Newsroom
Press Releases

<< Back to Press Releases

United States Steel Corporation Reports 2008 Second Quarter Results

PRNewswire-FirstCall
PITTSBURGH
(NYSE:X)
07.29.2008

PITTSBURGH, July 29 /PRNewswire-FirstCall/ --

  -----------------------------------------------------------------------
                           Earnings Highlights
  -----------------------------------------------------------------------
  (Dollars in millions except
   per share data)                              2Q 2008  1Q 2008  2Q 2007
  -----------------------------------------------------------------------
  Net sales                                      $6,744   $5,196  $4,228
  =======================================================================
  Segment income from operations
      Flat-rolled                                  $478     $120     $92
      U. S. Steel Europe                            298      161     244
      Tubular                                       177       51      97
      Other Businesses                                6       (5)      1
  -----------------------------------------------------------------------
  Total segment income from operations             $959     $327    $434
  Retiree benefit expenses                            1        1     (43)
  Other items not allocated to segments              (6)     (62)      -
  -----------------------------------------------------------------------
  Income from operations                           $954     $266    $391
  =======================================================================
  Net interest and other financial costs             25      (32)     34
  -----------------------------------------------------------------------
  Income tax provision                              255       58      53
  =======================================================================
  Net income                                       $668     $235    $302
  -----------------------------------------------------------------------
    - Per basic share                             $5.69    $2.00   $2.55
    - Per diluted share                           $5.65    $1.98   $2.54
  =======================================================================

United States Steel Corporation (NYSE: X) reported second quarter 2008 net income of $668 million, or $5.65 per diluted share, compared to first quarter 2008 net income of $235 million, or $1.98 per diluted share, and second quarter 2007 net income of $302 million, or $2.54 per diluted share.

Commenting on results, U. S. Steel Chairman and CEO John P. Surma said, "We recorded the highest quarterly sales and net income in U. S. Steel's history during the second quarter as all three reportable segments posted record results, reflecting strong operating performance and favorable global pricing dynamics."

Second quarter 2008 income from operations of $954 million more than tripled our first quarter 2008 income of $266 million and more than doubled our last year's second quarter income of $391 million.

Other items not allocated to segments in the second quarter of 2008 consisted of a charge for inventory transition effects related to the acquisition of U. S. Steel Canada (USSC) that reduced net income by $4 million, or 3 cents per diluted share. Other items not allocated to segments in the first quarter of 2008 reduced net income by $45 million, or 38 cents per diluted share. In the second quarter of 2007, net interest and other financial costs included a $23 million pre-tax charge related to the early redemption of debt, which reduced net income by $14 million, or 12 cents per diluted share.

Foreign currency effects related to the remeasurement of a U.S. dollar- denominated intercompany loan to a European affiliate were largely offset by euro-U.S. dollar derivatives activity during the second quarter. This compares to a foreign currency gain of $70 million, or 59 cents per diluted share, for these items in the first quarter of 2008. At June 30, 2008, U. S. Steel had open euro-U.S. dollar forward sales contracts with a total notional value of approximately $614 million. In early July, the outstanding balance on the intercompany loan was reduced from $1.1 billion to $836 million.

We repurchased 320,000 shares of common stock for $52 million during the second quarter.

Reportable Segments and Other Businesses

Management believes segment income from operations is a key measure in evaluating company performance. U. S. Steel's reportable segments and Other Businesses reported segment income from operations of $959 million, or $136 per ton, in the second quarter of 2008, compared with $327 million, or $48 per ton, in the first quarter of 2008 and $434 million, or $79 per ton, in the second quarter of 2007.

The significant increases in results for all three reportable segments resulted primarily from substantial price increases, which outpaced increases in raw materials costs. Shipments for all segments were also at record levels for the quarter as strong operating results were achieved. Raw steel capability utilization, up slightly from the first quarter, was 92.7 percent in North America, including 101.1 percent for our Canadian operations, and 104.3 percent in Europe.

Outlook

Commenting on U. S. Steel's outlook for the third quarter, Surma said, "We expect another excellent quarter with continued earnings improvement as price increases implemented during the second quarter and early in the third quarter are expected to improve average realized prices for each of our reportable segments."

For Flat-rolled, third quarter results are expected to improve substantially from the second quarter, reflecting continued realization of price increases. Raw steel capability utilization and shipments are expected to remain near second quarter levels, and raw materials costs are expected to increase.

Third quarter results are expected to decrease for U. S. Steel Europe (USSE). While average realized prices should be higher, raw materials costs are also expected to increase, and shipments and operating costs will be negatively affected by a planned blast furnace reline at U. S. Steel Kosice that is scheduled to begin shortly and continue into the fourth quarter.

Third quarter results for Tubular are expected to increase significantly as price increases continue to be realized. Semi-finished steel costs will increase and shipments are expected to be at about the second quarter level.

We are currently negotiating with the United Steelworkers for a replacement of the agreement covering most of our domestic operations. We expect to have the new agreement in place before the September 1 expiration of the current agreement.

This release contains forward-looking statements with respect to market conditions, operating costs, shipments and prices. Some factors, among others, that could affect market conditions, costs, shipments and prices for both North American operations and USSE include global product demand, prices and mix; global and company steel production levels; plant operating performance; the timing and completion of facility projects; natural gas and electricity prices and usage; raw materials and transportation prices and availability; the impact of fixed prices in energy and raw materials contracts (many of which have terms of one year or longer) as compared to short-term contract and spot prices of steel products; changes in environmental, tax, pension and other laws; the terms of replacement collective bargaining agreements; employee strikes or other labor issues; power outages; and U.S. and global economic performance and political developments. Domestic steel shipments and prices could be affected by import levels and actions taken by the U.S. Government and its agencies. Economic conditions and political factors in Europe and Canada that may affect USSE's and USSC's results include, but are not limited to, taxation, nationalization, inflation, currency fluctuations, government instability, political unrest, regulatory changes, export quotas, tariffs, and other protectionist measures. In accordance with "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, cautionary statements identifying important factors, but not necessarily all factors, that could cause actual results to differ materially from those set forth in the forward-looking statements have been included in the Form 10-K of U. S. Steel for the year ended December 31, 2007, and in subsequent filings for U. S. Steel.

A Statement of Operations (Unaudited), Cash Flow Statement (Unaudited), Condensed Balance Sheet (Unaudited) and Preliminary Supplemental Statistics (Unaudited) for U. S. Steel are attached.

The company will conduct a conference call on second quarter earnings on Tuesday, July 29, at 2 p.m. EDT. To listen to the webcast of the conference call, visit the U. S. Steel web site, http://www.ussteel.com/, and click on the "Investors" button.

For more information on U. S. Steel, visit its web site at http://www.ussteel.com/.

                       UNITED STATES STEEL CORPORATION
                     STATEMENT OF OPERATIONS (Unaudited)
                     ------------------------------------

                                     Quarter Ended          Six Months Ended
                             ---------------------------    ----------------
                             June 30   Mar. 31   June 30        June 30
  (Dollars in millions)         2008      2008      2007      2008    2007
  --------------------------------------------------------------------------

  NET SALES                   $6,744    $5,196    $4,228    $11,940  $7,984

  OPERATING EXPENSES (INCOME):
    Cost of sales (excludes
     items shown below)        5,497     4,643     3,595     10,140   6,774
    Selling, general and
     administrative expenses     171       142       138        313     277
    Depreciation, depletion
     and amortization            159       156       118        315     229
    Income from investees        (34)       (7)      (10)       (41)    (12)
    Net gains on disposal
     of assets                    (1)       (1)       (3)        (2)    (13)
    Other income, net             (2)       (3)       (1)        (5)     (8)
                               -----     -----     -----      -----   -----
      Total operating
       expenses                5,790     4,930     3,837     10,720   7,247
                               -----     -----     -----      -----   -----
  INCOME FROM OPERATIONS         954       266       391      1,220     737
  Net interest and other
   financial costs                25       (32)       34         (7)     39
                               -----     -----     -----      -----   -----
  INCOME BEFORE INCOME TAXES
   AND MINORITY INTERESTS        929       298       357      1,227     698
  Income tax provision           255        58        53        313     119
  Minority interests               6         5         2         11       4
                               -----     -----     -----      -----   -----
  NET INCOME                    $668      $235      $302       $903    $575
                               =====     =====     =====      =====   =====

  COMMON STOCK DATA:
  --------------------------------------------------------------------------
  Net income per share:
      - Basic                  $5.69     $2.00     $2.55      $7.68   $4.86
      - Diluted                $5.65     $1.98     $2.54      $7.64   $4.83

  Weighted average shares,
   in thousands
      - Basic                117,507   117,595   118,221    117,551 118,232
      - Diluted              118,217   118,405   118,891    118,190 118,920

  Dividends paid per
   common share                 $.25      $.25      $.20       $.50    $.40



                     UNITED STATES STEEL CORPORATION
                     CASH FLOW STATEMENT (Unaudited)
                   ------------------------------------
                                                         Six Months Ended
                                                              June 30
                                                        -----------------
  (Dollars in millions)                                   2008      2007
  -----------------------------------------------------------------------
  Cash provided from operating activities:
    Net income                                            $903      $575
    Depreciation, depletion and amortization               315       229
    Pensions and other postretirement benefits            (216)      (85)
    Deferred income taxes                                   97        49
    Net gains on disposal of assets                         (2)      (13)
    Changes in: Current receivables                     (1,053)     (297)
                Inventories                               (292)      108
                Current accounts payable and
                 accrued expenses                          798       229
                Bank checks outstanding                     (5)       63
    Other operating activities                             (82)       (2)
                                                        ------    ------
      Total                                                463       856
                                                        ------    ------
  Cash used in investing activities:
    Capital expenditures                                  (340)     (250)
    Acquisition of Lone Star Technologies, Inc.              -    (1,990)
    Acquisition of Stelco Inc.                              (1)        -
    Disposal of assets                                       7        18
    Other investing activities                             (16)       (1)
                                                        ------    ------
      Total                                               (350)   (2,223)
                                                        ------    ------
  Cash (used in) provided from financing activities:
    Issuance of long-term debt                               -     1,583
    Repayment of long-term debt                            (36)     (449)
    Common stock issued                                     11        15
    Common stock repurchased                               (85)      (58)
    Dividends paid                                         (59)      (47)
    Other financing activities                              34         1
                                                        ------    ------
      Total                                               (135)    1,045
                                                        ------    ------
  Effect of exchange rate changes on cash                   12         3
                                                        ------    ------
  Net increase (decrease) in cash and cash equivalents     (10)     (319)
  Cash at beginning of the year                            401     1,422
                                                        ------    ------
  Cash at end of the period                               $391    $1,103
                                                        ======    ======



                       UNITED STATES STEEL CORPORATION
                     CONDENSED BALANCE SHEET (Unaudited)
                     ------------------------------------

                                                   June 30        Dec. 31
  (Dollars in millions)                               2008           2007
  --------------------------------------------------------------------------
  Cash and cash equivalents                           $391           $401
  Receivables, net                                   3,183          2,077
  Inventories                                        2,593          2,279
  Other current assets                                 202            202
                                                    ------         ------
      Total current assets                           6,369          4,959
  Property, plant and equipment, net                 6,890          6,688
  Investments and long-term receivables, net           770            694
  Pension asset                                        871            734
  Goodwill and intangible assets, net                1,992          2,131
  Other assets                                         415            426
                                                    ------         ------
      Total assets                                 $17,307        $15,632
                                                    ======         ======
  Accounts payable                                  $2,357         $1,730
  Payroll and benefits payable                       1,040            995
  Short-term debt and current maturities
   of long-term debt                                   110            110
  Other current liabilities                            366            168
                                                    ------         ------
  Total current liabilities                          3,873          3,003
  Long-term debt, less unamortized discount          3,110          3,147
  Employee benefits                                  3,016          3,187
  Other long-term liabilities and
   minority interests                                  899            764
  Stockholders' equity                               6,409          5,531
                                                    ------         ------
      Total liabilities and stockholders' equity   $17,307        $15,632
                                                    ======         ======



                       UNITED STATES STEEL CORPORATION
               PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
               -----------------------------------------------

                                        Quarter Ended      Six Months Ended
                                 ------------------------  ----------------
                                 June 30  Mar. 31 June 30       June 30
  (Dollars in millions)             2008     2008    2007     2008    2007
  -------------------------------------------------------------------------

  INCOME FROM OPERATIONS
  Flat-rolled(a)                   $478     $120     $92       $598    $167
  U. S. Steel Europe                298      161     244        459     450
  Tubular(b)                        177       51      97        228     199
  Other Businesses(c)                 6       (5)      1          1       3
                                  -----    -----   -----      -----   -----
  Segment Income from Operations    959      327     434      1,286     819
  Retiree benefit expenses(d)         1        1     (43)         2     (82)
  Other items not allocated to
   segments:
    Flat-rolled inventory
     transition effects              (6)     (17)      -        (23)      -
    Litigation reserve                -      (45)      -        (45)      -
                                  -----    -----   -----      -----   -----
      Total Income from
       Operations                  $954     $266    $391     $1,220    $737

  CAPITAL EXPENDITURES
  Flat-rolled(a)                   $145      $83     $69       $228    $119
  U. S. Steel Europe                 49       32      47         81      77
  Tubular(b)                          5        4       1          9       3
  Other Businesses(c)                14        8      25         22      51
                                  -----    -----   -----      -----   -----
      Total                        $213     $127    $142       $340    $250

  -----------
  (a)  Includes the results of the businesses acquired from Stelco Inc. as
       of October 31, 2007, excluding the iron ore and real estate
       interests.
  (b)  Includes the results of the businesses acquired from Lone Star
       Technologies, Inc. as of June 14, 2007.
  (c)  Includes the results of the iron ore and real estate interests
       acquired from Stelco Inc. as of October 31, 2007.
  (d)  The second quarter and first six months of 2007 include certain
       profit-based expenses for former National employees pursuant to
       provisions of the 2003 labor agreement with the United Steelworkers.



                       UNITED STATES STEEL CORPORATION
               PRELIMINARY SUPPLEMENTAL STATISTICS (Unaudited)
               -----------------------------------------------


                                       Quarter Ended      Six Months Ended
                                ------------------------  ----------------
                                June 30  Mar. 31 June 30        June 30
  (Dollars in millions)            2008     2008    2007     2008    2007
  ------------------------------------------------------------------------

  OPERATING STATISTICS
    Average realized price:
     ($/net ton)(a)
      Flat-rolled(b)                777      646     652      713      651
      U. S. Steel Europe            986      791     726      890      697
      Tubular(c)                  1,690    1,297   1,389    1,508    1,410
  Steel Shipments:(a)(d)
      Flat-rolled(b)              4,849    4,701   3,599    9,550    6,787
      U. S. Steel Europe          1,696    1,638   1,616    3,334    3,268
      Tubular(c)                    500      433     288      933      535
                                  -----    -----   -----    -----    -----
        Total Steel Shipments     7,045    6,772   5,503   13,817   10,590
  Intersegment Shipments:(d)
      Flat-rolled to Tubular        472      445     164      917      338
  Raw Steel-Production:(d)
      North American
       facilities(b)              5,614    5,558   4,116   11,172    7,829
      U. S. Steel Europe          1,925    1,908   1,865    3,833    3,664
  Raw Steel-Capability
   Utilization:(e)
      North American
       facilities(b)               92.7%    91.7%   85.1%    92.2%    81.4%
      U. S. Steel Europe          104.3%   103.4%  100.8%   103.9%    99.5%

  -----------
  (a)  Excludes intersegment shipments.
  (b)  Includes the results of the businesses acquired from Stelco Inc. as
       of October 31, 2007, excluding the iron ore and real estate
       interests.
  (c)  Includes the results of the businesses acquired from Lone Star
       Technologies, Inc. as of June 14, 2007.
  (d)  Thousands of net tons.
  (e)  Based on annual raw steel production capability of 19.4 million net
       tons for North American facilities prior to October 31, 2007 and 24.3
       million net tons thereafter, and 7.4 million net tons for U. S. Steel
       Europe.

SOURCE: United States Steel Corporation

CONTACT: Media, John Armstrong, +1-412-433-6792, Investors/Analysts,
Nick Harper, +1-412-433-1184, both for United States Steel Corporation

Web site: http://www.ussteel.com/

Company News On-Call: http://www.prnewswire.com/comp/929150.html

print Print   email Email   rss RSS