USX Profits Dive; Armco Reports Loss
Depressed conditions in the steel industry continued to show up in second-quarter corporate earnings Tuesday as Armco reported a loss of $384.7 million and USX, which includes U.S. Steel, said its earnings dropped to $14 million from $180 million a year ago.
USX, the nation’s largest steel producer, which is facing a threatened strike by 45,000 steelworkers at midnight Thursday, pointed out that the company’s steel operations lost $42 million in the second quarter.
The company said its second-quarter profit actually amounted to a loss of 3 cents per common share after the company paid $86 million in dividends on preferred shares from earlier retained earnings. The company reported sales of $4.2 billion, compared to $5.4 billion in the second quarter of 1985.
Reflect Price Declines
“Second-quarter results reflect the precipitous decline in crude oil and natural gas prices and continued lackluster demand and depressed prices for steel,” USX Chairman David M. Roderick said.
Roderick used strong language in the company’s earnings statement to warn steelworkers against a strike, saying: “The damage to USS and its union workers would be far-reaching and long-term.”
Armco, the nation’s fourth-largest steelmaker, said it lost $384.7 million on sales of $658.7 million, compared to a loss of $25.7 million on sales of $784.8 million in the same period a year ago.
Armco Chairman Robert E. Boni said the company is nearing the end of 18 months of down-sizing and divestment and is continuing cost-cutting efforts.
The net loss included a special charge of $235 million for the possible closing of Reserve Mining Co., a joint venture with LTV. (LTV, the nation’s second-largest steel producer, recently sought protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code.)
The company also reported charges of $108 million for consolidation of operations primarily in its oil field equipment segment and $42 million from the disposition of several businesses in the fabricated products and services segment.
During the first half of this year, Armco had a net loss of $447.6 million on sales of $1.34 billion, compared to a loss of $52 million on sales of $1.54 billion in the six-month period in 1985.
