U.S. Steel Corp. (NYSE:X) shares sagged in early trading as the giant steelmaker reported a modest first-quarter earnings beat but revealed that "operational challenges" at a steel plant in Michigan would hurt second-quarter results.
In early trading, shares of U.S. Steel were down around 7%, at US$35 a share.
U.S. Steel reported first-quarter net income of US$18mln, or US$0.10 a share, compared to a net loss of US$180mln, or US$1.03 a share, in the first quarter of 2017. On an adjusted basis, the company had earnings of US$57mln, or US$0.32 a share, compared to a loss of US$145mln, or US$0.83 a share, a year earlier. Yahoo Finance put the average earnings estimate of 14 analysts at $US0.29 a share.
Revenue at U.S. Steel rose 15%, to US$3.15bn from US$2.73bn. The revenue figure was in line with the average estimate of 10 analysts surveyed by Yahoo Finance.
David Burritt, U. S. Steel president and CEO, said the company's performance in the latest first quarter "was significantly better than the first quarter of 2017, with improved results for all three of our reportable segments enabling four consecutive quarters of more predictable EBITDA."
However, U.S. Steel also said it is experiencing what it termed "operational challenges" at its Great Lakes Works steelmaking operation in Michigan that it expects "will have an unfavorable EBITDA impact of approximately US$30mln on second-quarter results."
"We currently believe that second-quarter 2018 adjusted EBITDA will be approximately US$400mln and full-year 2018 adjusted EBITDA will be approximately US$1.7bn to US$1.8bn," U.S. Steel said.
Last summer, an explosion at a hot strip mill at the Great Lakes Works resulted in injuries to six workers.