AK Steel Holding Corporation
) posted a narrower loss in first-quarter 2013, helped by lower
raw material costs. The Ohio-based company posted a net loss of
$9.9 million (or 7 cents a share) in the quarter compared with a
loss of $11.8 million (or 11 cents a share) a year-ago. The loss
per share is narrower than the Zacks Consensus Estimate of a loss
of 12 cents.
AK Steel saw a decline in raw material costs, mainly for iron
ore, coal, carbon scrap and coke, in the reported quarter. It had
a lower LIFO credit of $6 million in the quarter compared with a
LIFO credit of $12.4 million a year ago.
Revenue, Pricing and Shipments
Revenues fell 9.2% year over year to $1,369.8 million in the
reported quarter due to lower shipments to carbon spot market and
missed the Zacks Consensus Estimate of $1,403 million.
Average selling price dropped 7% year over year to $1,062 per
ton on account of lower spot market prices for carbon steel
products, brought about by a decline in raw material surcharges
and lower selling prices for electrical steel products globally.
Shipments fell 2.7% year over year to 1,289,200 tons due to lower
shipments to the carbon spot market.
Cost and Margins
Consolidated operating costs fell nearly 11.2% year over year
to $1,336.6 million. Operating profit jumped almost seven-fold to
AK steel ended the first quarter with strong liquidity. Cash
and cash equivalents stood at $191.8 million as of Mar 31, 2013,
compared with $42.3 million as of Mar 31, 2012. The company had
no borrowings under its $1.1 billion credit facility during the
AK Steel plans to release a detailed guidance for the second
quarter in Jun 2013. The company has a planned maintenance outage
at the Middletown Works blast furnace in the second quarter.
As a result, AK Steel expects to incur maintenance outage
costs of approximately $21 million in the second quarter compared
with $1 million in the first quarter of 2013, reflecting an
increase to its cost. AK Steel anticipates that these enhanced
maintenance costs in the second quarter would be mostly offset as
a result of lower cost in other areas, primarily raw
AK Steel is expected to benefit from the strength in the
automotive market and higher shipment of carbon steel products to
automakers. The company is also investing to internally procure
about half of its iron ore and coal requirements. However, we are
concerned about its high cost structure, the challenging
operating backdrop in overseas markets, softness in the
construction market and the weak steel pricing environment.
AK Steel currently holds a short-term Zacks Rank #3
Other companies in the steel industry worth considering are
Gibraltar Industries Inc.
Shiloh Industries Inc.
Companhia Siderurgica Nacional
). While Gibraltar and Shiloh hold a Zacks Rank #1 (Strong Buy),
Companhia holds a Zacks Rank#2 (Buy).
AK STEEL HLDG (AKS): Free Stock Analysis
GIBRALTAR INDUS (ROCK): Free Stock Analysis
SHILOH INDS INC (SHLO): Get Free Report
CIA SIDERUR-ADR (SID): Free Stock Analysis
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