US Steel soars after forecasting gains on rebound in demand

(c) 2014, Bloomberg News.

U.S. Steel, the country's largest steelmaker by volume, jumped the most in five years after reporting better-than-expected sales and earnings and forecasting an improvement in the current quarter.

Excluding one-time items, the company had a 17-cents-a- share profit in the second quarter, the Pittsburgh-based company said Tuesday in a statement after the close of trading. The average of 14 analysts' estimates compiled by Bloomberg was for a 31-cent loss. Sales of $4.4 billion beat the $4.2 billion average estimate.

The shares climbed 16 percent to $32.10 at 9:40 a.m. in New York on Wednesday, after earlier rising as much as 17 percent.

"Steel consumption has bounced back quite well," Chief Executive Officer Mario Longhi said Wednesday on a conference call with analysts. "The market is consuming flat-rolled at a rate well above 2013 levels," he said, referring to flat-rolled steel, the company's largest segment by sales.

Operating income in the third quarter will rise "significantly" from the preceding three months as the company returns to normal operating levels, Longhi said in the statement. Production was disrupted after a March accident at the Great Lakes plant in Ecorse, Mich. Furnaces at the Gary Works in Indiana, U.S. Steel's largest facility, went offline after ice stopped some raw-material shipments, the company said in April.

U.S. Steel boosted the savings it expects to realize from its Carnegie Way improvement program to $435 million for 2014, Chief Financial Officer David Burritt said on Wednesday's call. The previous estimate was for $290 million of savings.

U.S. Steel's second-quarter net loss narrowed to $18 million, or 12 cents a share, from $78 million, or 54 cents, a year earlier.

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