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U.S. Steel Rolls Past Estimate

Profit falls as sales slip and expenses rise.
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Earnings fell 44% from a year ago in

U.S. Steel's

(X) - Get Free Report

first quarter, as sales edged lower and input costs rose. The results were well ahead of analysts' forecasts, however.

U.S. Steel earned $256 million, or $2.04 a share, in the quarter, compared with $459 million, or $3.51 a share, last year. The latest period had an asset impairment charge of $5 million, or 4 cents a share. Analysts surveyed by Thomson First Call produced an average earnings estimate of $1.48 a share for the company's first quarter.

Sales were $3.73 billion in the latest quarter, down from $3.79 billion a year ago. Analysts had forecast $3.65 billion for the March 2006 period.

"First-quarter 2006 segment results improved from fourth-quarter 2005 as shipments and prices increased for flat-rolled and tubular," the company said (U.S. Steel earned $109 million, or 85 cents a share, in the fourth quarter). "Flat-rolled also benefited from lower natural gas costs and reduced outage costs as the Gary No. 14 blast furnace started up successfully during the first quarter and has been running well. U. S. Steel Europe also reported increased segment income on higher shipment volumes. Results for Other Businesses declined mainly due to seasonal effects at iron ore operations in Minnesota."

The company said it's experiencing good momentum and should see strong results and demand in the current period.

"We expect second-quarter flat-rolled results to improve from the first quarter as shipment volumes continue to increase and average prices and costs remain comparable to first-quarter levels," U.S. Steel said.

"For USSE, we expect improvements in second-quarter shipments to be partially offset by higher costs, while average prices should be comparable to first-quarter levels. Prices and shipments for Tubular in second-quarter 2006 are expected to be lower than first-quarter levels as shipments and product mix will be negatively affected by planned maintenance outages at our tubular operations," U.S. Steel said.