By Lisa Shidler

Post-Tribune staff writer

U.S. Steel turned around a $463 million net loss in 2003 to a nearly $1.09 billion net profit in 2004, taking advantage of steep steel prices and soaring demand in China.

The year-end numbers are a record for the 100-plus-year-old company, officials said Monday after releasing both fourth quarter and year-end numbers.

Earnings per diluted share were $8.44 for 2004, compared to $4.64 per diluted share the previous year.

The company’s stock (X:NYSE) closed at $50.37, up 5 cents per share, on Monday.

The results could even get better if the previously announced tax settlement with Gary, Lake County and the state of Indiana is approved.

U.S. Steel would pay $44 million under the plan.

However, it’s hard to know if the company can repeat these high earnings in 2005 because steel executives also cautioned results will be negatively affected in the first quarter by higher raw material costs and lower shipments.

Later this year, the company plans to rebuild the No. 13 blast furnace in the third quarter. It is the company’s largest blast furnace and the second largest in the nation next to the No. 7 at Ispat Inland. The flat-rolled shipments for 2005 are also expected to be less than 2004 because of the outage at the No. 13 blast furnace.

“Favorable global steel markets coupled with our acquisitions and ongoing cost reduction efforts resulted in record income for U.S. Steel for both the fourth quarter and full year,’’ said U.S. Steel President and CEO John Surma, in a statement.

In the tubular section, the company announced price increases for certain products ranging from $50 per ton to $250 per ton, effective this month.

For 2004, the company’s operating income was nearly $1.6 billion compared to a loss from operations of $730 million in 2003.

Although steel analysts expected high earnings from integrated steelmakers like U.S. Steel, one analyst said U.S. Steel’s numbers were even higher than his expectations.

“If you can’t make money last year, you should be ashamed of yourself,’’ steel analyst Charles Bradford said. “And you should make a lot of it.”

He pointed out that the mini-mill steel companies faced high scrap costs last year, which wasn’t as much of a deterrent to the integrated makers.

U.S. Steel also had a stellar fourth quarter, which was also a record at $462 million, or $3.55 per diluted share, compared to the third quarter 2004 of $354 million, or $2.72 per diluted share.

The company’s operating income for the fourth quarter was $551 million compared to $494 million in the third quarter. U.S. Steel will host a conference call today that will also be posted on its Web site at 1 p.m. at www.ussteel.com.

The company will likely outline the outcome for the rest of the year.

Bradford said he is cautious about this year in light of the company’s comments.

“The guidance was not terribly optimistic,’’ he said. “They talked about relatively flattened sales and higher costs.”