U.S. Steel Back in the Black in 1984

U.S. Steel Corp. on Tuesday proclaimed a “satisfying” return to profitability in 1984 with a net profit of $493 million versus a year-earlier loss of $1.16 billion. But its fourth-quarter results were less impressive, and analysts were uncertain that the giant steelmaker had finally returned to financial health.

The profit contained a number of one-time gains, analysts noted, which they said show that the giant company is in worse shape than its bottom-line results suggest.

But if U.S. Steel hasn’t recovered from the recession as well as most other corporations, the results still show a clear improvement from its bleak results of the two previous years.

Among other major steel producers, only National Intergroup Inc., which owns National Steel Corp., is expected to show fourth-quarter and full-year profits.

Chairman David Roderick credited U.S. Steel’s improvement to the results of its diversification--notably the purchase of Marathon Oil Co.--restructuring, cost cutting, higher steel prices and shipments, and other factors.

“These results are especially satisfying in light of the soft market conditions which prevailed in the steel industry and lower oil prices in the petroleum industry,” Roderick said, adding that the company expects 1985 to be profitable as well.

However, analysts said the fourth quarter was characterized by steel price cutting and lower shipments, and those conditions are continuing.

Steel analyst Charles Bradford of Merrill Lynch, Pierce, Fenner & Smith in New York said the upbeat tone of U.S. Steel’s announcement was “the most misleading thing I’ve seen in years. The fourth quarter was a complete catastrophe.”

The full-year profit came on a 9% increase in sales to $19.1 billion.

The company also reported an operating profit of $1.6 billion, compared to $437 million a year earlier.

In the fourth quarter, the company said its net profit was $29 million but that, on a per-share basis, there was a loss of 1 cent after payment of dividends on preferred stock.

That compares to a loss of $983 million in the fourth quarter of 1983.

Sales in the last three months of the year were $4.7 billion, about the same as last year.

Analyst Bradford and others said a string of one-time gains declared for the year masked troubles still plaguing U.S. Steel.

For example, net income of $493 million for the year includes a reduction of $523 million in pension costs due to changes in the actuarial valuation, an extraordinary gain on the repurchase of debt securities and gains on the sale of assets.