With higher prices holding and more expensive steel products being sold, Bethlehem Steel Corp. yesterday reported its second-quarter earnings more than doubled and sales increased 16 percent.
But the results failed to excite Wall Street, which had been expecting more, and the company's stock slumped, closing at $15.75 a share, down 87.5 cents.
The company, which owns the Sparrows Point steel mill in Baltimore County, reported earnings of $60.3 million, or 45 cents a share, during the quarter, up 131.9 percent from the $26 million, or 14 cents a share, earned in the second quarter a year ago.
Sales rose to $1.25 billion from $1.23 billion in the same period a year ago.
For the six months, earnings were $112.8 million, or 83 cents a share, up 190 percent over the $38.9 million, or 17 cents per share, earned during the same time last year. Sales during the first half rose by 5.5 percent, to $2.5 billion compared with $2.4 billion.
But analysts had expected more from the nation's second-largest steel company, with the average estimate for the quarter being 56 cents a share, according to I/B/E/S, a firm that tracks earning estimates.
"When I look at the profit per ton, [Bethlehem's] the lowest of anybody that has reported so far," said Charles A. Bradford, a metals analyst for UBS Securities Inc., a New York investment banking firm.
Whereas Bethlehem made $43 a ton, AK Steel Holding Corp. made $81 a ton; USX-U.S. Steel Group $56; and Inland Steel Industries Corp. $49.
Problems for Bethlehem ranged from difficulties at a coal mining operation to loss at nonsteel-making operations, including BethShip, its ship repair yard at Sparrows Point.
But there were more pluses than minuses in the report, according to Curtis H. Barnette, Bethlehem's chairman and chief executive officer.
"I think we should focus on the facts, and the facts are that we have more than doubled a quarter over a quarter," Mr. Barnette said at a news conference in Bethlehem, Pa., yesterday. "That's a fact. And we should be very proud as a company and as employees in our company to have achieved that."
The company's basic steel operation, which includes mills at Burns Harbor, Ind., and Sparrows Point, saw operating income double during the quarter, going to $98 million from $49 million in the second quarter a year ago. While steel shipments actually dropped by 3.5 percent from the previous second quarter, the company was able to get better prices for the steel and sell more expensive items such as coated products.
Sparrows Point, which has a work force of 5,300, expects to increase exports to 400,000 tons this year compared with only 20,000 tons last year.
"With the dollar being what it is today in the marketplace, it has made us very competitive and we've had excellent opportunities," Duane R. Dunham, president of the Sparrows Point Division, said at the news conference. "And so far we've been very pleased."
One of the operations keeping profits down is BethShip, which has seen its work force drop from about 1,200 earlier this year to 600 now. Business at the Baltimore County yard could be hurt further if a Navy decision stands that excludes the shipyard from competing for repair work for Navy ships based in Norfolk, Va.
"It's wrong in the interest of national defense and we think [Navy] Secretary [John H. Dalton] should revisit that decision and change that decision," Mr. Barnette said.
Mr. Barnette said the company has not given up on the yard and is concentrating on attracting repair work from foreign ships plying American waters.