United States Steel Corp. on Tuesday said there are some hurdles ahead for the global steel industry, as it gave a shaky outlook for the current quarter after posting a second-quarter loss.
The loss was far smaller than a year ago as sales more than doubled. For the current quarter, the company expects to post a profit compared with a year-ago loss. It thinks results will fall below the $198 million in income from operations during the second quarter because of declining orders from spot market customers.
Shares fell $3.23, or 6.6 percent, to $45.66 in afternoon trading.
In a conference call with analysts ,Chairman and CEO John Surma said while there is an economic recovery under way, there is also "a high degree of uncertainty" about the shape and pace of the recovery, including whether the economy will fall into a "W" shaped double-dip recovery or a slow and steady "U" shaped rebound.
"You can take whatever alphabet you like but I think it is going to be choppy recovery and it is going to take some time," he said.
US Steel noted that European demand is slightly higher than in North America.
"While we're still not prepared to say there is a turn or we're getting optimistic again, (it) feels like there is a little bit more traction in the spot markets in Europe than there are so far in North America," Surma said.
US Steel offers insight into the economic recovery because it makes steel products used in everything from appliances to cars.
The company posted a second-quarter loss of $25 million, or 17 cents per share. That compares with a loss of $392 million, or $2.92 per share, a year earlier.
Taking out the impact of the weakening euro against the U.S. dollar and some accounting charges, US Steel made 45 cents a share — well below the forecast of analysts polled by Thomson Reuters, who on average predicted profit of 63 cents per share.
Sales more than doubled to $4.68 billion. Analysts predicted $4.63 billion. Surging revenue was offset by higher operating expenses, which nearly doubled from a year earlier.
Shipping and production are being dragged down by slower order rates, due to seasonal weakness and changes in inventory.
Steel prices have fallen in recent weeks because of diminishing demand.
Also on Tuesday, AK Steel said it is cutting production capacity amid weakening demand. The gloomy news from the pair of steelmakers was a stark contrast to a number of largely positive corporate earnings reports and outlooks in the past week.
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