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April 30, 2014

U.S. Steel Reports Profitable First Quarter
United States Steel Corp., Pittsburgh, reported net income of $52 million in the first quarter, a turnaround from the $73 million loss posted in the same quarter last year. The steelmaker had revised net income of $270 million during the company’s fourth quarter.

Net sales during the quarter totaled $4.4 billion, increasing 4.2 percent compared to the fourth quarter, but decreasing 3.2 percent compared to the same quarter last year.

"We are pleased to report an improvement in our first-quarter operating results despite extreme weather-related issues. Higher natural gas prices and operational issues due to the weather were offset by better commercial prices and Carnegie Way benefits," said U.S. Steel President and CEO Mario Longhi.

First-quarter results for the company's Flat-rolled segment were comparable to the fourth quarter as higher average realized prices and shipments, operational benefits, and reduced repairs and maintenance costs were offset by higher energy and raw materials costs. Average realized prices increased as a result of higher contract and spot-market prices.

Shipments also increased after the holiday downtime in the fourth quarter and a full quarter's worth of production at Lake Erie Works. Repairs and maintenance costs decreased due to the completion of projects at Gary Works and Fairfield Works in the fourth quarter. The extraordinary weather conditions resulted in significantly higher natural gas costs as well as operating inefficiencies and logistical issues that negatively impacted shipments in the first quarter, the company claimed.

Results for the Tubular segment in the first quarter decreased compared to the fourth quarter as lower average realized prices and increased substrate costs were partially offset by the benefits of reduced operating costs. Average realized prices decreased due to pricing pressures primarily from continuing high import levels, the company said.

"We expect reduced income from operations in the second quarter. We expect our production to be limited, which will temporarily slow shipments primarily due to continued weather-related logistical issues affecting both raw materials and finished products," Longhi said.

U.S. Steel expects to report a loss in the Flat-rolled segment during the quarter, as operational difficulties will temporarily limit production capabilities, resulting in reduced shipments and higher operating costs compared to the first quarter. However, the company also expects market conditions to improve in North America, so averaged realized prices should be comparable to the first quarter.

In the second quarter, the company projects its Tubular results will increase compared to the first quarter. Shipments will likely be higher due to increased drilling activity, while average realized prices are expected to be in line with the first quarter.

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