Armco Steel sees bigger loss in 3rd quarter

October 01, 1992|By Ross Hetrick | Ross Hetrick,Staff Writer

Armco Inc., the owner of two stainless steel operations in the Baltimore area, said yesterday that it expects a loss in the third quarter that is "somewhat greater" than the $15 million lost in the second quarter, excluding extraordinary items.

Meanwhile, Armco's stainless steel rod and wire division is working with other producers in preparing trade cases against foreign companies, which they accuse of dumping steel on the U.S. market or receiving unfair government subsidies.

Armco released its third-quarter earnings estimate yesterday with a filing it submitted to the Securities and Exchange Commission in connection with the planned offering of $200 million in senior notes and convertible preferred stock.

Armco spokesman Jim Herzog said the underwriters of the securities recommended the announcement because stock analysts have been estimating the company's third-quarter loss would be 10 cents a share, or about $10 million. "They were concerned that expectations were too high," Mr. Herzog said.

The announcement had little effect on the company's stock, which moved up by 12.5 cents per share, closing at $6 a share. The actual earnings are scheduled to be released late next month.

Mr. Herzog attributed the poorer third-quarter results to the seasonal decline in demand and weakness in the automotive and aerospace industries. There were also two shutdowns during the third quarter of the company's stainless steel melting facilities in Butler, Pa.

In the second quarter, Armco reported income of $2.5 million. But without extraordinary gains and losses, Armco would have lost $15 million in that quarter.

The company's Baltimore operations include the Eastern Stainless Corp. in Essex, which has a work force of 625, and the Armco Stainless & Alloy Products division, which has 355 workers.

The Armco Stainless division recently announced it is working with four other companies in preparing unfair-trade cases against foreign makers of rod and wire.

In July, Armco and 11 other steel companies filed charges with the U.S. Commerce Department against foreign makers of flat rolled steel. Flat rolled products, used in cars, ships, buildings and consumer items, account for about 60 percent of U.S.-made steel.

While stainless steel rod and wire production accounts for only about 2 percent of American steel production, it is a major part of the product line at the Armco Stainless plant on East Biddle Street in Baltimore.

H.W. Delano, a spokesman for the Specialty Steel Industry of the United States, said foreign imports of stainless steel rod and wire have grown to 17,939 tons during the first six months of 1992, from 12,091 tons during last year's first half.

Much of the stainless steel wire and rod imports come from France, Italy, England, Spain, Japan, South Korea, Brazil and Sweden, Mr. Delano said.

Earlier this year, Armco's Baltimore operation was consolidated with another Armco plant in Bridge- ville, Pa. About 100 workers were laid off in Baltimore as the result of this merger, according to Raymond E. Hein, Armco Stainless president.

Another 300 workers have been laid off this year because of increased imports and the poorer economic conditions, he said.

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