PITTSBURGH (AP) - United States Steel and AK Steel Tuesday reported strong increases in second-quarter profit, and the industry forecast even bigger third-quarter gains.
U.S. Steel posted a 64 percent increase in earnings, and AK Steel, which has locked out union workers at its biggest mill for nearly five months, said its profit more than tripled.
After paying preferred dividends, U.S. Steel Corp.'s net income rose to $400 million, or $3.22 per share, from $244 million, or $1.91 per share, in the year-earlier quarter. The recent quarter included a boost of 12 cents per share related to a tax adjustment.
Sales increased to $4.11 billion from $3.58 billion a year ago. The company said sales grew across its three major segments: flat-rolled products; U.S. Steel Europe and tubular products.
Solid demand in key markets and strong shipments combined with productivity improvements to boost results, the company said.
Analysts had expected profit of $2.38 per share on $3.87 billion in sales, according to Thomson Financial.
Chairman and Chief Executive John P. Surma said the company expects ''continued strong operating results for our three reportable segments in the third quarter of 2006,'' adding that ''healthy steel consumption levels are expected during the quarter along with further increases in flat-rolled prices in the U.S. and in Europe.''
Pittsburgh-based U.S. Steel is the nation's No. 2 integrated steelmaker behind Mittal Steel USA.
Middletown-Ohio based AK Steel said it earned $29.1 million, or 26 cents a share, for the quarter ended June 30 compared with profit of $9 million, or 8 cents a share, a year ago.
Sales rose to $1.5 billion from $1.45 billion a year ago.
Analysts had expected earnings of 22 cents a share on sales of $1.5 billion.
The year-ago results included a non-cash charge of $29.5 million, or 27 cents a share, for costs associated with state tax law changes. Without the charge, net income would have been $38.5 million, or 35 cents a share.
Operating profit for the second quarter was $63 million, compared with $74.2 million a year ago.
Some 2,700 hourly production and maintenance workers have been locked out of AK's Middletown Works since their contract expired Feb. 28. The company has continued to operate with about 1,500 salaried and replacement workers.
''By the end of the quarter, our temporary work force was operating nearly every unit at Middletown Works at or above the levels prior to the onset of the labor dispute on March 1,'' said James L. Wainscott, chairman, president and CEO.
AK Steel makes flat-rolled carbon steel and stainless and electrical steel used in cars and appliances.
Analyst Charles Bradford of Bradford Research/Soleil Securities said the steel industry was having a stronger than expected quarter and predicted an even stronger third quarter.
''Any steel company that doesn't have a really good quarter needs a new manager,'' he said.
''But the underlying sentiment in the industry is getting negative because a lot of this strength is customers building inventory'' he said.
Eventually, he said, orders will drop and prices might flatten, adding, ''I don't think we'll have a big collapse, but August might not be the biggest month.''