View From a Height

Steel Steal?

So, this catches my eye in the earnings reports (hey, you, wake up, this gets interesting).

U.S. Steel Corp., the first major domestic steelmaker to report earnings, swung to a fourth-quarter profit of $462 million from a year-earlier loss, helped by strong demand, particularly in its tubular business.

The company posted net income of $3.55 a share, its fourth straight quarterly profit after four quarters of losses in 2003, before a pricing boom lifted the steel industry's profits and share prices.

U.S. Steel, the country's largest steelmaker, had a loss of $22 million, or 26 cents a share, a year earlier. Fourth-quarter revenue surged 47% to $3.93 billion.

The company was able to make a $255 Million pension contribution, and will have about $1 Billion in the bank for foreign acquisitions. It's not just rising prices, either, as shipments were up 14% over last year. The company seems to be running as somewhat leaner operation, as SG&A and per-unit cost of production have fallen. US Steel has lagged behind Nucor for years, but may have actually caught it this quarter, and may pass it in cash on hand.

Imagine that. An industry that was being taken to a chop shop itself a few years ago is now ready to buy up foreign competitors. I'm sure this isn't news to industry followers, but for people like me, it's going to mean a whole new paradigm shift. While my parents had to shake their heads at a crumbling empire, I got used to seeing the dead mills in and around Johnstown, PA. (I had a weekly commute from DC to there for a brief time.)

Now, I'm going to have to get used to thinking of the US steel industry as profitable.