Bethlehem Steel Corp. looks forward to profit

FACING THE CHALLENGES OF THE NEW YEAR

January 03, 1993|By Ross Hetrick

With three losing years behind it, Bethlehem Steel Corp. may eke out a small profit this year.

Bethlehem, which owns the Sparrows Point steel mill in Baltimore County, racked up more than $1.2 billion in losses in 1990 and 1991. And for the first nine months of last year, the company lost $180 million, or $2.50 per share, on revenues of $3 billion.

But Charles Bradford, vice president of UBS Securities Inc. in New York, predicts a small profit this year based on $200 million of expected cost cuts and an improvement in the economy. Analysts' estimates compiled by Bloomberg Business News call for earnings of 46 cents per share in 1993.

Potential problems include price cuts by low-cost competitors. Bethlehem also may find resistance to price increases -- previous attempts to boost prices have failed, and prices remain at 1981 levels.

The company also could stumble by not continuing to cut labor costs and other expenses aggressively. "This company has to make it on cost reduction," Mr. Bradford said. "They can't do it on price increases."

Vahid Fathi, senior vice president and metals analyst for Kemper Securities Inc. in Chicago, is more optimistic. He says there will be a token profit -- if the economy improves, steel prices move up modestly and imports are limited by trade cases brought by domestic steel companies.

In November, the Commerce Department made a preliminary determination that 12 countries had subsidized steel imports, and required a cash deposit or a bond to cover possible future duties. A decision on imposing duties will be made in several months.

The small profit this year should be followed by larger gains in 1994 and 1995.

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