U.S. Steel had its best quarterly performance since 2014, but missed analysts’ estimates of $337 million in Earnings Before Interest, Taxes, Depreciation and Amoritization by $65 million, or 19 percent, as it looks to get back on its feet in a challenging time for steelmakers.
The company just sold off its former U.S. Canada operation to Bedrock Industries Group for $126 million, and is hoping market conditions improve worldwide.
“We have faced and continue to face many challenges, some at the company level and some at the industry level,” U.S. Steel CEO Mario Longhi said in a conference call with analysts on Wednesday. “At the company level, we have streamlined our operating configuration, including the temporary idling of facilities to create greater production efficiencies under today’s market conditions and have made many hard decisions to permanently address unprofitable businesses and facilities, with a final resolution of our former operations in Canada now within our sight.”
Longhi said value-added products like advanced high-strength steel now make up more than 70 percent of shipments from the Flat-Rolled segment, which includes Gary Works, East Chicago Tin and the Midwest Plant in Portage.
“With access to our state-of-the-art equipment, computer models and simulators, our experienced team is focused on the future,” he said. “We are pleased with the progress we have made so far on the trade front, but much more work needs to be done to truly create a sustainably fair and level playing field.”
U.S. Steel won three flat-rolled trade cases earlier this year, and is still working to fight an onslaught of cheap imports that have depressed prices and resulted in up to 19,000 steelworker layoffs nationwide.
“We are continuing to utilize all the tools available to us as demonstrated by our Section 337 filing against Chinese steel producers and distributors, and the circumvention actions filed against Chinese companies who are routing products through Vietnam in order to avoid tariffs,” Longhi said.
The company seeks an all-out ban on Chinese steel that would be far more far-reaching than the tariffs it normally pursues.
“Trade cases, the outcomes of trade cases normally are a penalty, a premium that is imposed upon the company’s countries and products,” he said. “The difference here is that the penalty is the different one, which is blocking the — those folks from being able to participate in this market for quite a long period of time. And it’s basically for all products. So that is a fundamental difference between the two approaches.”
General Manager of Investor Relations Dan Lesnak said shipments would decline in the fourth quarter because of planned outages for maintenance, but did not specify which mills.
U.S. Steel anticipates losing $355 million this year, but still has about $3.1 billion in liquidity. The steelmaker does not anticipate restarting its idled Granite City Works plant in Illinois anytime soon, since capacity utilization in the industry is only about 70 percent.