July 30, 2013 / 4:05 PM / 4 years ago

UPDATE 1-U.S. Steel's locked-out Canada workers to vote on contract

3 Min Read

(Adds detail on company outlook, market reaction, analyst comment.)

July 30 (Reuters) - Workers locked out for three months at U.S. Steel Corp's Lake Erie works in Ontario will vote on the steelmaker's latest contract offer on Wednesday, the company said.

If members of the United Steelworkers Local 8782 approve the contract, operations at Lake Erie would restart "as soon as possible," the company said in its quarterly earnings report, released on Monday.

U.S. Steel posted a second-quarter loss and lower sales, hurt by a drop in shipments linked to the labor dispute as well as maintenance projects that raised costs. Its shares fell on Tuesday, even though the loss was narrower than expected.

"The guidance was a little bit softer than expected," said Macquarie Securities analyst Aldo Mazzaferro, but he also said the quarterly operating results came in ahead of his forecasts.

U.S. Steel said it expects third-quarter results from the flat-rolled steel segment, its largest business by shipments, to improve from the second quarter, but it did not say whether the unit would be profitable.

The flat-rolled segment's loss from operations was $51 million in the second quarter, compared with income of $177 million a year earlier. The steelmaker said its outlook did not include any benefit that could come from a restart at Lake Erie.

The lockout affects nearly 1,000 workers at the Nanticoke, Ontario, facility, which accounted for about 10 percent of U.S. Steel's raw steel output in 2012.

The contract proposal has not been endorsed by the union, according to updates posted on its website. The vote will be supervised by Ontario labor relations authorities.

Workers rejected an earlier offer from the company, shortly before they were locked out on April 28. The last lockout at Lake Erie, which started in August 2009, lasted eight months.

U.S. Steel's net loss for the second quarter was $78 million, or 54 cents a share, compared with net income of $101 million, or 62 cents a share, a year earlier. Net sales fell to $4.43 billion from $5.02 billion.

Analysts, on average, had been expecting a loss of 78 cents a share on net sales of $4.61 billion, according to Thomson Reuters I/B/E/S.

U.S. Steel shares were down 5.6 percent to $17.91 in midday trading on the New York Stock Exchange, while rival integrated steelmaker AK Steel Holding Corp slipped 1.4 percent to $3.47. (Reporting by Allison Martell; Editing by John Wallace)

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