Bethlehem Steel loss widens in quarter

37 cents per share, compared with 26 cents

Basic metals

January 27, 2000|By Sean Sommerville | Sean Sommerville,SUN STAFF

Bethlehem Steel Corp. said yesterday that prices driven lower by imports resulted in a fourth-quarter loss of $38.1 million -- 64 percent more than the $23.2 million loss reported for the comparable period a year earlier.

The Bethlehem, Pa.-based steel giant said the loss might have been steeper if not for higher shipments than in the year-earlier period.

The company, which operates a major plant in Sparrows Point in Baltimore County, also said that import-driven pressure on prices had started to ease. While prices for the year were about 9 percent lower last year than in 1998, they were only 7 percent lower in the fourth quarter of last year than in the fourth period of 1998.

For the first quarterly period since the middle of 1998, average realized prices did not decline during the fourth quarter, said Bethlehem President and Chief Executive Officer Curtis H. "Hank" Barnette. "And there has been some modest price restoration," he added.

Bethlehem's fourth-quarter loss amounted to 37 cents per share, compared with 26 cents in the fourth period a year earlier. Sales for the quarter were flat, at $1.01 billion. Bethlehem shipped almost 2.2 million tons of steel products in the fourth quarter, up 14 percent from 1.9 million tons a year earlier. Bethlehem had been expected by analysts to post a loss of about 41 cents a share.

Shares of Bethlehem lost 81.25 cents yesterday to close at $6.50 on the New York Stock Exchange.

Charles Bradford, an independent steel industry analyst, said the stock appeared relatively cheap among steel companies. "The problem is the earnings have to come through," he said. "I think they should be in the black this year, but I don't know if they will make it in the first quarter."

For the year, Bethlehem reported a loss of $183 million, or $1.72 per share, compared with a profit of $120 million, or 64 cents per share, for 1998. Sales for last year were $3.9 billion, down about 13 percent from $4.5 billion in 1998. Shipments for last year were 8.41 million tons, down about 3 percent from 8.68 tons in 1998.

"Our financial results for 1999, which reflect a number of issues over which we had limited control, were disappointing," Barnette said. "Our shipment levels and prices were depressed because of unfairly traded steel imports, especially plate products. In addition, the results include substantial additional operating costs in connection with planned modernization, which will improve our future competitiveness."

Barnette said the decline in average steel prices of about 9 percent did a lot of damage. "A 1 percent increase or decrease in average realized price per ton in our products results in an increase or decrease in net sales and pretax income of about $40 million," he said.

Pointing to the company's progress during the past year, Barnette singled out the relining of the "L" blast furnace and the construction of a cold-rolling mill at Sparrows Point.

The company anticipates that raw product costs will increase next year, and it vowed to offset those by cutting operational costs. Officials at Bethlehem, which employs about 15,500, would not discuss what the company's head count might be in a year.

Duane R. Dunham, the former president of the Sparrows Point plant who will succeed Barnette as chairman and CEO in April, said he would seek to eliminate duplication of tasks performed at Bethlehem's headquarters and at its plants around the country. "Our top three priorities for this year are cost, cost, cost," he said.

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