USX Corp. Problems Corrected, Chairman Says

USX Corp. Chairman David Roderick said today that the company has corrected problems in the steel division that had caused steel profits to fall below the company’s expectations last year.

USX had predicted that its steel profits in 1988 would be about $60 per ton shipped. But the US Steel unit, the nation’s largest steelmaker, achieved a profit of only about $40 a ton shipped. Roderick said the $60 level will be hit this year.

Declines in tubular steel sales in the second half, higher than expected costs and a fire at the large Gary, Ind., steelworks all hurt steel profit levels, Roderick said in a briefing on the earnings report released Tuesday.

“We didn’t quite do as well in running our mills in the second half as we did in the first half,” Roderick said. The start-up of a Fairfield, Ala., steel plant cost more than expected, he said.

USX took a pretax charge of $101 million against fourth-quarter steel earnings to cover the start-up of Fairfield, an adjustment to the costs of its major 1986 restructuring, retiree labor costs and other items.

Despite the charge the company reported a profit of $158 million on sales of $4.4 billion in the quarter, contrasted with a loss of $14 million on sales of $4.3 billion a year ago. In 1988 as a whole, USX net income more than tripled to $756 million.

Charles Corry, who will succeed Roderick as chairman and chief executive on June 1, said USX’s earnings outlook for 1989 was better than 1988 but declined further comment.

Won’t Divest Steel

Speaking to reporters, Corry said USX does not plan to divest its steel operations, as some had speculated that it might do when it began a restructuring two years ago to avoid a takeover by investor Carl Icahn.

Corry said he could not speculate about Icahn’s intentions regarding USX. “He can answer that better than I can,” Corry said. “We can’t say what his intentions are.”

Icahn, who holds 11.4% of USX, has not added to his holdings since acquiring the stake in late 1986, Corry noted.

Corry said that he is not as close to Icahn as Roderick but that the three men meet occasionally to discuss USX.

“Steel is definitely going to continue to be a part of USX,” he said. But the performance of the USS steel unit since its 1986 restructuring has not been tested in an industry downturn, he added.

Roderick said the company will ship 1 million more tons in 1989 than the 12.2 million in 1988.