AK Steel Holding Corporation
) anticipates a loss in third-quarter 2012 as a non-cash tax
expense coupled with lower pricing is expected to drag down its
bottom line in the quarter. These factors are expected to lead to a
loss of between 60 cents and 65 cents per share in the quarter.
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The Ohio-based steelmaker expects to incur a tax charge of roughly
$29 million (or 26 cents a share) in the third quarter associated
with a valuation allowance for its deferred tax assets. The
expected third quarter results also reflect a maintenance outage
charge of $29 million, mostly related to a blast furnace outage at
the company's Ashland Works facility.
In addition, the company sees its average per-ton selling price,
for the third quarter, to slip roughly 7% from the second quarter
of 2012. The expected sequential decline is partly triggered by
lower spot market prices for carbon steel products as a result of
weaker global economic and business conditions, and lower raw
On a positive note, AK Steel expects shipments to increase around
3% over the second quarter to roughly 1,375,000 tons in the third
quarter. Shipments rose roughly 0.7% sequentially in the second
quarter to 1,335,800 tons.
AK Steel reported lackluster second-quarter 2012 results in July.
The company turned into red in the quarter, hit by a non-cash tax
charge of $736 million.
AK Steel logged a net loss of $724.2 million (or $6.55 a share) in
the second quarter compared with a profit of $33.1 million (or 30
cents a share) a year ago. The company noted that weak global
economic conditions affected volume and steel pricing in the
AK Steel, like and other major players in the steel space such as
U.S. Steel Corp.
), are contending with weak steel demand, oversupply in the
industry and pricing pressure.
The company is also hamstrung by weak construction and housing
sectors. Moreover, it is exposed to macroeconomic uncertainties,
stemming from the recessionary conditions in Europe and sluggish
growth in Asia.
AK Steel holds a short-term Zacks #3 Rank (Hold). We currently have
a long-term Underperform recommendation on the stock.