Beth Steel loses 31 a share

Bleak 2nd quarter blamed on imports

Dunham is promoted

Metals

July 29, 1999|By William Patalon III | William Patalon III,SUN STAFF

Bethlehem Steel Corp. reported a larger-than-predicted loss yesterday of $29.7 million for the second quarter, and some analysts no longer see the steelmaker returning to profitability this year.

Bethlehem officials also confirmed that the $100 million relining of its "L" blast furnace at Sparrows Point will take 60 to 65 days to finish -- compared with the 54 1/2 days recently forecast.

In a separate matter, the company promoted Executive Vice President Duane R. Dunham, 57, to president and chief operating officer, elected him to the board of directors, and said he is the prime candidate to succeed Chief Executive Officer Curtis H. "Hank" Barnette, who retires in April. The appointment of Dunham, a former Sparrows Point president, takes effect Sunday.

The loss, equivalent to 31 cents a fully diluted share, in the quarter that ended June 30 compares with a profit of $37.6 million, or 23 cents a share, in the corresponding period a year earlier.

Analysts had expected a loss of 28 cents per share, according to Zacks Investment Research.

"I think that they're not going to make money in the third quarter, or the fourth quarter either," said Morgan Stanley Dean Witter analyst Waldo T. Best, who until yesterday was predicting a break-even third quarter for Bethlehem. Sales declined 17 percent to $984.8 million.

"We are very disappointed with our second-quarter financial results, which continued to be adversely affected by unfairly traded steel imports," said Barnette. "Our hot-rolled, cold-rolled and especially our plate businesses are among those that have been seriously injured."

Bethlehem continues to blame its poor financial performance on cheap imports.

Barnette has been the point-man for the U.S. steel industry as it wages a bevy of dumping cases against countries such as Japan, Russia and Brazil.

Bethlehem said it had steel shipments of 2.1 million tons in the second quarter, down from the 1998 quarter's 2.4 million tons as lower volumes from its Sparrows Point and Burns Harbor, Ind., operations more than offset higher shipments from its Lukens plate mills, acquired in May 1998. Prices received for products -- particularly steel plate -- also fell, the company said.

"We have the correct strategy," Barnette said, stating that company executives are going to have to look for more ways to cut costs and boost efficiency company-wide.

The company also blamed part of the loss on the $20 million outlay for the Sparrows Point blast furnace relining.

In an afternoon conference call, Barnette denied that the relining project -- the linchpin of a seven-project, $615 million modernization of Sparrows Point -- is having problems or is behind schedule. He said the company had found "additional opportunities" to improve the furnace.

"As is always the case, when you run into a construction project of that significance, you run into additional opportunities of further importance," Barnette said.

As recently as late June, company officials were insisting that they would hit the 54 1/2-day target. Originally slated for a re-start on Sunday, the furnace won't return to action until mid-August, the company said.

Yesterday's announced promotion of Dunham was accompanied by the naming of Roger P. Penny, Bethlehem's chief operating officer, and Gary L. Millenbruch, its chief financial officer, to the posts of vice chairmen.

Dunham has extensive marketing experience to accompany his experience running businesses, including five years at Sparrows Point. Barnette said that makes Dunham "the primary candidate to succeed me as chief executive."

Shares of Bethlehem lost 18.75 cents yesterday to close at $7.9375.

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