(By Balaseshan) United States Steel Corp. (NYSE: X) reported a jump in quarterly earnings on lower costs and expenses as well a tax benefit. Earnings and revenue exceeded Street's expectations.
Earnings for the third quarter were $44 million or $0.28 per share, up from $22 million or $0.15 per share last year. The latest quarter results included a $22 million or $0.13 per share after-tax charge for employee lump sum payments as provided in the new labor agreement.
Sales decreased 8.4% to $4.65 billion.
Analysts, on average, polled by Thomson Reuters had expected a break-even per share on sales of $4.64 billion for the third quarter.
For the latest quarter, the company recorded a tax benefit of $27 million on its pre-tax income of $17 million. The tax benefit includes $20 million or $0.12 per share of favorable effects associated with the settlement of prior years' income tax audits and $26 million or $0.15 per share of a tax benefit to adjust estimated 2011 federal income tax liability to actual tax liability reflected in tax return as filed in the third quarter.
Total steel shipments declined to 5.34 million tons from 5.51 million tons. Flat-rolled steel shipment increased to 3.97 million tons from 3.84 million tons, while U.S. Steel Europe shipment fell to 911,000 tons from 1.20 million tons. Tubular shipment declined to 457,000 tons from 481,000 tons.
Average realized price of flat-rolled steel decreased to $741 per net ton from $773 per net ton, while Average realized price of U.S. Steel Europe declined to $731 per net ton from $862 per net ton. Average realized price of Tubular fell to $1,676 per net ton from $1,699 per net ton.
Looking ahead into the fourth quarter, the company expects total reportable segment and Other Businesses operating results to be around break-even with decreased results in all reportable segments, reflecting the continued weakness in the European and emerging market economies, as well as economic uncertainty in North America.
Average realized prices are expected to be lower for all three operating segments with total reportable segment shipments lower than the third quarter. The company expects a loss for Flat-rolled segment due to slightly lower average realized prices, as well as lower shipments and higher operating costs.
The company expects its European segment results to be around break-even, and its Tubular segment to remain profitable but well below third quarter results. United States Steel projects a minimal tax provision/benefit in the fourth quarter primarily due to the full valuation allowance on deferred tax assets in Canada.
X closed Friday's regular session at $21.15. The stock has been trading between $17.67 and $32.52 for the past 52 weeks.