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Earnings Preview: United States Steel

Fri, 07/23/2010 - 2:26pm
Manufacturing.net

United States Steel Corp. releases second-quarter results Tuesday before the market opens.

WHAT TO WATCH FOR: Signs of whether slowing global economic growth is affecting the Pittsburgh manufacturer's performance.

U.S. Steel is poised to post a profit, with improving demand in industrial production, yet retail sales and commercial construction markets remain weak.

In addition, steel prices have trended lower in recent weeks because of diminishing demand.

On Thursday steel manufacturer Nucor Corp. said second-quarter sales jumped 69 percent on higher average prices. But it sees a general slowdown across all product lines amid economic uncertainty.

One advantage that U.S. Steel has over some competitors is that it has its own source of iron ore for North American operations.

WHY IT MATTERS: The Pittsburgh manufacturing giant turns out a variety of products for the construction, agricultural and industrial equipment industries. Its steel also is used in consumer products ranging from automobiles to appliances, so demand for its products can provide insight into economic growth.

WHAT'S EXPECTED: The company forecast a profit in all three of its operating segments in the second quarter, citing improving business conditions.

Analysts polled by Thomson Reuters, on average, predict earnings of 63 cents a share on revenue of $4.63 billion.

"I think that the quarter is going to be a better quarter than first quarter but there was a downturn in business towards the end of the quarter overall on steel prices and on volume," Steel Market Intelligence analyst Michelle Applebaum said.

"There'll be some impact in the second quarter and I think the outlook for third, which is really more what investors focus on, is going to be very subdued," she said.

LAST YEAR'S QUARTER: U.S. Steel reported a net loss of $392 million, or $2.92 per share, on revenue of $2.13 billion.

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