Steelmaker heads for profit breakthrough

Manufacturing News, Source : The Manufacturer US
Published : 06 Nov 2002 12:25

The controversial tariffs that President Bush slapped on foreign steel imports last March seem to be hitting home, with the US’s largest steelmaker poised to make an annual profit for the first time since 1999.

Pittsburgh-based US Steel said the tariffs of 8% to 30% on a range of foreign steel products had combined with strong shipments and higher prices in contributing to the turnaround. The tariffs had prompted complaints to the World Trade Organization from foreign companies who said they violated global trading rules.

US Steel reported third quarter net income of $106 million, compared with a net loss of $23 million for the same period a year earlier. Revenue jumped 15% to $1.91 billion from $1.66 billion.

“Our solid third-quarter financial results were due largely to higher realized prices for both our domestic and US Steel Kosice (Slovakia) operations, continued strong shipments and operating efficiencies,” said US Steel CEO Thomas Usher.

The company's flat-rolled division, which makes the steel used in automobile manufacture, saw income from operations soar to $61 million, compared with a loss of $97 million a year earlier. However, flat-rolled shipments are expected to decline “moderately” in the fourth quarter due to customer efforts to control inventories.

Tubular steel, used in pipe making and oil drilling, recorded income from operations of $4 million, down from $18 million a year earlier and, again, fourth-quarter shipments are likely to be lower than in the third quarter.

Overall, it was the second consecutive quarterly profit for US Steel and the second quarter in a row it out-performed analysts’ expectations. Usher said the steelmaker could post a profit this year after losing $218 million last year.

But commentators have pointed to other problems on the horizon, and it is unclear how long the nation’s number one steelmaker will be able to enjoy high prices with experts expecting steel prices to decline slightly at the turn of the year due to increased production.

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