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Steel, oil gluts hurt USX
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January 22, 1999: 10:02 a.m. ET
U.S. Steel, Marathon groups both report sharply lower earnings for 4Q
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NEW YORK (CNNfn) - Oversupplies of steel and crude oil delivered a double whammy to Pittsburgh-based USX Corp., causing fourth-quarter operating income to tumble at both of its publicly traded units -- U.S. Steel Group and Marathon Group.
USX's U.S. Steel Group (X) says earnings before extraordinary items fell in the final quarter of 1998 to $59 million, or 63 cents a diluted share, from $141 million, or $1.52, in the 1997 period.
The earnings were nearly double the 32 cents a share consensus estimate of analysts surveyed by First Call, but they were hardly seen as good news by the company.
"In mid-1998, imported steel, including unprecedented volumes at predatory prices, began flooding U.S. markets," says USX chairman Thomas Usher. "As a result, the group's shipments, average steel prices and operating levels suffered dramatically throughout the remainder of the year."
U.S. Steel revenue for the quarter declined 26 percent to $1.36 billion from $1.84 billion a year earlier.
Depressed crude oil, natural gas and other energy commodity prices caused fourth-quarter operating income at USX-Marathon Group (MRO) to sink to $13 million, or 4 cents a diluted share, from $131 million, or 45 cents, in the final three months of 1998. The results were below the 15 cents a share consensus estimate of analysts surveyed by First Call.
Revenue rose 37 percent in the quarter to $5.35 billion.
Usher is somewhat optimistic about Marathon's outlook, citing increases in worldwide liquids production and the contribution of the new Marathon Ashland Petroleum LLC to marketing, refining and transportation operations.
But the USX chairman isn't as upbeat about steel operations, saying that the glut of imports from Japan, Russia and Brazil has forced U.S. Steel to operate at a less efficient capacity. And he's critical of the initial Clinton administration response to the crisis.
"It is uncertain at this time how soon the export crisis will be resolved," Usher says. "With current world conditions, the import problem is far broader than hot-rolled products from three countries, and we continue to evaluate new trade cases against these and other nations covering a number of products."
USX-U.S. Steel stock is up 1/8 to 27-1/8 in early Friday trading. USX-Marathon shares are unchanged at 28-3/16. 
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