U.S. Steel today reported a first-quarter profit in line with analysts' estimates, but cautioned that lingering issues related to a severe winter will crimp results for the current quarter.
The Pittsburgh steel producer reported net income of $52 million, or 34 cents per share, versus a loss of $73 million, or 51 cents per share, in the year-ago quarter. Sales fell 3 percent to $4.45 billion while shipments slid 7 percent to 5.1 million tons.
Analysts surveyed by Bloomberg were expecting earnings of 33 cents per share on sales of $4.5 billion.
President and CEO Mario Longhi said higher pricing in the first quarter and undisclosed benefits from the Carnegie Way, the ambitious efficiency and cost-cutting initiative the company launched last year, offset higher natural gas prices and operational issues caused by the rough winter. The company generated an operating profit of $30 per ton during the quarter versus a $17 per ton profit in the first quarter of last year.
However, Mr. Longhi said weather-related logistical problems continued into the current quarter and will result in a quarterly operating loss for the company's North American flat-roll operations. In March, U.S. Steel had to halt production at its Great Lakes plant near Detroit after a large pipe damaged the roof covering one of its steel-making furnaces. This month, the company notified customers that problems moving iron ore through icy conditions on the Great Lakes would curtail operations at its largest plant in Gary, Ind.
In a statement today, Mr. Longhi said those issues will reduce shipments and lead to higher operational costs in the current quarter.
"We expect to have the operational difficulties largely behind us as we exit the second quarter," he said.
Much to the frustration of analysts, Mr. Longhi has been tight-lipped about the savings the Carnegie Way initiative is generating. He stuck to that discipline at the company's annual shareholder meeting, held this morning at company headquarters in the U.S. Steel Tower. Shareholders approved a proposal to elect directors annually, joining an increasing number of companies adopting the practice at the urging of shareholder activists. They also approved the company's pay practices.
During a question-and-answer session, a representative of the National Center for Public Policy Research asked the company to adopt a policy of not punishing employees for outside political activity.
"Somebody's got to turn the tide," Justin Danhof, the organization's general counsel, told U.S. Steel general counsel Suzanne Rich Folsom after the meeting.
The proposal was sparked by the resignation of Mozilla co-founder and CEO Brendan Eich after there were protests over his $1,000 contribution to a 2008 campaign in support of a proposal to ban same-sex marriages in California.
"We feel people's First Amendment rights in the workplace need to be protected," Mr. Danhof said.
The organization has offered the suggestion to 13 or 14 companies and will present it later this week at shareholder meetings for Marathon Oil, Duke Energy and Humana, he said.
Ms. Folsom told Mr. Danhof the company is reviewing its code of conduct and will consider the suggestion.
The first-quarter profit was announced after Wall Street closed. U.S. Steel shares finished today at $26.34, up 61 cents.
Len Boselovic: 412-263-1941 or firstname.lastname@example.org