Chrysler Group LLC has awarded AK Steel Holding
Corporation ( AKS ) with the Metallic "Supplier of the Year"
award for its outstanding performance last year, affirming the
steel company's place among the top suppliers to the renowned car
maker.
AK Steel's commitment towards providing commercial support to
Chrysler along with its exceptional quality of products and timely
delivery were the primary reasons behind the award.
For Supplier of the Year, Chrysler rates its suppliers on
various parameters such as quality, delivery, service and costs, as
well as recommendations from its senior management team. The honor
awarded to AK Steel suggests it has strong customer satisfaction
values.
The news comes as a positive for AK Steel after it slipped into
the red in the recently reported first quarter. Although the
company met the Zacks Consensus Estimate on bottom line, it failed
to match the top line expectations due to lower shipments.
However, AK Steel witnessed an improvement in market conditions
in the first quarter. Average selling price jumped 6% sequentially
and 3% year over year, primarily driven by improved product mix,
better contract sales and higher prices for certain products.
The company expects to sustain the momentum in the second
quarter, and as such, expects to post a profit. Increased strength
in the automotive market along with anticipation of higher
shipments and lower raw material costs are the driving factors
behind the company's expectation of getting back into the black.
We expect higher shipments of carbon steel products to the
automotive market, which constituted one-third of its sales in the
first quarter, to support the company's results in 2012. However,
challenges such as weakness in the construction and housing sectors
along with issues arising out of Europe and muted growth in Asia
might impact AK Steel's earnings power.
We currently have a long-term (more than 6 months) Neutral
recommendation on AK Steel. The company, which competes with
Nucor Corporation ( NUE ),
U.S. Steel Corp. ( X ) and
Steel Dynamics Inc. ( STLD ),
currently retains a Zacks #3 Rank, reflecting a short-term (1 to 3
months) Hold rating.
AK STEEL HLDG (AKS): Free Stock Analysis Report
NUCOR CORP (NUE): Free Stock Analysis Report
STEEL DYNAMICS (STLD): Free Stock Analysis
Report
UTD STATES STL (X): Free Stock Analysis Report
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