) posted a narrower loss in second-quarter 2013. The Ohio-based
company recorded a net loss of $40.4 million or 30 cents a share
in the quarter, down roughly 94% from a loss of $724.2 million or
$6.55 a share a year-ago. The year-ago quarter's results were
dragged down by income tax charge of $735.6 million or $6.65 per
During the reported quarter, AK Steel took a charge of $21.6
million related to the planned maintenance outage at its
Middletown Works blast furnace in Ohio. Moreover, it incurred
$6.2 million associated with unplanned blast furnace outage in
the quarter. AK Steel also recorded an inventory-related credit
of $12.4 million in the reported quarter.
Barring one-time items (tax charges related to a valuation
allowance for deferred tax assets), AK Steel's loss for the
quarter was 15 cents per share, lower than the Zacks Consensus
Estimate of a loss of 35 cents.
Revenue, Pricing and Shipments
Revenues fell 8.7% year over year to $1,404.5 million in the
reported quarter due to lower shipments to carbon spot and
electrical steel markets. It missed the Zacks Consensus Estimate
of $1,414 million.
Average selling price dropped 8% year over year to $1,061 per ton
on account of lower spot market prices for carbon steel products,
a decline in raw material surcharges and lower selling prices for
electrical steel products. Shipments fell 0.9% year over year to
1,323,700 as lower shipments to the carbon spot and electrical
steel markets more than offset higher shipments to automotive
Cost and Margins
Consolidated operating costs fell around 6% year over year to
$1,390.8 million. Operating profit tumbled 76% year over year to
$13.7 million, hurt by lower sales.
AK steel exited the quarter with cash and cash equivalents of
$58.4 million, up 56% year over year. Long-term debt increased
roughly 49% year over year to $1.4 billion.
In line with its current practice, AK Steel plans to divulge a
detailed guidance for the third quarter in Sep 2013. The company,
however, said that it expects to take additional costs related to
the unplanned maintenance outage at the Middletown Works blast
furnace in the third quarter.
Middletown Works experienced an unexpected mechanical failure in
Jun 2013. As a result, the blast furnace was taken offline to
prevent any damage to the furnace and to position it for a
restart once the repairs were completed. AK Steel used its
existing inventory and its Butler Works and Ashland Works
furnaces to service its customers during that period. The blast
furnace was restarted on Jul 12.
AK Steel expects total uninsured losses of between $12 million
and $17 million for second-half 2013. It also said that the
timing and amount of any insurance recovery could not be
accurately predicted currently and may occur after the third
While AK Steel is poised to gain from healthy automotive demand,
we remain cautious factoring in weak steel pricing environment
and a challenging operating backdrop in overseas markets.
AK Steel currently retains a short-term Zacks Rank #3 (Hold).
Other companies in the steel industry with favorable Zacks Rank
Kobe Steel Ltd.
Shiloh Industries Inc.
Nippon Steel & Sumitomo Metal Corp.
). All of them hold a Zacks Rank #1 (Strong Buy).
AK STEEL HLDG (AKS): Free Stock Analysis
KOBE STEEL-ADR (KBSTY): Get Free Report
NIPPON STEEL CP (NSSMY): Get Free Report
SHILOH INDS INC (SHLO): Get Free Report
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