US Steel 2nd-qtr net income cut in half, but beats Wall Street expectations, shares rise | iNFOnews | Thompson-Okanagan's News Source
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US Steel 2nd-qtr net income cut in half, but beats Wall Street expectations, shares rise

Shares of U.S. Steel jumped 9 per cent Tuesday after the manufacturer exceeded Wall Street's expectations for the second quarter by raising some prices and selling more steel to energy companies.

U.S. Steel Corp. also said it expects each of its business segments to manage an operating profit in the third quarter, although overall results should decline from the second quarter.

Net income still fell by half because of challenging economic conditions. The Pittsburgh manufacturing giant earned $101 million, or 62 cents per share, in the April-through-June quarter. That's down 54.5 per cent from net income of $222 million, or $1.33 a share, a year ago. Revenue fell 2 per cent to $5.02 billion.

Analysts predicted net income of 48 cents per share on revenue of $5 billion, according to FactSet.

Steel manufacturers have turned in weaker second-quarter performances as a number of key steel customers reduced demand, including the construction industry. The economies of the U.S. and China have slowed while Europe's economy remains fragile with some countries in recession.

Typically, the second quarter is the strongest for the industry. But Nucor Corp., AK Steel Holding Corp. and ArcelorMittal all reported weaker earnings from April through June, blaming anemic demand.

U.S. Steel fared somewhat better because it sells more steel under contract to makers of automobiles, appliances and other products, Nomura Securities International analyst Curt Woodworth said.

Demand has been stronger in those markets and the contracts helped U.S. Steel keep prices more stable, he said.

In addition, U.S. Steel sold more pipes and other products to energy companies during the quarter. Woodworth expects those sales to decline in the third quarter as some companies adjust operations due to lower oil and natural gas prices.

For the quarter, U.S. Steel's shipments declined 1 per cent from a year ago and were off 4.1 per cent from the first quarter. The company blamed the drop on an increase in flat-rolled steel imports.

Average prices increased for flat-rolled steel and in U.S. Steel Europe but fell slightly for tubular products. Overall operating expenses fell 1 per cent from a year ago.

Shares of U.S. Steel rose $1.72, or 9.1 per cent, to $20.64 in midday trading.

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AP Business Writer Samantha Bomkamp contributed to this report.

News from © The Associated Press, 2012
The Associated Press

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