AK Steel Posts Net Loss in First Quarter 2013
04/23/2013 - AK Steel noted it will have a seven-day maintenance outage at its Middletown blast furnace in the second quarter at a cost of US$21 million as it reported its first quarter 2013 earnings results.
AK Steel reported a net loss of US$9.9 million for the first quarter ended 31 March 2013, compared to a net loss of US$11.8 million for the first quarter of 2012. This also compares to a net loss of US$230.4 million or an adjusted net loss of US$36.6 million for the fourth quarter of 2012. The adjusted net loss for the fourth quarter of 2012 excludes a pension corridor charge and a non-cash income tax charge as a result of a change in a deferred tax asset valuation allowance and is reconciled below.
Net sales for the first quarter of 2013 were US$1,369.8 million on shipments of 1,289,800 tons, compared to net sales of US$1,508.7 million on shipments of 1,325,900 tons for the year-ago first quarter and net sales of US$1,423.1 million on shipments of 1,406,100 tons for the fourth quarter of 2012. The decreased shipments in the first quarter of 2013 compared to both prior periods were primarily due to lower shipments to the carbon spot market, partially offset by increased shipments to the automotive market.
|
Steel Shipments (Tons in thousands) |
||
| . |
Three Months Ended 31 March |
|
|
. |
2013 |
2012 |
| Tons Shipped by Product | ||
| Stainless/electrical |
204.4 |
214.9 |
| Coated |
577.1 |
583.2 |
| Cold rolled |
277.4 |
286.0 |
| Tubular |
31.5 |
36.3 |
| Subtotal value-added shipments |
1,090.4 |
1,120.4 |
| Hot rolled |
172.3 |
170.5 |
| Secondary |
27.1 |
35.0 |
| Subtotal non-value added shipments |
199.4 |
205.5 |
| Total shipments |
1,289.8 |
1,325.9 |
The company said its average selling price for the first quarter of 2013 was US$1,062 per ton, a 7% decrease from the first quarter of 2012, but a 5% increase from the fourth quarter of 2012. The higher average selling price for the first quarter of 2013 compared to the fourth quarter of 2012 was primarily due to a higher value-added product mix and higher carbon spot market prices, partially offset by lower selling prices for electrical steel products globally. The lower average selling price for the first quarter of 2013 compared to the first quarter of 2012 was primarily due to lower spot market prices for carbon steel products, reduced raw material surcharges and lower selling prices for electrical steel products globally.
The company reported adjusted EBITDA of US$66.8 million, or US$52 per ton, for the first quarter of 2013 compared to adjusted EBITDA of US$48.9 million, or US$37 per ton, for the year-ago first quarter and adjusted EBITDA of US$16.8 million, or US$12 per ton, for the fourth quarter of 2012. The adjusted EBITDA excludes EBITDA of non-controlling interests. This improvement was the result of a higher value-added product mix and lower raw material costs, primarily for iron ore, coal, carbon scrap and coke. The lower raw material costs included benefits from energy credits received through the company's contractual supplier arrangements with SunCoke Energy, Inc. pertaining to its Haverhill cokemaking facility. These first quarter improvements were partly offset by higher-than-anticipated operating costs associated with the company's Middletown Works blast furnace and a lower LIFO credit. The 2013 first quarter results include a LIFO credit of US$6.0 million, compared to a LIFO credit of US$12.4 million in the first quarter of 2012 and a LIFO credit of US$30.8 million for the fourth quarter of 2012.
"AK Steel's results reflect significant progress for the company during the first quarter," said James L. Wainscott, chairman, president and CEO. "We experienced increased shipments to the automotive market, a higher-priced product mix, and lower costs, primarily for raw materials."
Mr. Wainscott added, "While the automotive market was a bright spot for our business, markets remained challenging for some products, particularly those in the spot market. Simply put, global steelmaking capacity continues to exceed demand. Additionally, the cyclical improvement in spot market pricing we normally see during the first quarter did not materialize and is expected to occur later this year."
The company ended the first quarter of 2013 with total liquidity of US$1,052.6 million, consisting of cash and cash equivalents and US$874.4 million of availability under the company's revolving credit facility. There were no outstanding borrowings under the company's revolving credit facility as of March 31, 2013.
Second Quarter 2013 Outlook
Consistent with its current practice, the company said that it will provide detailed guidance for its second quarter results in June. In advance of this guidance, the company indicated that it will have a planned seven-day maintenance outage at its Middletown blast furnace in the second quarter, which is the first major maintenance outage that has been required for that furnace since a major reline in 2009. Total maintenance outage costs, including the Middletown blast furnace, are expected to be about US$21 million in the second quarter of 2013, compared to US$1 million in the first quarter of 2013. The company expects the increased maintenance outage costs in the second quarter to be mostly offset as a result of lower costs, primarily for raw materials.
AK Steel produces flat-rolled carbon, stainless and electrical steels, primarily for automotive, infrastructure and manufacturing, construction and electrical power generation and distribution markets. The company employs about 6,100 men and women in Middletown, Mansfield, Coshocton and Zanesville, Ohio; Butler, Pa.; Ashland, Ky.; Rockport, Ind.; and its corporate headquarters in West Chester, Ohio.
