Apr. 28--U.S. Steel Corp. said Monday it will cut its dividend, executive salaries and sell stock to raise capital as a result of a $439 million loss in the first three months of 2009.

The loss, equal to $3.78 a share, was steelmaker's first quarterly net loss in five years. It cited weak demand for its flat-rolled and tubular products, coupled with falling prices for its products.

The Pittsburgh-based company, which produced record quarters when the steel industry was booming in 2008, said first-quarter sales dropped to $2.75 billion, from $5.19 billion in the first quarter a year ago. Its net income for the first quarter 2008 was $235 million, or $1.98 a share, and it posted a net income of $290 million in the fourth quarter last year.

U.S. Steel CEO John P. Surma expects U.S. Steel will have operating losses in the second quarter "as our order book remains at low levels and idled facility carrying costs continue," he said in a statement.

"Uncertainty surrounding financial markets and key steel-consuming industries such as automotive and construction" make it difficult to offer anything beyond a short-term forecast, Surma said.

Steel industry analyst Charles Bradford of Bradford/Soleil Research agreed with Surma's assessment that the second quarter will be difficult. With mills running at far below capacity "the losses will pile up really fast because the unit costs go up quite a bit," Bradford said.

While U.S. Steel's tubular business generated $127 million in profits in the quarter, Bradford expects that the company will lose money in the second quarter because of the huge buildup of pipe inventory.

"There's very little demand for pipe because the drilling is down," Bradford said.

U.S. Steel responded to the loss by instituting several cost-cutting measures and plans to raise money by selling 18 million shares of stock and $300 million worth of debt due 2014.

Among the cost-cutting moves U.S. Steel announced:

--Cutting the quarterly dividend to 5 cents a share, a decrease of 25 cents, which will save it about $116 million annually.

--Reducing capital expenditures by $270 million to $410 million. The company previously said it will delay its $1.1 billion project to build new coke ovens at its Clairton coke-producing plant.

--Reaching an agreement with the United Steelworkers to permit the company to defer until 2012 and 2013, $95 million of its contributions for this year and 2010 into its retiree health care and life insurance programs.

Surma, whose 2008 salary was $1.2 million, said he will take a 20 percent cut in his base compensation, and other top executives will see a 10 percent pay cut, and general managers will have salaries reduced by 5 percent to 10 percent.

U.S. Steel, along with other major steelmakers like Severstal North America, Arcelor Mittal and Nucor Corp., have reduced capacity and delayed capital expenditures and cut workers through layoffs and early retirement programs. The company said it recorded a pre-tax charge of $90 million to cover layoff benefits for about 9,400 employees affected by the temporary idling of plants and a slowdown in production at other facilities.

U.S. Steel said its flat-rolled operations, which include the Mon Valley plants, lost $422 million in the first quarter, and operated at just 38 percent of capacity as shipments fell by 24 percent. Its average prices fell by $90 per net ton to $715.

U.S. Steel stock fell yesterday to $27.71 a share, down $1.32, or 4.5 percent. The shares have declined 26 percent this year. The company's results were announced after the market closed.

Joe Napsha can be reached via e-mail or at 724-836-5252.

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