United States Steel Corp. (X) on Tuesday reported a profit for the second quarter that more than halved from last year, reflecting lower shipments and prices amid the global economic slowdown. However, both adjusted earnings and revenue beat analysts' estimates. The company's shares are up more than 4 percent in the pre-market trading.
Steel shipments for the quarter totaled 5.43 million tons, down 1.3 percent from 5.50 million tons in the year-ago period. Shipment increases were seen at flat-rolled and tubular segments, while it declined at U.S. Steel Europe.
Tubular segment prices rose 9 percent to $1,706 per ton, while flat-rolled prices declined 4 percent to $772 per ton and U.S. Steel Europe segment prices declined 18 percent to $767 per ton.
John Surma, Chairman and CEO of U.S. Steel said, "Our Flat-rolled and Tubular segments had solid results considering the very fragile nature of the U.S. economic recovery. U. S. Steel Europe returned to profitability with significantly improved results but continues to be challenged by the economic situation in the region."
U.S. Steel's second-quarter net income was $101 million or $0.62 per share, down from $222 million or $1.33 per share in the year-ago quarter.
The latest quarter's results include an $11 million after-tax early redemption premium on $300 million 5.65 percent senior notes due 2013. The prior-year period includes $37 million of net foreign currency gains, primarily related to the accounting remeasurement of a U.S. dollar denominated intercompany loan to a European entity.
Excluding these items, adjusted net income for the quarter declined to $112 million or $0.69 per share from $185 million or $1.12 per share in the same period last year.
On average, seventeen analysts polled by Thomson Reuters expected the company to earn $0.47 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter declined 2 percent to $5.02 billion from $5.12 billion in the prior-year quarter, but beat analysts' consensus revenue estimate of $4.99 billion.
Looking ahead to the third quarter, U.S. Steel expects near break-even results for its flat-rolled segment in the third quarter due to lower average realized prices. The company also expects its European segment results to remain positive, but lower than the second quarter reflecting the continued economic challenges in Europe.
Further, the company anticipates third-quarter results for its tubular segment to be in line with the second-quarter results.
U.S. Steel said it is currently in talks with its employees for a new labor agreement covering most of its domestic operations. The current agreement expires on September 1, 2012. The company said it expects to reach a competitive agreement without a work stoppage.
X closed Monday's trading at $18.92. In Tuesday's pre-market, the stock is gaining $0.81 or 4.28 percent to $19.73.
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