Steel Mills

U.S. Steel Expects Earnings Loss in Q4

December 20, 2019

U.S. Steel anticipates an EBITDA loss of $25 million in the fourth quarter of 2019, which excludes about $225 million in estimated restructuring and other charges.

Fourth-quarter results were negatively impacted by lower steel selling prices in the third quarter and in October, which impacted about 60 percent of shipments, said U.S. Steel in its earnings guidance. Lower shipment volume is also expected to impact earnings along with a $15 million charge resulting from the Nov. 27 flooding at Gary Works.

The European segment is facing lower prices and weak market conditions that are expected to continue in 2020. As a result, U.S. Steel will keep one of the three blast furnaces at its EU division idled and has postponed the planned Dynamo line investment for 2020.

The tubular segment has also faced headwinds that are contributing to lower fourth-quarter earnings. Declining selling prices and higher scrap costs are expected to narrow margins and reduce earnings along with seasonal slowdown and high import levels.

Full-year 2019 adjusted EBITDA is estimated at $682 million, excluding $284 million in restructuring and other charges and a $47 million impact due to the December 2018 fire at the Clairton coke facility. U.S. Steel hopes to achieve as much as $1 billion of capital and operational cash improvements by 2022.

In a separate press release on Thursday, U.S. Steel announced it will indefinitely idle a significant portion of Great Lake Works, laying off over 1,500 employees.

“Fourth-quarter expected results confirm the need to change to make the business more resistant to factors outside of our control,” said President and CEO David Burritt. “While the decisions being made are difficult, we believe they allow us to drive increased stockholder value as we move towards our future faster with a more capital efficient footprint.

“Market dynamics reinforce the need to accelerate the world-competitive, ‘best of both’ company, ultimately centering our North American Flat-rolled footprint around three world-class assets (Big River Steel, Mon Valley Works, and Gary Works),” he added.

“To get to the future faster, we remain focused on the successful execution of our strategic projects. Acquiring the remaining stake in Big River Steel continues to be our top strategic priority. We are monitoring the Phase II-A expansion of Big River and are encouraged by the progress. The EAF at Tubular remains on-budget and on-track to be operational in the second half of 2020. We remain committed to the Endless Casting and Rolling investment at Mon Valley and its timeline of first coil in 2022 and will continue to be flexible and execute investments at the Gary hot strip mill and Dynamo line at U.S. Steel Europe as market conditions warrant.”