Armco chalks up huge loss Company reports $39.6 million loss in the first quarter.

April 24, 1991|By Liz Atwood | Liz Atwood,Evening Sun Staff

The woes of the United States steel industry were reaffirmed today with Armco Inc. reporting a loss of $39.6 million, or 47 cents a share, on sales of $410.5 million.

Included is an equity loss of $31.6 million, which represents Armco's share in the loss of Armco Steel Company, L.P.

In the first quarter of 1990, Armco had net income of $12.9 million, or 12 cents a share, on sales of $445.9 million. That included an equity loss of $1.2 million from ASC.

Armco is the parent company of Baltimore Specialty Steel, which makes stainless steel rod, bar and wire.

Yesterday, Bethlehem Steel Corp. reported a loss of $39.2 million in the first quarter, but analysts said Bethlehem is faring better than most steel companies.

"Bethlehem's performance will compare favorably with the other integrated steel producers," said Richard Henderson, an analyst with Pershing & Co. in Jersey City, N.J.

Charles Bradford, an analyst with UBS Phillips & Drew in New York, calculated that the Bethlehem, Pa., company lost $13 a ton on the steel it produced. But Inland Steel Industries lost $55 a ton, and USX Corp. could report a loss as high $95 a ton, he noted.

"It's a terrible year for the steel industry," said Peter Anker, an analyst with First Boston in New York.

The steel industry is suffering from a slump in demand and higher operating costs. Bethlehem Steel also is spending money on renovating its plants in Baltimore County and Burns Harbor, Ind.

Yesterday's loss translates into 60 cents a share on sales of $1.05 billion, compared with a profit of $21 million, or 20 cents a share, on sales of $1.2 billion in the first quarter of 1990.

In the fourth quarter of 1990, the company posted a loss of $517 million, or $6.91 a share.

The company said today it will pay a dividend of 10 cents a share to shareholders of record May 10. The payment will be made June 10. Bethlehem Steel has paid 10 cents a share for the last six quarters.

Henderson said Bethlehem Steel is taking the right approach in trying to upgrade its facilities. In focusing on its Sparrows Point and Burns Harbor plants, the company will become more profitable and improve its product mix, he said.

Improvements to Sparrows Point include a $200 million renovation of the hot-strip mill that was started in 1989, a $92 million project started a year ago to retool coke ovens to meet environmental standards and a new $150 million sheet-coating line, on which construction started earlier this month. The plant employs about 6,700 people.

Henderson also praised the company for negotiating with labor in an effort to make its Bar, Rod and Wire Division more profitable.

"Here you have a company working very hard to improve its competitive position," Henderson said. "By the end of 1992, they will have Sparrows Point and will also have Burns Harbor relined, and it should be a time when the economy is recovering."

The company is predicting another loss in the second quarter, and analysts said a loss in the third quarter also is likely. But the company could return to profitability as soon as the fourth quarter, Bradford said.

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