U.S. Steel shares jumped to three-year high Wednesday after the Pittsburgh steel producer reported much better than expected second quarter results and said its performance will be significantly better in the third quarter.
President and CEO Mario Longhi told analysts during a conference call this morning that the company will achieve $435 million in savings from his Carnegie Way efficiency initiative, $145 million more than previously disclosed. He said a stronger economy, including improved demand from the automotive and energy businesses, will bolster the company’s performance during the third quarter, when demand usually takes a summertime breather.
“We’re not seeing the normal summer slowdown,” Mr. Longhi said.
U.S. Steel shares closed Wednesday at $33.03, up $5.36, or 19 percent. After the market closed Tuesday, U.S. Steel reported a second quarter loss of $18 million, or 12 cents per share. Sales were flat at $4.4 billion while shipments declined 4 percent.
However, stripping out one-time items, adjusted earnings of $25 million, or 17 cents per share, were much better than the 31-cent per share adjusted loss analysts were expecting. Sales also topped their $4.2 billion forecast.
Analysts had sharply cut their second quarter forecasts in April after Mr. Longhi told them the impact of a roof collapse at the company’s Great Lakes mill near Detroit and winter weather-related problems getting iron ore from the company’s Minnesota mines to the Gary, Ind., mill would linger long into the second quarter.
Mr. Longhi said the company overcame the problems several ways, including shifting production to other plants and importing steel from its Slovak mill. He credited the swift and creative response of employees.
“That was the primary driver. To a degree, that surprised us too,” he told analysts.
The one-time items included setting aside $46 million, or 31 cents per share, to cover possible lawsuit costs. The company declined to identify the litigation that prompted the charge.
In a quarterly filing Wednesday, U.S. Steel disclosed it has offered $58 million to settle a 2008 lawsuit alleging that it and other steel makers conspired to fix prices. A federal judge has given preliminary approval and a final court hearing is scheduled for October.
Len Boselovic: 412-263-1941 or email@example.com