Beth Steel posts long-sought profit Higher demand, lull in imports help

October 28, 1993|By Ross Hetrick | Ross Hetrick,Staff Writer

After three dark years of losses, Bethlehem Steel Corp. broke into the light of profits yesterday, announcing it earned $31.2 million in the third quarter.

"I'm very pleased," Bethlehem Chairman Curtis H. Barnette said at a news conference yesterday. "And the celebrating that I'm going to do is to go to work immediately on the fourth quarter."

Mr. Barnette said that, given a moderate improvement in the steel market, he expected the company to turn another profit in the fourth quarter. He declined to speculate, however, on when the company would start paying dividends on its common stock. The company last paid a quarterly dividend of 10 cents a share at the end of 1991.

After years of cost cutting, work force reductions, modernization efforts and battles with imported steel, Bethlehem was helped into the black in the latest three-month period with an uptick in demand for steel and a lull in steel imports.

Contributing to the profitability of the company was its Sparrows Point mill in Baltimore County, which has 5,800 workers. However, the BethShip division, the company's shipyard at Sparrows Point, which employs 750 workers, was a drain on profits because of a two-week strike at the yard in July.

Beth Steel's third-quarter profit included a gain of $25 million, equal to 28 cents a share, stemming from federal tax changes.

Profits were cut by about $20 million because of a five-week strike at an iron ore operation partially owned by Bethlehem as well as the expense of phasing down its steel mills at Sparrows Point and Burns Harbor, Ind., in late July in anticipation of a strike that did not materialize.

The latest earnings, equal to 23 cents a share, were in contrast to a loss of $58.2 million, or 76 cents a share, during the 1992 third quarter.

Despite the good news, the company's stock dropped by 62.5 cents yesterday to close at $16.75 a share.

The decline in the stock price, however, was primarily caused by investors cashing in on a $1-a-share rise Tuesday after USX-U.S. Steel Group reported a $66 million profit in the third quarter, according to David J. Boczar, an industry analyst for New Japan Securities in New York.

"The fundamentals are coming together very well," he said, crediting Bethlehem's cost-cutting and modernization efforts. Mr. Boczar also expects steel imports to stay at bay because of increased competitiveness of American steel companies.

George K. Lynch, vice president for bond research for Salomon Brothers Inc., said Bethlehem was helped by an upturn in steel demand caused by increased automobile and appliance production.

At the news conference at the company's headquarters in Bethlehem, Pa., Mr. Barnette said the company's negotiations to sell its closed bar, rod and wire division does not include the rod mill at Sparrows Point, a 350-worker facility that closed more than a year ago. But, Bethlehem was still talking to companies about either reopening the separate mill or buying just the equipment, Mr. Barnette said.

Bethlehem Steel Corp.

Ticker ... ... ... ... ... ... Yesterday's

Symbol ... ... ... ... ... ... Cls. ... Chg.

BS ... ... ... ... ... ... ... 16 3/4 - 5/8

Period ended

Sept. 30 ... ... ... 3rd qtr. ... ... ... Year ago ... ... Chg.

Revenue .. .. .. ... $1,055,300 .. .. ... $1,007,800 .. .. +4.7%

Net Income .. .. ... $31,200 ... .. .. .. $(58,200) ... ... --

Primary EPS .. .. .. $0.23 ... ... ... .. $(0.76) ... .. .. --

... ... ... .. .. .. 9 mos. .. ... ... .. Year ago .. .. .. Chg.

Revenue ... .. .. .. $3,193,100 .. ... .. $3,017,500 ... .. +5.8%

Net Income ... .. .. $(15,400) ... ... .. $(396,200)* .. .. --

Primary EPS .. .. .. $(0.49) ... .. .. .. $(5.24)* ... ... --

Figures in thousands (except per share data.)

*Includes a charge of $250 million, or $3.16 a share, for changes in accounting rules.

By dialing Sunfax at (410) 332-6123 and entering the code 5670, readers can receive, by fax, a free copy of the Bethlehem Steel third quarter earnings report.

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