U.S. Steel Corp. plunged after delivering a barrage of harsh news, warning of a loss and announcing it will shut down most of its Great Lakes Works facility near Detroit, lay off workers and slash its dividend.
The adjusted loss is expected to be about $1.15 a share in the fourth quarter, with a fully diluted loss of 42 cents for 2019, the Pittsburgh-based company said Thursday in a statement. The industrial icon plans to lay off as many as 1,545 workers from the Michigan plant, reduce its quarterly dividend to 1 cent from 5 cents, and prune capital expenditures.
U.S. steelmakers are facing slowing demand in the manufacturing sector, even though mills have enjoyed protection because of Trump administration tariffs. U.S. Steel has been a laggard in the domestic industry, with aging plants that are less efficient than rivals with newer technology. That’s led to a spate of operational initiatives under different names that have shifted multiple times since 2014.
The shifting strategies “raise concerns that there’s no long-term, overriding execution capability to improve competitiveness,” Richard Bourke, a senior credit analyst at Bloomberg Intelligence, said in a note. “Cash costs from layoffs will likely exceed savings from the cuts, in our view.”
U.S. Steel stock has sunk by about a third this year, hitting the lowest since 2016 in October, even as the broader U.S. equity market hit all-time highs.
