January 28, 2010

United States Steel posts Q4 loss of $267 million

PITTSBURGH

United States Steel, the steelmaker locked in a legal tussle with the Canadian government over ownership of the former Stelco, lost money for the fourth consecutive quarter as sales fell sharply.

On Tuesday the Pittsburgh manufacturing giant reported a fourth-quarter loss of US$267 million, compared with earnings of $290 million during the same period last year. Revenue declined 26 per cent.

The company, which bought the Hamilton, Ont.-based former Stelco for more than $1 billion in 2007, has challenged the federal government in Federal Court, saying the Investment Canada Act violates foreign companies’ constitutional rights.

Ottawa has alleged U.S. Steel failed to keep employment and production promises it made when it acquired Stelco and that, under the act, it could face divestiture of its Canadian operations.

U.S. Steel is facing possible fines of up to C$10,000 a day — an amount the company says could add up to $14.6 million.

It argues the case should be dismissed because the act punishes companies that don’t comply with the rules as if they had committed a criminal offence, but doesn’t give them the rights guaranteed under criminal proceedings, and therefore violates the Charter of Rights and Freedoms.

Steel manufacturers were battered during the recession as demand dried up for the metal used in automobiles, construction and consumer products.

Though the company saw improvement in those markets at the end of 2009, it still predicts a first quarter operating loss “in line’’ with the fourth quarter.

Associated Press

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