U.S. Steel Corp. Chairman Edgar B. Speer told shareholders yesterday that the giant steel company's fortunes should turn around in the last nine months of the year after a first quarter loss of $58.7 million.
Speer said that the loss was due primarily to back-to-back, four-month strikes in iron ore mining and in the coal industry. He said later that although he expected second half earnings to surpass last year's second half it is too early to tell whether profits for the full year will exceed last year's $138 million.
He said the company expects to ship between 5.8 million and 6 million tons of steel during the second quarter and the company's order books are such that the giant steel maker will operate at 90 percent capacity during the current quarter. That is up from about 75 percent during most of last year.
He said a key to both U.S. Steel's performance as well as the entire steel industry's is the government's new program to restict steel imports. So far, Speer told reporters at a press conference before the company's annual meeting here, the program has been an "absolute diaster" and that the industry does not "have any evidence" that the so-called trigger price mechanism is "having any effect at all."
But he acknowledged that the program, which in effect sets minimum prices for foreign steel, only took full effect in late March and it is probably "too early to really know" whether it will keep out low-priced import, which the industry claims are at the heart of its problems.
He said that adequate restriction of unfair imports is the key to whether the industry will operate at sufficient volume in coming months to reduce its need for further price increases. Speer projected that the nation will use 110 million tons of steel this year, up from 108 million tons last year. Whether the domestic industry will be able to increase its share of the market (last year foreigners sold 19 per cent of the total steel used in the United States) depends on how seriously the administration enforces the trigger price program.
He said he is encouraged by the Carter administration's approach to steel imports.
Speer, who has been adament in the past about the need for higher steel prices, was very cautious yesterday in discussing the price future for U.S. Steel and declined to say whether he thought the company would be forced to raise prices again before the end of the year.
Last month, after settlement of the nationwide coal strike, U.S. steel announced a $10.50-a-ton increase to cover what it said were the higher costs of production because of the coal pact.
After intense government pressure, most other steel companies announced a smaller, $5.50 increase, forcing U.S. Steel to scale back its original price announcement. The $5.50 increase averaged a little more than 1 percent, followed an industry wide increase of 5.5 percent on Feb. 1.
The president's Council on Wage and Price Stability said that if the steel industry, and U.S. Steel in particular, is to comply with the President's voluntary anti-inflation program, steel price increases would have to be held to 8 percent or less in 1978. That is a half percent below the 8.5 percent increases in steel products that occurred during 1977.
Without pledging to hold prices to any level, Speer voiced support for the President's program and said the only way to bring inflation under control is through moderating increases in the cost of labor and the price of products and by a strict policy by state, local and federal governments to "spend less rather then more than the taxes they are able to collect."
In other matters Speer told reporters and shareholders:
He could not predict when the company would find itself able to raise dividends back to the 55 cents a share level that prevailed until January, when directors cut it to 40 cents.
U.S. Steel is actively considering whether to build a giant new facility in Conneant, Ohio, on Lake Erie near the Pennsylvania-Ohio border.
The giant steel maker has considered setting up steel making operations abroad. But Speer did not indicate the company has any plant to do so in the near future, if at all.