Shares for United States Steel Corp. (X) tanked right out of the gate on Tuesday after the company released a dismal second-quarter earnings report.
For Q2 2013, US Steel posted a loss of $78 million, or $0.54 per share on revenue of $4.43 billion, compared to the prior year period during which the company earned $101 million, or $0.62 per share on revenue of $5.02 billion. Consensus estimates had the company losing $0.81 per share on revenue of $4.61 billion.
US Steel’s flat-rolled and tubular segments underperformed and shipments were down 6.5 percent from Q2 2012 to 3.7 million tons. Meanwhile, the company’s profits in Europe were down $34 million from the year previous.
The poor sales figures are to a considerable extent the result of a labor dispute at the company’s Lake Erie Works facility in Nanticoke, Ontario, that made up some 10 percent of US Steel’s raw output in 2012. Approximately 1,000 members of the United Steelworkers Local 8782 have been locked out since late April as a result of a contract dispute.
While workers are set to vote on the company’s most recent offer on Wednesday, they have already rejected one proposal that was floated shortly before the lockout. The current standing offer has not been approved by the union, and the last lockout at the factory, in 2009, lasted for eight months.
Labor disputes were not the only reason for the fairly disastrous Q2 however, as maintenance projects that are expected to carry in to the third quarter have also inflated costs. The European segment in particular will see a blast furnace-outage that will last for the duration of Q3, and the company expects even lower figures than in the recently ended period.
Still, US Steel expects better numbers from the flat-rolled segment due to lower raw material costs, and the tubular segment should see an uptick from increased shipments from more drilling activity.
Shares dropped early on Tuesday, down 7 percent to $17.65 in midday trading.