U.S. Steel’s Q3 2016 Earnings Review: Lower Competition From Imports And Cost Reduction Initiatives Boost Results
U.S. Steel reported a significant year-over-year improvement in its Q3 results, with an improved business environment in the U.S. and the company’s ongoing cost reduction initiatives translating into better earnings. Regulatory intervention in the form of the imposition of antidumping and countervailing duties on steel imports resulted into higher realized prices for the company’s U.S. Flat-rolled operations, which accounts for over 60% of the company’s overall revenue. The company’s results could have been even better but for unplanned production outages at the Flat-rolled operations that lowered the division’s production volumes by around 5%. [1] With European authorities also looking into instances of unfair trade practices with respect to steel imports, favorable regulatory decisions could boost the results of the company’s European operations in the coming quarters. Weak drilling activity amid subdued oil prices continues to weigh on the results of the Tubular Steel division.
Faced with an improving though still unfavorable business environment, the company management remains focused on lowering production costs, improving operational efficiency and lowering debt. The Carnegie Way, U.S. Steel’s company-wide initiative to lower costs and boost operational efficiency, will continue to prop up the company’s earnings going forward. Lower cost operations and debt levels will allow the company to deal effectively with fluctuations in steel prices.
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- Will U.S. Steel Stock Continue To Outperform Despite Economic Headwinds?
- Is U.S. Steel Set For Tough Q3 Results?
- Why We Are Cutting Our Price Estimate For U.S. Steel Stock
- How Will U.S. Steel Stock Fare In An Uncertain Economy?
Have more questions about U.S. Steel? See the links below.
- What Is U.S. Steel’s Revenue And EBITDA Breakdown?
- What Is U.S. Steel’s Fundamental Value Based On Expected 2015 Results?
- How Has U.S. Steel’s Revenue Composition Changed Over The Last 5 Years?
- By What Percentage Did U.S. Steel’s Revenue & EBITDA Change In The Last 5 Years?
- By What Percentage Can U.S. Steel’s Revenue & EBITDA Grow In The Next 3 Years?
- How Has The Increase In Steel Imports To The U.S. Impacted U.S. Steel’s U.S. Flat-Rolled Steel Operations?
- How Has The Decline In Oil Prices Impacted U.S. Steel’s Tubular Steel Shipments?
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Notes:- U.S. Steel’s Q3 2016 Earnings Call Transcript, Seeking Alpha [↩]