(Bloomberg) -- U.S. Steel Corp. tried to paint a rosy picture, but investors just didn't buy it.
Shares of the Pittsburgh-based steelmaker headed for its deepest slump in almost four months --the worst performer on the S&P index of 13 producers of the metal -- even after reporting second-quarter results that topped estimates. Concerns are mounting that the company's $1.6 billion investment strategy will hurt its finances at a time when its cash level is already at the lowest in almost six years.
“They are burning through cash and still trying to make all these investments,” said Andrew Cosgrove, an analyst for Bloomberg Intelligence. That spending won't payoff for a couple of years, which is a long time to wait with little expectation that results will improve in the meantime, he said.
While steel prices have started to rebound, U.S. Steel said it won't be able to immediately benefit from the gains because of the lag in its ability to change contracts. The steelmaker also faced challenges in the European market, "and we don't see that dynamic changing soon," Chief Executive Officer David Burritt said during the earnings call Friday.
To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net
To contact the editors responsible for this story: Luzi Ann Javier at ljavier@bloomberg.net, Joe Richter
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