Boosting its profit per ton of steel from $13 to $29, Bethlehem Steel Corp. yesterday reported it had more than tripled its net income during the third quarter even as its sales slipped.
The nation's No. 2 steelmaker, which owns the Sparrows Point mill in Baltimore County with 5,400 workers, reported earnings soared to $34.4 million, or 22 cents per share, compared with $10.3 million, or zero cents per share, for the same period a year ago. Yet at the same time, sales dipped slightly to $1.22 billion from $1.23 billion for the previous third quarter.
The company accomplished the earnings by getting higher prices for its steel products. It also benefited from the comparison with the previous third-quarter results, which were drastically depressed by a $60 million expense connected to capital improvements at the company's Burns Harbor, Ind., plant.
Bethlehem's nine-month net income also nearly tripled, jumping to $147.2 million, or $1.05 a share, from $49.2 million, or 16 cents per share, for the same period a year ago. Sales grew 3.4 percent to $3.7 billion.
But the results failed to impress Wall Street, which left the stock unchanged at $13.625 a share.
"I think they were in line with the other earnings that we expect of other steel companies," said Brian C. McLoughlin, analyst for J.P. Morgan Securities, a New York investment banking firm.
And like other steel companies, Bethlehem is expected to encounter reduced sales in the fourth quarter. "In Bethlehem's case they are looking to have some cost savings to offset the expected weakness in demand," Mr. McLoughlin said.
Hurt by the anticipation of an economic downturn next year or in 1997, Bethlehem's stock has been moving down in the past year after reaching a high of $22.625 in September 1994.
Noting that the results are the seventh consecutive profitable quarter for the steel company, Bethlehem Chairman and Chief Executive Officer Curtis H. Barnette said he expects the market for steel to remain strong for the next year, though domestic steel sales are expected to dip from 94 million tons this year to about 92 million tons next year.
"We believe the economy will remain on a course of moderate and sustainable growth for the balance of this year and next," Mr. Barnette said.
However, the company has not been profitable long enough to merit restarting common stock dividends, which have not been paid since the end of 1991.
"It depends on attained results and business outlook," Mr. Barnette said about those dividends. "We have this under regular review."
While the company's basic steel operation soared, its steel-related operations -- which include its 850-person shipyard at Sparrows Point -- saw losses grow to $11 million compared with $9 million for the previous third quarter.
"That continues to do progressively worse," said Charles A. Bradford, a metals analyst for UBS Securities Inc., a New York investment banking firm. "It was supposed to have been turning around a little bit. That was the area where I was disappointed."
The shipyard, which has long been under-performing because of the nation's depressed ship repair industry, has recently seen an upturn in business with four ships now under repair and work slated on four deckhouses for tankers being built at Newport News Shipbuilding in Virginia, Bethlehem officials said.
The shipyard was also recently awarded a $20.5 million contract to overhaul two Navy cargo ships next year, which should provide work for 200 workers for eight months.
And while the shipyard is expected to eventually turn a profit, Mr. Barnette set no deadline.
"Each business division must be profitable, must make a positive cash contribution to our company's operations," he said. "They must do that, or they must have a credible plan to achieve that sort of result."