Bethlehem Steel Corp., which operates the Sparrows Point steel mill in Baltimore County, lost $29.1 million in the second quarter, but analysts say the company is in better shape than most other U.S. steelmakers.
The Bethlehem, Pa., company yesterday reported a loss of 46 cents a share on sales of $1.1 billion in the second quarter compared with income of $21.9 million, or 21 cents a share, on sales of $1.3 billion in the year-ago period.
For the first half, the company reported a loss of $68.3 million, or $1.06 cents a share, on sales of $2.2 billion, compared with a profit of $43.2 million, or 41 cents a share, on
sales of $2.5 billion in the first six months of 1990.
Bethlehem said it was hurt by lower steel prices and shipments and by higher operating costs.
In addition, the company projected it would have a net loss for the third quarter and for all of 1991.
It attributed the expected loss to high operating costs because of the relining of its blast furnace in Burns Harbor, Ind., and the start-up of its modernized hot line at Sparrows Point.
Although costly in the short run, the renovations will mean long-term profitability because of greater efficiency and quality, said Richard Henderson, an analyst with Pershing & Co. in Jersey City, N.J.
"They are going to be head and shoulders above the crowd," Henderson said.
The analyst predicted Bethlehem will begin to exert its dominance in 1993. "Beth is going to surprise a lot of inves
tors with its upside earnings potential."
Charles Bradford, an analyst with UBS Philips & Drew in New York, said he had expected Bethlehem to post a loss more in line with its $39 million deficit in the first quarter of this year.
"I frankly am very encouraged," he said.
While earnings in the steel industry as a whole were down 42 percent in the first five months, due largely to the recession, Bethlehem is doing better than most and is in a better position to make gains later, analysts said.
For example, USX Corp. earnings plummeted 88 percent in the second quarter as income from oil refining and steel making declined. Its profit fell to $25 million in the 1991 quarter from $212 million in year-earlier period.
The company posted a $212 million loss in the first six months of the year, compared with a profit of $388 million in first half of 1990.
USX closed some of its steel operations earlier this year, making Bethlehem Steel the country's largest steelmaker, with a capacity of 16 million tons compared with USX's capacity of 12.5 million tons, Bradford said.
A continued downturn in the steel industry contributed to Armco Inc.'s loss of $28.5 million, or 35 cents a share, on sales of $388.7 million in the second quarter, the company reported late last week.
The loss included special charges of $16.3 million, and a gain of $17.4 million on the previously announced 5 percent increase in ownership of Armco Steel Co. L.P. by Kawasaki Steel Corp. Also included is an equity loss of $25.2 million, which represents Armco's share in the losses incurred by ASC.
In the second quarter of 1990, Armco had a net loss of $85.1 million, or 98 cents a share, on sales of $457.2 million. The 1990 second quarter included a number of unusual items which reduced income by $79.4 million.
Armco, which is the parent of Baltimore Specialty Steels Corp., anticipates a loss for the year, said Robert L. Purdum, chairman and chief executive officer.
On a per-ton basis, Bethlehem also did better than most. Bradford said USX lost $41 a ton, Armco $67 a ton, but Bethlehem Steel lost only $6.72 a ton on steel produced.
Bradford said Bethlehem Steel probably would have made money had it not been for the renovations at Sparrows Point and Burns Harbor, which interrupted production at those facilities.