Beth Steel has good quarter

April 27, 1994|By Ross Hetrick | Ross Hetrick,Sun Staff Writer

WILMINGTON, DEL — WILMINGTON, DEL. -- Bethlehem Steel Corp. continued its profitable trend with its announcement yesterday that it earned $12.9 million, or 2 cents a share, in the first quarter.

Yet the nation's second-largest steelmaker, which owns the Sparrows Point steel mill and shipyard in Baltimore County, could have earned $30 million more if cold winter weather and a malfunctioning blast furnace in Bethlehem, Pa., had not interfered with operations.

But now that the warm weather has returned, profits should rise with the temperature, Bethlehem Chairman and Chief Executive Officer Curtis H. "Hank" Barnette told shareholders yesterday at the annual meeting.

"Demand for our sheet and plate products remains strong," he said. "The economy and steel markets are expected to show continued strength for the balance of the year."

Earnings were boosted by stronger steel demand from automotive, machinery and light construction markets, along with higher prices for plate and sheet products, Mr. Barnette said. But they were also helped by aggressive cost cutting and restructuring by the company, he said.

"We have dramatically reduced our costs, improved our product quality and enhanced our product mix," he said.

While the results were hurt by the weather, Bethlehem did well under the circumstances, according to Christian F. Baiz, senior financial analyst for Roulston Research Corp., a research firm in Cleveland.

"My view is they did pretty well for the first quarter," he said, adding that he had predicted the company would lose 9 cents a share because of the weather. But the consensus of other analysts was that the company would have a net income of $23.2 million, or 13 cents a share.

"I think the second quarter will be a far more attractive quarter for the company," Mr. Baiz said. He was particularly impressed by a 14 percent reduction in selling, administrative and general expenses to $34.4 million from $40 million a year ago.

The stock market reacted favorably to the news, with the stock rising 25 cents a share to close at $20.875 a share.

The first-quarter net income is the third profitable quarter for Bethlehem, excluding a restructuring charge of $290 million in last year's fourth quarter.

Without that restructuring charge, which was connected to the shutdown of some operations in Bethlehem, Pa., the company would have made a profit last year of $76 million. The company last made a profit in 1989.

But some of the shine of the company's renewed profits has been tarnished by a series of accidents at Sparrows Point that have claimed three lives since October.

"We deeply, deeply regret that or any other accident," Mr. Barnette said at a news conference after the annual meeting.

He said the company has not found a cause for the two most recent accidents. On Tuesday, a worker was killed when molten iron was spilled. Another man fell off a pier at the shipyard on Feb. 20.

"There is not a satisfactory answer for the two accidents," Mr. Barnette said, adding that the incidents were not linked to the plant's increased production.

In a third incident, on Oct. 31, a foreman died after falling 16 feet from a raised concrete pad at the Sparrows Point mill.

The first-quarter profit stemmed from a $36 million operating profit in the company's basic steel operation, which benefited from increased demand and higher prices for flat rolled products from the Sparrows Point mill, which has 5,800 workers, and Bethlehem's other major steel mill in Burns Harbor, Ind.

Sales jumped by 10.9 percent to $1.1 billion from $1.0 billion in the previous first quarter.

But the company's steel-related operations, which include the Sparrows Point shipyard, lost $10 million partly because of a weak market for the shipyard and weather-related costs, according to a press release.

The shipyard, which is called the BethShip Division, has 1,000 workers and is now working on ships that are part of the U.S. Ready Reserve Fleet and various merchant ships.

The first-quarter income compares to a loss of $40.8 million, or 53 cents a share, in the previous first quarter.

But results were about $35 million less than the fourth-quarter operating income, excluding the restructuring charge. About $20 million of that drop was due to the problems related to harsh weather -- such as higher energy costs, increased repairs and reduced productivity. Another $10 million was attributed to problems with a blast furnace in Bethlehem, Pa.

Bethlehem Steel Corp.. .. . .. .Ticker.. .. .. .. .. Yesterday's

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

.. .. .. .. .. .. .. .. .. .. ..BS .. .. .. .. ..... 20 7/8 .. .. ..+ 1/4

Period ended

3/31/94 .. .. .. .. .. .. .. ..1st qtr.. .. .. ....Year ago.. .. .. .. Chg.

Revenue .. .. .. .. .. .. .. ..$1,131,200 .. .. . .$1,020,400 .. .. ..+10.9%

Net Income .. .. .. .. .. .. ..$12,900 .. .. .. .. $(40,800).. .. .. .. -- Primary EPS .. .. .. .. .. .. .$0.02 .. .. .. .. ..$(0.53) .. .. .. .. ..-- Figures in thousands (except per share data.)

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