US Steel Corp. reported a first quarter 2016 net loss of $340 million. This compared to a first quarter 2015 net loss of $75 million and a fourth quarter 2015 net loss of $1,133 million.
Commenting on results, US Steel President and Chief Executive Officer Mario Longhi said, “Our first quarter results reflect the challenging conditions as we started 2016, but were in line with our expectations. Contract pricing resets had an immediate impact on our results, while our cost reduction efforts progressed as planned and will continue to grow throughout the year. We took significant actions to align our overhead costs with our operations, contributing $100 million to our Carnegie Way benefits for this year.”
First quarter results for the Flat-Rolled segment declined as compared to the fourth quarter primarily due to decreases in average realized prices for contract business and slightly lower average spot prices compared to the fourth quarter.
European segment results declined compared to the fourth quarter. A decrease in average realized euro based prices and higher repair and maintenance costs, as some outage work was completed, were offset by lower raw materials, energy and operating costs.
First quarter results for the Tubular segment were comparable to the fourth quarter as lower average realized prices and shipments, reflecting the continuing decline in drilling activity and increasing import levels, were offset by lower substrate, spending and operating costs.
Commenting on US Steel’s outlook for 2016, Longhi said, “We are encouraged that our efforts to improve US trade laws and their enforcement have started to be reflected in preliminary trade rulings. This is a positive step toward establishing a fair market environment in the US, but we remain a long way from truly resolving the trade practices that are harming the domestic steel industry. These rulings have been one of the catalysts for improving conditions domestically, and the recent increases in prices for flat-rolled products will begin to be reflected in our results in the second quarter.”
“If market conditions, which include spot prices, customer demand, import volumes, supply chain inventories, rig counts and energy prices, remain at their current levels, we would expect 2016 adjusted EBITDA to be near $400 million,” Longhi said. “If market conditions remain at their current levels, we would expect EBITDA for our Flat-Rolled segment to be higher than our 2015 results, we would expect EBITDA for our European segment to be comparable to 2015 results, and we would expect our Tubular segment EBITDA to be lower than our 2015 results.”