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U.S. Steel +7% as adjusted Q2 earnings surprise amid cost cuts

  • U.S. Steel (NYSE:X) +7% AH as adjusted Q2 earnings jumped to $0.17/share, but results show a continuing struggle with a glut in global markets.
  • Net sales edged lower to $4.4B as total steel shipments fell 4% Y/Y, but the result was ahead of analyst consensus; also, total operating expenses dropped nearly 2% to $4.37B.
  • Expects its flat-rolled segment to generate a "favorable impact" of ~$150M in the absence of weather-related and operational challenges experienced during Q2 via reduced repairs and maintenance costs, increased operating efficiencies and higher shipments.
  • Q2 shipments of flat-rolled products fell 5%; at the European business, shipments slipped 0.85% and tubular products fell nearly 2%.
  • Average realized prices declined for the European and tubular segments, but rose again for flat-rolled products.
Comments (4)
  • AlpaNN
    , contributor
    Comments (28) | Send Message
     
    surprise 7% up AH. what is making this stock run if "results show a continuing struggle with a glut in global markets."AKS & X both showed better resultsis this a good entry point for x and aks or wait for few quarter
    29 Jul, 06:47 PM Reply Like
  • Phil McFarren
    , contributor
    Comments (16) | Send Message
     
    As a former management employee of USX all of this rhetoric is the continual garbage from the PR machine that just continues to crank out meaningless dialogue with no reference to turning the company around and instilling a needed attitude adjustment among employees. If you want to know what is wrong with the company call most any management phone line after 5 p.m. and you do not even get an answer. Employees might as well be robots who march in the door in the a.m. gossip with all the peers--drink coffee for at least two hours a day--always leave for lunch--Do not take any risks--never tell the boss what he should hear--tell him or her what they want to hear. Hope to hell somebody is selling something but make sure you keep good records on the imports--best patented excuse for non-performance--since everybody does it --it is a safe game to play.
    And, don't worry about internal audits--all of those people were dumped years ago.

     

    Two changes would do wonders for USS --make every employee responsible for documenting his contribution and value to the company by a multiple of his salary and second, dump the old marketing excuse game and take charge of marketing all products from line of production to end user. Play a smarter game than the competition--develop a real CRM program--E-mail prospective customers weekly with new product price challenges.

     

    I get four or five e-mails a week from foreign producers--we get nothing from USS and forget about getting a return telephone call unless you are a large current customer. Is it any wonder that the USS market slowly shrivels to a dribble--then the answer is to fire all the employees--take credit for the cost reduction--or buy out a competitor ---this all helps hide the real financial facts. How could any employee justify a drop in tubular sales while the company sits in the middle of the greatest oil and gas boom in a century. That is an insult to shareholders and employees should look aghast at leadership of the company--the current playbook is clearly outdated. As an employee when the corporation was the 14th largest in the U. S., the continual demise has been a very painful show to watch. In those days U. S. Steel played a major role with all the leading financial institutions in New York and the company was respected in every corner of the capital in U. S. as well as all steel producing states. Today the company is a mere shadow that crosses the doorway occasionally to complain about the world market place. I am still a respectful stockholder and much to my chagrin I did not short the hell out of the stock like many others when it began its decline from $200-plus per share.
    29 Jul, 10:35 PM Reply Like
  • toolpusher
    , contributor
    Comments (34) | Send Message
     
    If you set the bar low enough, even a 4% drop in sales and a 5% drop in flat-rolled steel along with a 2% drop in tubular sales, can light up the stock price even with mediocre performance. And if you think tubular is losing market share now, wait for the new production in Texas from the Chinese and Tenaris to take market share big time from X.
    30 Jul, 02:45 PM Reply Like
  • Phil McFarren
    , contributor
    Comments (16) | Send Message
     
    Without a change in their marketing strategy -I agree that any new production by a formidable company in Texas will further erode the company's market share.
    As an example, another company is shipping by truck pipe from Alabama to new distribution points in Ohio Utica shale play regularly taking business away from USS despite the latter's large facility at Lorain. Moving pipe by truck from Alabama is at least twice the cost of moving same by rail with a greater likelihood of damage. The story just continues how more flexible marketing programs are serving the ultimate customer in a more efficient manner-thus gaining market share.
    31 Jul, 11:02 AM Reply Like
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