Inland Steel Co. Monday reported its losses widened in the fourth quarter, to $90.5 million from $28.3 million a year earlier, resulting in the company`s fourth consecutive money-losing year.
However, Frank W. Luerssen, Inland`s chairman, predicted a profit for 1986 because of stabilizing steel prices and an end to the company`s costly quality-control problems in 1985`s second half.
In a brief reference to upcoming negotiations with the United Steelworkers of America, Luerssen said Inland ”must achieve” cost savings, including additional improvements in labor productivity. The contract expires July 31.
In the year, Inland had a net loss of $178.4 million, an increase from a deficit of $41.4 million in 1984.
Inland, the nation`s fourth largest steelmaker, hasn`t reported an annual profit since 1981. In the last four years, the company has had losses totaling $455 million.
”It`s hard to see a profit right now” for Inland in 1986 unless the company corrects its internal quality problems, Dick McClow, an analyst for Duff & Phelps Inc. in Chicago said.
Inland`s deeper fourth-quarter loss included nonrecurring charges of $30.3 million for planned shutdowns of certain steel facilities; a $32 million writeoff in closing a coke facility; and a $22.8 million writeoff in the planned divestiture of Inland`s Inryco construction subsidiary.
A year earlier, nonrecurring charges totaled $49.5 million.
Fourth-quarter sales fell 1 percent, to $716.4 million from $723.4 million. In the year, sales dropped 4 percent, to $3 billion from $3.13 billion in 1984.
Luerssen called integrated steel results ”the major operating disappointment” for 1985. The steel segment reported an operating loss from continuing operations of $29.1 million last year; in 1984, the segment earned $72 million.
Luerssen blamed the deteriorating performance on declines in sales and prices and internal quality problems resulting from the company`s extensive reorganization last year.
At a press briefing in the company`s downtown Chicago headquarters, Luerssen said there`s ”some indication” that prices have at least stabilized and ”modest indications” that prices will pick up in 1986.
In 1985, prices were at their lowest levels in the fourth quarter, Inland said.
In addition, Inland`s internal quality problems, caused in part by last year`s dismissal of 1,000 salaried employees as part of an extensive cost-cutting effort, have been ”substantially rectified,” Luerssen said. Those quality problems cost the steelmaker about $50 million in the third quarter and a substantially lower, though undisclosed, amount in the fourth quarter, he added.
Luerssen said Inland expects two new continuous casters at its Indiana Harbor Works plant in East Chicago to produce cost savings and improved product quality this year.
However, Luerssen noted Inland entered 1986 with no ”appreciable change” in demand for its steel mill products.
The company`s outlook for a profitable 1986 assumes steel imports will capture about one-fourth of the United States market in 1986, about the same as 1985.
At year-end, Inland`s net liquidity–cash and marketable securities minus short-term borrowings–fell to a negative $48 million from a positive $16 million at the close of the third quarter.
”It shows when you`re losing money, you`re chewing up cash,” an Inland financial executive said.
