Bethlehem's loss narrows in first quarter

Steelmaker loses 82 cents a share, down from 99 cents

productivity increases

April 17, 2002|By Kristine Henry | Kristine Henry,SUN STAFF

Bankrupt Bethlehem Steel Corp. reported a narrower first-quarter loss yesterday as its position strengthened and said there is no chance it will fold in the near future.

The Pennsylvania steelmaker lost $97.3 million, or 82 cents a share, in the three months that ended March 31. In the first quarter of 2001 Bethlehem lost $118.4 million, or 99 cents a share.

Revenue in the first quarter was down 8 percent, to $803.8 million from $877.9 million a year earlier. But Bethlehem's costs were lower in the first quarter, thanks in large part to lower natural gas prices. Productivity was also up because of work force reductions.

Between managerial layoffs and attrition of hourly workers, Bethlehem's employment levels have been falling. At Sparrows Point, the number of workers represented by the United Steelworkers of America fell in the past year from 3,232 to 3,018 and the number of salaried workers dropped from 521 to 417.

"We were in a free fall in the first quarter of 2001," said Robert S. "Steve" Miller Jr., Bethlehem's chairman and chief executive. "The markets have recovered very well since year end, our order books are strong, pricing is stronger, and we have stopped the hemorrhaging of cash that occurred in the last half of 2001."

Because the company is locked into many long-term contracts, recent price increases on the spot market have yet to have much effect on the company. But shipments were up about 10 percent in the quarter vs. the last quarter of 2001.

Miller also said that the company has enough liquidity to continue operating into the year 2003 and that there is "zero chance Bethlehem would be shutting down plants or going out of business."

The steelmaker had $76 million in cash and cash equivalents at the end of March, down from the $104 million on hand Dec. 31.

Under pressure from both rising imports that helped depress prices and billions of dollars of pension and health care obligations, the steelmaker filed for bankruptcy protection in October.

Bethlehem is in talks to sign a joint venture deal between its Sparrows Point plant and Companhia Siderurgica Nacional (CSN) of Brazil - Latin America's largest steel company. Ten members of the Steelworkers union toured CSN's facility near Rio de Janeiro last week and now will begin earnest negotiations with CSN over a new labor contract.

If the deal goes through, CSN would be responsible for the day-to-day operations of Sparrows Point and Bethlehem would become a holding company whose sole purpose would be to pay out benefits to retirees. Miller said a tentative agreement with CSN could come within the next 60 days.

Bethlehem also is seeking similar joint ventures for its other facilities, including its Burns Harbor mill in Indiana.

The company "is better off with half a loaf of a viable, healthy, growing entity," Miller said, "rather than owning all of a plant that is problematic."

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