U.S. Steel continues to rack up huge losses despite an aggressive cost cutting program.
The Pittsburgh-based company reported a third quarter net loss of $173 million US Tuesday afternoon. That brings its losses for nine months of 2015 to more than $509 million US.
The latter includes a $53-million US loss to shut down blast furnace, steelmaking and most flat-rolled operations at its Fairfield Works and a $10-million US charge for a pension obligation related to its troubled U.S. Steel Canada operation.
In a news release, company president Mario Longhi blamed the poor performance on unfair imports of subsidized foreign steel and a sluggish American economy.
"Total segment (earnings before interest and taxes) improved as compared to the second quarter as we continued to take action to address our cost structure," he said. "We remain focused on our Carnegie Way transformation efforts to weather the continued difficult market environment. These efforts will better position our company to generate stronger operating margins and respond to changing market conditions."
Carnegie Way, named for company founder Andrew Carnegie, is an aggressive cost cutting program that Longhi said has so far trimmed $715 million US from its operations.
Despite its losses the company has strong liquidity of $2.9 billion US, including $1.2 billion US in cash.
For the rest of 2015, the company predicts adjusted earnings before interest, taxes, depreciation and amortization of about $225 million US.
The quarterly results compare to a net loss of $207 million US in the same period last year and a second quarter 2015 net loss of $261 million US.
The results reported from the company's American headquarters do not include figures for its Canadian arm, which is under creditor protection.
The court-appointed monitor of that process recently reported year-to-date losses of $343.8 million.
The American company noted year-to-date losses of $217 million US associated with U.S. Steel Canada. That's down from $413 million US for the same period last year.
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However, it also reported improved results in the flat-rolled steel segment compared to the second quarter, although it contends the sector continues to be plagued by unfair imports.
"Imported flat-rolled products, much of which we believe are dumped and/or subsidized, remained excessively high in the third quarter, causing further damage to the domestic market," it said in a release. "Based on preliminary statistics, imported sheet products still averaged more than one million tons per month in the third quarter and not only continued to erode our market share, but also placed downward pressure on both our spot and our contract prices."
Average prices for the quarter were $674 US per ton, down from $777 US for the same period last year. The year-to-date average price was $712 US per ton.
Looking ahead, Longhi said the future is not bright.
"Commercial markets are not improving as we had anticipated for the second half of 2015. Steel selling prices reversed direction as excessively high levels of imports, much of which we believe are unfairly traded, and a significant decline in steel scrap prices caused spot prices to reach new lows for the year," he added. "High import levels also had a negative impact on the rebalancing of supply chain inventories, decreasing customer order rates in the second half of the year."
Based on those factors, Longhi said the company expects "significantly lower shipments and average realized prices than we previously projected for full-year 2015."http://www.thespec.com/news-story/6079315-u-s-steel-reports-another-huge-loss/