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U.S. Steel Misses 3Q16 Revenue Estimates on Lower Shipments

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3Q16 revenue

U.S. Steel Corporation (X) reported revenue of $2.68 billion in 3Q16, compared with ~$2.83 billion in 3Q15 and $2.58 billion in 2Q16. According to data compiled by Bloomberg, analysts expected U.S. Steel to post revenue of $2.81 billion in 3Q16. U.S. Steel missed consensus revenue estimates in 2Q16.

In comparison, steel producers Nucor (NUE) and AK Steel (AKS) missed 3Q16 consensus revenue estimates, while Steel Dynamics’ (STLD) 3Q16 revenue was more or less in line with estimates.

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Shipments

  • Steel companies’ (XME) revenue is a function of shipments and average selling prices. U.S. Steel shipped 3.7 million tons of steel to outside customers in 3Q16. U.S. Steel’s 3Q16 steel shipments fell on a quarterly and yearly basis.
  • U.S. Steel attributed its lower shipments to unplanned outages at some of its facilities. As a result of these outages, the company’s 3Q16 steel shipments were negatively impacted by 125,000 tons in 3Q16.

Average selling prices

  • While lower shipments dragged down U.S. Steel’s 3Q16 revenue, it was supported by higher steel selling prices. The Flat Rolled segment, which is U.S. Steel’s largest segment, reported an ASP (average selling price) of $718 per ton in 3Q16. This is significantly higher than the average realized prices of $642 per ton in 2Q16 and $674 per ton in 3Q15.
  • The ASP rose on a sequential basis in U.S. Steel’s Europe operations also. However, the Tubular segment’s ASP remained flat between 2Q16 and 3Q16. The Tubular segment, which supplies steel to the energy sector, has seen its fortunes nosedive over the last two years on reduced drilling activity.

Along with looking at a company’s revenue, it’s important to consider its profitability metrics, which we’ll discuss in the next part.

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