United States Steel Corporation (NYSE: X) slipped to a loss in the third quarter from a profit last year as lower shipments and a decline in average realized prices hurt the top line. The bottom line was narrower than the analysts’ expectations while the top line exceeded consensus estimates.
Net loss was $84 million or $0.49 per share, compared to a profit of $291 million or $1.62 per share in the previous year quarter. Adjusted loss per share was $0.21 compared to EPS of $1.79 a year ago.
Net sales dropped by 18% to $3.07 billion. While market headwinds persist, the company continues to focus on what it can control, including re-scoping its asset revitalization investments and reducing fixed costs.
The average realized price of flat-rolled fell by 15% to $732 per net ton while that of U.S. Steel Europe declined by 2% to $656 per net ton. The tubular average realized price dropped by 12% to $1,417 per net ton.
The flat-rolled steel shipments declined by 0.2% to 2.65 million net tons while steel shipments from U.S. Europe plunged by 30% to 765,000 net tons. Tubular steel shipments decreased by 5% to 174,000 net tons. The flat-rolled showed a 5% decline while U.S. Steel Europe recorded a 32% dip in raw steel production.
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The steel prices have been hit by the falling demand due to the weak macroeconomic environment. Also, the trade tariffs continued to remain as a hurdle in the company’s results for this quarter.
In a separate release, the company said it has closed its acquisition of a 49.9% ownership interest in Big River Steel for about $700 million, which implies an enterprise value of $2.325 billion. The company will account for its investment in Big River under the equity method as control and risk of loss are shared among the partnership members. The financial impact of this acquisition will begin to be reflected in United States Steel’s Q4 2019 results.
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