U.S. Steel Košice has record profits

After a period marked by troubles caused by market development and a changed situation, the US steelmaker has marked an uplift, while its Košice-based plant reports record profits.

Illustrative stock photoIllustrative stock photo (Source: TASR)

Last year’s economic results of the United States Steel Corporation from Pittsburgh show that the earnings of its European division, dominated by the steelworks in Košice, are gradually increasing. Only a few months ago, there were speculations about its sale to the Chinese He Steel Group.

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However, U.S. Steel Košice reported one of its highest profits since entering the Slovak market in 2000 last year, with net profit reaching almost €450 million, the Hospodárske Noviny economic daily wrote on July 3.

What is behind the upturn?

Compared with the year 2016, the improvement in financial results was impacted by higher sale prices, savings from ongoing initiatives that improve operational efficiency, lower interest costs, a positive impact of exchange rates differences, and the absolute abolition of the reduction of real estate and equipment values, the 2017 annual report reads, as cited by the daily.

The net profit in 2016 amounted to €271 million. The Košice-based steelworks reported its highest profit in 2006, when it amounted to €480 million. Since then, profits have been dropping; with the lowest sum being reported in 2013 when the plant reported a loss at €369 million, caused by persisting surplus on production capacities on European steel market, according to HN. The Košice plant generates around 20 percent of the revenues of the entire steelmaker group.

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Up to €250 million from last year’s profit will go – as a share on profit – to the Dutch company U. S. Steel Global Holdings VI. B. V. The ownership structure of the Košice plant is complex, with United States Steel Corporation, traded on the US stock exchange, being at the end of the chain.

To sell, or not to sell…

U.S. Steel Košice’s mother company has been plagued by debts; and it was the big debt burden (€1.3 billion by March 31), which sparked negotiations on the potential sale of the Košice plant.

Although the Slovak steel plant denied the rumours of the sale, the interest of the He Steel Group was eminent. Other failed potential bidders include the Czech group Třinecké Železárny-Moravia Steel (with Slovak owners, led by Tomáš Chrenek).

A member of the Board of the biggest Czech steel producer, Ján Moder, points out that the steel industry in the Czech Republic, and the entire European Union, can be threatened in the upcoming years by the tariffs introduced by the administration of US President Donald Trump.

“The extent of European export to the USA – at 4.9 million tonnes of steel in 2017, will currently decline and new trading outlets for excess products will be sought,” Moder noted during a recent assembly of Třinecké Železárny, as quoted by Hospodárske Noviny.

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