Steelmaker earns $80.5 million in a year first profit since '89 'STRONG YEAR' FOR BETHLEHEM

January 26, 1995|By Ross Hetrick | Ross Hetrick,Sun Staff Writer

Riding the crest of what has been called the best steel market in 20 years, Bethlehem Steel Corp. yesterday reported its first annual net profit since 1989. But the results would have been even more impressive if a key Indiana blast furnace had not been shutdown, adding more than $150 million to the company's expenses.

"We are very pleased with the year. It was a strong year," said Curtis H. Barnette, chairman and chief executive officer of Pa.-based Bethlehem. "We completed major modernization projects that were essential for the long-term strength of our company."

Yet he conceded that the projects hurt the company's bottom line. "They obviously had, as would have been the case with any other company, from an operating cost standpoint, an effect on our earnings," Mr. Barnette said.

Results should be better this year as strong demand for steel continues and steel imports are diverted to improving foreign economies, he said.

The second-largest steel company in the country, which owns the Sparrows Point steel mill and the adjoining shipyard, had a net income of $31.3 million, or 19 cents a share, for the fourth quarter and an annual profit of $80.5 million, or 35 cents a share.

With Bethlehem's total sales hitting $1.2 billion in the quarter and billion for the year, the Baltimore County steel mill has been working at full capacity with a work force of 5,400.

Even the shipyard, which had been a weak performer, perked up in recent months with new contracts sending employment from 200 in August to 1,100 now.

In 1993 the company reported losses of $242.6 million for the fourth quarter and $266.3 million for the year.

But without an after-tax restructuring charge of $290 million, the company would have had a profit of $47 million in the fourth quarter and $24 million for 1993. In that comparison, Bethlehem's operating income dropped by 33.4 percent for the fourth quarter but increased by more than threefold for the year.

The results were below those of other steel companies, which had dramatic increases for the year.

Much of the blame for Bethlehem's subpar results is laid on the three-month shutdown of the main blast furnace for relining at the Burns Harbor, Ind., plant -- the company's flagship mill. That forced the company to import more than a million tons of semifinished steel slabs to meet customer demand.

"Basically, this is a very poor performance on Bethlehem's part," said J. Clarence Morrison, vice president and senior metal analyst for Prudential Securities Research in New York. "The other companies are doing substantially better."

He faulted the company for not fully anticipating the need for semifinished steel and buying it at a cheaper price early in the year. He also said the company should not have allowed the effects of the shutdown and other projects to linger into the fourth quarter.

But another analyst was more charitable.

"It looked like a good quarter compared to what everybody expected," said Charles A. Bradford, a metal analyst for UBS Securities Inc., a New York investment banking firm. "It wasn't good compared to last year, but nobody expected it to be because they had major equipment outages during the quarter," he said.

" '95 should be spectacular because they don't have any of the outages," he said, predicting the company may earn $80 million in the first quarter alone.

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