U.S. Steel (X) - Get Report was slumping Friday after the steelmaker warned it would report a fourth-quarter loss, planned to slash its dividend and said it would idle a plant near Detroit that could affect more than 1,500 workers.
U.S. Steel said it now expects to report an adjusted loss in the fourth quarter of $1.15 a share, wider than analysts' calls for a loss of 62 cents.
The company said it would cut its quarterly dividend to 1 cent a share from 5 cents and suspend stock buybacks.
A "significant portion" of the company's Great Lakes Works plant near Detroit will begin to be shut down on April 1, 2020. Worker Adjustment and Retraining Notification notices will be sent to about 1,545 workers though a U.S. Steel spokeswoman told the Detroit News "we anticipate they will be lower subject to discussions with the United Steelworkers as well as operational and maintenance needs at the finishing facilities we will continue to operate."
U.S. Steel also said it was adjusting its 2020 capital spending forecast to $87 million from $950 million and "reprioritizing spending across the enterprise to enable focus on previously announced strategic priorities."
“While the current realities of the markets we serve are having a significant impact on our short-term results, we are taking swift action to align our operational footprint and financial strategy with our customers’ future to ensure we continue executing our ‘best of both’ integrated and mini-mill technology strategy,” President and CEO David Burritt., in a statement. “Fourth quarter expected results confirm the need to change to make the business more resistant to factors outside of our control. While the decisions being made are difficult, we believe they allow us to drive increased stockholder value as we move towards our future faster with a more capital efficient footprint.
"We understand the impact (Thursday's) announcement to indefinitely idle Great Lakes Works has on many of our stakeholders, and we are acting now to reposition U. S. Steel around a footprint differentiated based on cost or capability,” the CEO added.
Shares fell 8.65% to $12.21 in trading Friday. The stock has fallen about 33% so far in 2019 as U.S. Steel and other steelmakers struggle with a slump in domestic demand and other challenges.