By Sandy Shore
AP Business Writer
Denver — Steelmakers are seeing the first blush of a recovery with more orders from manufacturers of autos, appliances and similar products. Yet, the battered industry’s full recovery has been stalled largely by a sluggish construction market.
Officials at United States Steel Corp. and Nucor Corp. this week indicated they believe the steel market will gradually improve this year as the economy rebounds but warned that demand in commercial construction remained weak.
The forecast came as the two manufacturing giants released fourth-quarter earnings reports showing an industry still struggling from the effects of the recession that left key markets reeling — autos, construction, industrial equipment and consumer products.
“While we are becoming more optimistic, primarily due to improvements we are starting to see in the manufacturing sector, we remain cautious in our outlook for end-user demand,” according to a statement attributed to U.S. Steel Chairman and CEO John P. Surma.
Signs of an improving economy have been surfacing in recent weeks across several sectors.
Manufacturers have been busier as customers restock inventories. The Institute for Supply Management, a trade group of purchasing executives, has reported five straight months of improved manufacturing activity. Economists said they believe industrial production is likely to keep expanding in coming months.
Automaker executives, for example, said they are hoping for a better 2010 after many reported improved sales last month.
While overall U.S. sales of cars and light trucks declined 21 percent to 10.4 million in December, Hyundai reported an 8 percent yearly gain, Kia had an annual gain of nearly 10 percent. And auto dealerships saw a typical post-Christmas rush as buyers sought year-end bargains. Analysts said they expect sales to rise to 11.5 million to 12 million this year.
But the U.S. construction market remains the weak spot.
“The nonresidential construction market is not projected to have a significant upturn here in the first half of the year,” said Dan DiMicco, chief executive of Nucor.
In the fourth quarter, U.S. Steel, which is based in Pittsburgh, reported a net loss of $267 million, or $1.86 per share, compared with earnings of $290 million, or $2.50 per share, during the same period last year.
Revenue declined 26 percent to $3.35 billion from $4.5 billion.
Analysts surveyed by Thomson Reuters had predicted a loss of $1.43 a share on revenue of $3.1 billion.
Company officials cautioned that these signs of improvement won’t be fully reflected in first-quarter operating results, which should show a loss “in line” with the fourth quarter.
U.S. Steel had a 2009 loss of $1.4 billion, or $10.42 a share, compared with net income of $2.1 billion, or $17.96 a share in 2008. Revenue fell 54 percent to $11.05 billion.
Nucor, which is based in Charlotte, N.C., reported a fourth-quarter profit of $58.9 million, or 18 cents per share. The company earned $105.9 million, or 34 cents per share, in the year-ago quarter. Revenue tumbled 29 percent to $2.94 billion.
The results topped analysts’ forecasts for profit of 7 cents a share on revenue of $1.58 billion.
Although Nucor did not release detailed first-quarter guidance, it said it expected a 5 percent increase in steel mill shipments, higher sales prices and higher scrap costs.
For the full year, the company posted a loss of $293.6 million, or 94 cents per share, compared with earnings of $1.83 billion, or $5.98 per share, in 2008. Revenue fell 53 percent to $11.19 billion.