Bloomberg News

U.S. Steel Rises After Forecasting Higher Prices in Quarter

January 31, 2012

(Updates with Profitability Index in last paragraph.)

Jan. 31 (Bloomberg) -- U.S. Steel Corp., the country’s largest producer of the metal by volume, advanced the most in four weeks in New York after forecasting improved prices and shipments at its biggest division.

U.S. Steel rose 5.1 percent to close at $30.19, the biggest gain since Jan. 3. Shares of the Pittsburgh-based company have increased 14 percent this year.

Prices and shipments of flat-rolled steel, used in autos and appliances, will increase in the current quarter, Chairman and Chief Executive Officer John Surma said today in a quarterly earnings statement. The performance of the European unit also will improve, after selling a plant in Serbia, and the tubular- products unit will remain strong, he said.

“We expect to report a significant improvement in operating results in the first quarter,” Surma said.

The fourth-quarter net loss narrowed to $226 million, or $1.57 a share, from $249 million, or $1.74, a year earlier, it said. The loss excluding foreign-exchange effects and an environmental-remediation charge was $1.14 a share, missing the average projection from 17 analysts’ estimates compiled by Bloomberg, which was for an 86-cent loss.

Sales gained 12 percent to $4.82 billion from $4.3 billion, beating the $4.71 billion average of 12 analysts’ estimates in the survey.

‘Really Shocked’

“I’d be really shocked if their flat-rolled business didn’t make money in the first quarter,” Chuck Bradford, president of Bradford Research in New York, said today in a telephone interview. “Tubular should be better or at least as good and Europe should be better because they’ll be excluding Serbia.”

The company sold its Serbian division to the Serbian government for a nominal price, U.S. Steel said. The division had an operating loss of more than $200 million in 2011, according to the company.

The Serbian plant was “the most financially disadvantaged piece of the company,” Mark Parr, an analyst at Keybanc Capital Markets in Cleveland, said by phone. “If you pull that out, the company would have made money in 2011.”

The loss from the company’s European business unit widened to $89 million from $39 million a year earlier.

“U.S. Steel Europe results continue to reflect the difficult economic situation in the region,” Surma said in the statement.

The Bloomberg Steel Profitability Index, a measure of the condition of North American blast-furnace operators, rose 2.4 percent on average in January from a year earlier. The index measures benchmark prices of steel and steelmaking inputs.

--Editors: Steven Frank, Simon Casey

To contact the reporter on this story: Sonja Elmquist in New York at selmquist1@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net


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