U.S. Steel's stock up 2% after offering strong guidance and confidence Nippon deal can close by year-end

By Ciara Linnane and James Rogers

U.S. Steel said it's still confident it can win the necessary approvals for its planned takeover by Nippon Steel and can close the deal by year-end

United States Steel Corp.'s stock rose 2.2% early Thursday after the company updated third-quarter guidance and said it's still confident it can win the necessary approvals for its planned takeover by Japan's Nippon Steel (JP:5401), and that it can close the deal by year-end.

The company said it now expects third-quarter adjusted per-share earnings of 44 cents to 48 cents, compared with a FactSet consensus of 36 cents. It expects adjusted earnings before interest, taxes, depreciation and amortization of about $300 million. "Adjusted Ebitda guidance of $300 million is in line with our prior third-quarter outlook and reflects resilient domestic flat-rolled steel demand amid a bottoming steel-pricing environment," U.S. Steel (X) CEO David B. Burritt said in prepared remarks. "Challenging pricing dynamics are being offset in part by the benefits of our balanced and diverse order books in the North American Flat-Rolled segment."

Related: U.S. Steel's stock rises after report Biden won't block takeover by Nippon anytime soon

In Europe, a softening demand environment has led to the temporary idling of a furnace following a planned 30-day outage. U.S. Steel's Tubular segment continues to face pressure from a weak pricing environment, according to Burritt.

The CEO said that U.S. Steel is also approaching the planned start-up of Big River 2, or BR2, in the fourth quarter of 2024. BR2, is the company's new technologically advanced flat-rolled steel facility near Osceola, Ark. For the third-quarter result, U.S. Steel expects approximately $40 million of related startup and one-time construction costs. These are included in the company's third-quarter adjusted Ebitda guidance for its Mini Mill segment.

Related: Nucor's stock falls after steelmaker issues profit warning, citing lower selling prices

The stock has fallen 24.4% in the year to date, while the S&P 500 has gained 17.8%.

Earlier this week, steelmaker Nucor warned investors of a third-quarter profit shortfall, citing lower selling prices.

Tomi Kilgore contributed.

-Ciara Linnane -James Rogers

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09-19-24 0940ET

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