U.S. Steel’s profit doubles on higher prices; shares rally
By Daniel at 29 July, 2008, 12:24 pm
U.S. Steel’s profit more than doubles on higher prices
By Shawn Langlois, MarketWatch
Last Update: 7/29/2008 12:15:00 PM
SAN FRANCISCO (MarketWatch) — United States Steel Corp. shares jumped more than
14% on Tuesday after the company reported its second-quarter profit more than
doubled on prices pushed higher by surging global demand for its steel products.
The stock added $20.92 to $166.25 in early trading and, despite some recent
weakness, has now surged 70% in the past year.
The nation’s second-biggest steelmaker (X) posted a profit of $668 million, or
$5.65 a share, up from $302 million, or $2.54 a share, earned in the year-ago
second quarter.
The Pittsburgh-based manufacturer reported that income from operations jumped to
$954 million from $391 million, as quarterly sales reached $6.74 billion from the
prior year’s $4.23 billion.
Analysts polled by FactSet Research had expected earnings, on average, of $3.80 a
share as well as revenue of $5.98 billion.
U.S. Steel has also been able to avoid some of the raw materials costs that have
hamstrung other manufacturers because it processes its own iron ore, which
essentially serves as a shield against rising prices of the key ingredient to
making steel.
The company also supplies its own coke, which is produced from coal and, along
with iron ore, makes up two of the three raw materials used in the steelmaking
process.
Overall, the steel industry has benefited from worldwide demand and a steady
appetite from some burgeoning construction markets. Chairman and CEO John Surma
said he’s looking for the strong results to continue in the coming months.
“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,” he said.
The company warned, however, that third-quarter European results are expected to
slip due in part to scheduled maintenance outage for one of its blast furnaces.
Separately, U.S. Steel’s board of directors raised the stock’s dividend by 5
cents to 30 cents. The dividend will be paid Sept. 10 to stockholders of record
at the close of business Aug. 13.
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