U.S. Steel loses $439 million in 1st quarter 2009

By Times of Northwest Indiana and Wire Reports

PITTSBURGH | U.S. Steel Corp. says it lost $439 million in the first quarter ending March 31 as the recession pinched demand for the metal.

The nation's largest steel producer, which has a facility in Gary, says it lost $3.78 per share. That compares with a gain of $235 million, or $1.98 per share, a year ago.

Pittsburgh-based U.S. Steel says sales fell by nearly half to $2.75 billion.

The company said it will offer more stock and reduced its quarterly dividend to 5 cents per share, down from 30 cents per share. It says lenders agreed to eliminate financial covenants from loans. And it's cutting capital spending.

The company also reached an agreement with the United Steelworkers to defer up to $170 million in mandatory retiree health and life insurance trust contributions.

The steel industry has been hit especially hard by the global economic meltdown, which has undercut demand and prices for the metal used in everything from cars to office buildings. U.S. Steel and other companies filed petitions with U.S. trade officials earlier this month decrying imports from China flooding the domestic market.

U.S. Steel Corp. gave layoff notification letters to hundreds of steelworkers at its Gary Works and Midwest plants Friday. The exact number of employees affected in the layoffs weren't available late last week.

The company said aside from operations continuing at Gary Works and a few other major facilities, the rest have been temporarily idled.

U. S. Steel Chairman and CEO John P. Surma said the results were because of weak customer demand for certain products combined with customers' efforts to reduce inventories. The flat-rolled segment lost $422 million in the first quarter and European operations of U.S. Steel lost $159 million. The company isn't projecting an earnings improvement in the second quarter either.

"We continue to face an extremely difficult global economic environment," Surma said. "We expect an operating loss in the second quarter as our order book remains at low levels and idled facility carrying costs continue to be incurred. Extremely short lead times coupled with the uncertainty surrounding financial markets and key steel-consuming industries such as automotive and construction make it difficult to forecast beyond a very short horizon."