UPDATE 2-U.S. Steel returns to profit but warns of weaker 2nd qtr

Tue Apr 29, 2014 5:28pm EDT
 
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(Adds stock price, cash figure, more on outlook)

April 29 (Reuters) - United States Steel Corp returned to profit in the first quarter, but the steelmaker said Tuesday it expected reduced operating income in the second quarter as cold weather slowed transportation of raw materials and finished products.

The Pittsburgh-based steelmaker also said it expects to report a loss in its flat-rolled segment, its biggest unit by shipments, in the second quarter. Its shares fell in after-hours trading.

"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," U.S. Steel said in a statement.

Although market conditions in North America are improving for flat-rolled products, U.S. Steel said average realized prices in the second quarter are expected to be similar to the first quarter.

The company, however, expects to be able to put operational difficulties behind it by the end of the second quarter.

U.S. Steel's shares fell 2.5 percent in after-market trading. The stock had closed at $26.34 in New York, up 2.4 percent.

For the first quarter, U.S. Steel reported net income of $52 million, or 34 cents a diluted share, helped by higher commercial prices for its products and the impact of the company's cost-cutting program.

That compared with a loss of $73 million, or 51 cents a diluted share, a year earlier, and analysts' expectations for earnings of 32 cents a share, according to Thomson Reuters I/B/E/S.

First-quarter revenue dipped to $4.4 billion from $4.6 billion.

U.S. Steel said it had $1.1 billion of cash at the end of March. (Reporting by Nicole Mordant in Vancouver; Editing by David Gregorio and Cynthia Osterman)