Beth Steel's earnings reflect tough winter $100,000 quarterly profit a result of bad weather, GM strike

April 24, 1996|By Timothy J. Mullaney | Timothy J. Mullaney,SUN STAFF

Bethlehem Steel Corp. saw its profits all but evaporate during the first three months of the year, the company said yesterday, buffeted by low steel prices, harsh winter weather that left four feet of water in one Pennsylvania mill, and a strike at General Motors Corp.

The Pennsylvania steel company said it earned $100,000 in the first quarter, down from $52.5 million in the same months of 1995. This year's first-quarter sales were $1.12 billion, down about $120 million.

Charles Bradford, a steel industry analyst at New York-based UBS Securities, said he actually had expected the earnings to be worse, given all the bad news during the quarter.

"I thought my 15 cents a share [projected loss] not conservative enough," Mr. Bradford said.

The report was in line with what other steel producers have been saying: that the first quarter was bad because of poor weather, the GM strike and the residual effects of steel prices that softened throughout 1995, and are now lower than early last year ZTC even as steel producers announce price increases that they hope they will be able to make stick.

"Demand for steel is strong. Price increases have been announced," Beth Steel Chairman Curtis H. Barnette told the company's annual stockholders meeting yesterday in Wilmington, Del. But he said later that the industry is still well short of getting its prices to where they were many years ago, if adjusted for inflation.

The company, along with Mr. Bradford, said the price increases should stick because major steel customers have now used up inventories of steel they piled up during the economic slowdown in the fourth quarter of 1995.

The industry is expected to add up to 19 new domestic steel plants by 2000, according to trade press reports, and that is likely to intensify pressure on steel prices. "That's when it starts to get a little hairy," said Mr. Bradford, adding Nucor Inc.'s South Carolina plant is expected to be a particular problem for Bethlehem Steel's Sparrows Point mill when it opens later this year.

Sparrows Point employs more than 5,000 people in eastern Baltimore County. A delegation of union steelworkers came to yesterday's meeting to plead for a list of capital improvements they said would make the mill more competitive, but Mr. Barnette did not commit to any of them.

Pub Date: 4/24/96

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