U.S. Steel weighs bids for Slovakia plant

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U.S. Steel said it has received and is considering offers for its mill in Slovakia, 10 months after the Pittsburgh steelmaker sold its hemorrhaging steel plant in Serbia for $1.

Jan Baca, a spokesman for U.S. Steel Kosice, said it is prudent to consider the expressions of interest in the company and that "no decisions have been made at this time." He declined to identify the interested parties, citing confidentiality agreements.

Mr. Baca said the Kosice plant and its affiliates employ 13,000.

U.S. Steel acquired the former government-owned Kosice plant in 2003 for $475 million and expanded its Eastern European foothold three years later with the $33 million acquisition of Serbia's government-owned steel producer. Initially profitable, the ventures were battered beginning in 2008 by the European economic crisis.

The Slovak plant, which caters to the automotive industry and other higher-margin customers, has swung back into the black this year. It posted operating income of $27 million in the first nine months of the year on shipments of 2.9 million tons. By comparison, U.S. Steel's North American flat roll business shipped 12 million tons during the same period and generated operating income of $389 million.

Overall, U.S. Steel reported a loss of $74 million for the first nine months of the year, a figure that reflects interest and tax expenses.

"The Slovak mill is a good mill. It's doing really well not to lose money this year given that Europe's not so good," said John Tumazos, an industry analyst based in Holmdel, N.J.

He said the plant is worth more now than it was when U.S. Steel arrived, based on investments the steel producer has made during its tenure.

Industry analyst Charles Bradford said Ukrainian or Russian steel producers might be interested in the Slovak plant. He said there were rumors several months ago that German steel producer ThyssenKrupp, which is trying to unload its new steel processing plant in Alabama, was a potential suitor. But ThyssenKrupp said Monday it is not interested, Mr. Bradford said.

Mr. Tumazos said ArcelorMittal, the world's largest steel producer, probably is not interested because it is slashing costs. Stung by a $709 million third-quarter loss, the Luxembourg steel producer will save $1 billion annually by slashing its dividend from 75 cents to 20 cents. ArcelorMittal's chairman, CEO and president, Lakshmi Mittal, "is a seller these days, not a buyer," Mr. Tumazos said.

Whoever owns the plant is facing a significant investment in the years ahead. In a securities filing last month, U.S. Steel estimated it will have to spend $350 million to $400 million by 2016 to comply with new European Union environmental mandates that the Slovak Republic must adopt by January.

U.S. Steel shares closed Tuesday at $21.31, down 22 cents. They are off 19 percent this year.

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Len Boselovic: lboselovic@post-gazette.com or 412-263-1941.


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