U.S. Steel Swings to Profit

The company warns of high costs in the first quarter, though.
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U.S. Steel

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swung to a fourth-quarter profit but warned that first-quarter results will be pressured by high raw material costs.

For its quarter ended Dec. 31, the Pittsburgh steel giant earned $462 million, or $3.55 a share, reversing the year-ago loss of $22 million, or 26 cents a share. The latest quarter included nonoperating gains, including tax benefits, of 11 cents a share. Even so, the latest quarter eased past the Thomson First Call earnings estimate of $2.71 a share.

Revenue surged nearly 50% from a year ago to $3.93 billion, as the company shipped into hungry global markets.

Segment income from operations jumped to $121 a ton in the latest quarter from $108 a ton in the third quarter and $9 a ton a year ago. The company said domestic operations benefited from increased prices for tubular products and lower purchased coke costs, while costs increased for natural gas, scrap and coal.

U.S. Steel said it expects flat-rolled prices to stay in line with fourth-quarter levels, but high raw materials costs and lower shipments will hurt results. In Europe, prices should rise moderately, with shipments remaining about the same and costs for raw materials increasing significantly. Meanwhile, tubular shipments should be sequentially flat, with prices and costs continuing to rise. The company plans to raise tubular prices by $50 to $250 per ton effective this month, though full-year shipments are expected to increase to 1.2 million tons.

The company reversed the liability associated with its main defined benefit pension plan, resulting in a net credit to equity of $1.45 billion. The decision had no effect on income or cash flow, U.S. Steel said.

On Monday, U.S. Steel rose a nickel to $50.37.