U.S. Steel Corp. posted a slimmer second quarter loss Tuesday due to a revaluation of an intercompany loan that softened the effect of the company's improved performance from operations.
The Pittsburgh-based steel production titan had a loss of $25 million, or 17 cents per share, in the three months that ended June 30, compared to losses of $157 million, or $1.10 per diluted share, in the first quarter and $392 million, or $2.92 per diluted share, in the second quarter of 2009.
U.S. Steel also turned a $198 million quarterly profit from operations, which was the first time the company had an operating profit since the fourth quarter of 2008.
The company said its flat-rolled segment benefited from increases in average realized prices, higher levels of trade, lower energy costs and increased production volumes. The flat-rolled segment made $98 million in the second quarter, which was the highest among U.S. Steel's four operating segments. All U.S. Steel operations in Northwest Indiana are part of the flat-rolled segment.
In the region, U.S. Steel operates Gary Works, the largest manufacturing complex in the company's system. Gary Works includes the steelmaking, finishing and coke production facitilies in Gary, and the Midwest Plant in Portage and East Chicago Tin, which are finishing facilities. U.S. Steel also is part of two joint ventures in Portage: Feralloy Processing Co. and Chrome Deposit Corp.
U.S. Steel blamed a significant portion of its net loss on currency adjustments. A $96 million quarterly loss on foreign currency was largely because a revaluation of a $1.4 billion intercompany loan accounted for a weakening euro relative to the U.S. dollar.
The company had $4.7 billion in revenue in the second quarter, up 20 percent from the first quarter and more than double the amount it had in the second quarter of 2009. The company said it had $2.5 billion in liquidity as of June 30, down from $2.9 billion on March 31.
Production capacity utilization rates in the company's flat-rolled segment were 82 percent in the second quarter.
A dividend of 5 cents per share was declared for shareholders, which is unchanged from the previous quarter.
U.S. Steel Chairman and CEO John Surma said the company expects to turn a third quarter operating profit but didn't disclose when the company could return to overall profitability. He also warned the operating profit would be smaller compared to the April through June period because slower order rates are being reflected in a drop in shipping and production volumes for the flat-rolled segment.
The company also is planning for a cost increase for raw materials, energy and maintenance activities. The activities in the third quarter include planned maintenance work at blast furnaces and repairs to the transportation system used to deliver raw materials to the blast furnaces at Gary Works.
Shares fell $3.13, or 6.4 percent, to $45.76 in Tuesday trading on the New York Stock Exchange.
