These initiatives reduce costs and more closely align US Steel's corporate structure with the company's previously announced strategic investments in leading technology and advanced manufacturing, including the recently announced purchase of a minority interest in Big River Steel, the newest and most advanced flat-rolled mini mill in North America, with a clear path to consolidation," the company said in a statement.
US Steel shares fell 8.44% Wednesday to close at $10.09 each after touched $9.93 each earlier in the session, the lowest since March 2016. Shares in the group, the country's biggest steelmaker, have fallen more than 78% since President Trump first imposed a 25% tariff on imported steel in March of last year.
Earlier this month, US Steel said it would $700 million in cash for at 49.9% stake in Big River Steel, and hold an option to buy the remaining 50.1% stake by 2023, as the industry looks to consolidate amid a slowdown in global demand and the impact of import tariffs on non-US imports.
Including debts, as well as the expected expansion of Big River's flat-rolled mill in northern Arkansas, the deal could be valued at $2.35 billion, U.S. Steel said.
That move followed a profit warning from the Pittsburgh, Pa.-based group, which said it would likely post an adjusted third quarter loss of 35 cents per share and continue idling two of its main U.S. blast furnaces owing to "the impact of falling steel prices through the second quarter, combined with the impact of a larger than expected drop in scrap prices."
"It's the third steel company to provide a disappointing earnings view in just the last few days, with Nucor (NUE) - Get Nucor Corporation Report and Steel Dynamics (STLD) - Get Steel Dynamics, Inc. Report giving you numbers well short of the Street's projections," TheStreet's founder, Jim Cramer, said following U.S. Steel's revised outlook.
"U.S. Steel forecasts that things are only getting worse as a host of end markets weaken both here and in Europe and remember that's despite tariffs meant to boost its bottom line and cause more hiring, not idling."