‘The trough’ is behind U.S. Steel, CEO Burritt says
Steelmaker reports loss, reopens furnaces
Pittsburgh-based steelmaker U.S. Steel Corp. told investors that things are beginning to look up after a quarter that saw multiple facilities shut down and profits plunge as a result of the COVID-19 pandemic and the deteriorating state of the oil and gas industry.
“The second quarter was clearly the trough, and we have to get better at making money when the market hits bottom,” company CEO David Burritt said during a call with analysts Friday. Early this year, he predicted that the first quarter would be “the trough.”
U.S. Steel posted a net loss of $589 million, or $3.36 per share, during the three months that ended June 30. Last year during the same time, the steelmaker reported a profit of $68 million, or 39 cents per share.
The pandemic has had a deep impact on the company, which closed several blast furnaces, consolidated its tubular operations and is “analyzing opportunities” to consolidate the space it leases for its headquarters in the UPMC tower Downtown.
But as customer demand — specifically from the automotive, construction, packaging and appliance markets — came back, U.S. Steel restarted its Mon Valley and Gary Works blast furnaces at the beginning of June.
Its tubular segment, which serves the oil and gas industry, isn’t crawling out of the bottom anytime soon. In fact, U.S. Steel leaders told analysts that it hasn’t even reached the trough yet.
The steelmaker’s foremost strategic priority is completing the acquisition of an Arkansas mini mill through its stake in Big River Steel. U.S. Steel invested $700 million in a joint venture with the three-yearold company for a 49.9% interest in the mill, and has another three years to complete the acquisition of the entire business.
Big River represents U.S. Steel’s strategy to marry its legacy integrated business with smaller mills and more sustainable production.
“With Big River Steel, we’ll make money in a trough,” Mr. Burritt said.
Also part of its modernization goals is a $1.5 billion project to upgrade Mon Valley Works, announced last year.
The effort has been delayed, in part because of lags in permitting caused by COVID-19, the company said Friday.