Mario Longhi, who has been serving as U.S. Steel’s (X) CEO since 2013, has announced his retirement. The move comes after the company missed its 1Q17 earnings by a wide margin and slashed its 2017 profit guidance. In this article, we’ll take a brief look at Longhi’s tenure at U.S. Steel.
When Longhi took over as U.S. Steel’s CEO, the company was not in the pink of health and had seen four consecutive years of losses. Longhi embarked on a transformation plan called the “Carnegie Way.” Through a disciplined approach, it started working to strengthen its balance sheet with intense focus on cash flows, improving operational efficiency, optimizing supply chain, and right-sizing its operations.
U.S. Steel made some hard decisions as part of this exercise. The company shut down some of its loss-making plants, deconsolidated its loss-making Canada operations, and restructured its management to streamline its operations and compete with new-age mini-mills (AKS) like Nucor (NUE) and Steel Dynamics (STLD).
Under the Carnegie Way program, U.S. Steel worked to cut its costs and control its cash outflow. While the company’s efforts to cut costs were appreciated, some market observers point out that U.S. Steel underinvested in its facilities over the last few years. These observers point to U.S. Steel’s “asset revitalization program,” which was announced earlier this year as a testimony to their point of view.
Notably, U.S. Steel has faced several downgrades after its 1Q17 earnings, which we’ll look at in detail later in this series. But before that, in the next part, let’s see how analysts are rating ArcelorMittal (MT).