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U.S. Steel’s 4Q16 Revenues: Everything You Need to Know

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Feb. 2 2017, Published 11:20 a.m. ET

U.S. Steel’s 4Q16 revenues

U.S. Steel (X) reported revenue of $2.65 billion in 4Q16 compared with $2.57 billion in 4Q15 and $2.7 billion in 3Q16. U.S. Steel’s 4Q16 revenues were largely in line with consensus estimates.

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Shipments

Steel companies’ (MT) revenue is a function of shipments and average selling prices. Shipments depend on end-user demand as well as import penetration. U.S. Steel shipped 3.77 million tons of steel to outside customers in 4Q16. To put this in context, consider that the company’s shipments totaled 3.74 million tons in 3Q16 and 3.70 million tons in 4Q15. U.S. Steel’s 4Q16 steel shipments rose on a year-over-year basis as well as on a sequential quarterly basis.

Notably, all other major steel companies including Nucor (NUE), Steel Dynamics (STLD), and AK Steel (AKS) have reported a sequential decline in their 4Q16 steel shipments. Markets expected the decline in shipments given the typical fourth quarter seasonality in the US steel market.

Sequential increase in shipments

In U.S. Steel’s case, we saw a sequential increase in steel shipments due to two reasons. First, U.S. Steel’s 4Q16 consolidated steel shipments were helped by its Europe operations where shipments rose 14.1% as compared to the sequential quarter. Secondly, the increase in shipments comes from a slightly lower base in 3Q16.

We should remember that U.S. Steel faced unplanned outages in 3Q16. As a result of these outages, the company’s 3Q16 steel shipments were negatively impacted by 125,000 tons.

In the next article, we’ll see how average steel selling prices affected U.S. Steel’s 4Q16 financial performance.

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