AK Steel Reports 2nd Quarter Income
07/23/2008 - AK Steel reports net income of $145.2 million on record net sales of $2,236.6 million for the second quarter, and net income of $246.3 million on record sales of $4,028.0 million for the first six months of 2008.
AK Steel reported net income of $145.2 million on record net sales of $2,236.6 million for the second quarter, and net income of $246.3 million on record sales of $4,028.0 million for the first six months of 2008.
Second Quarter Results—The $145.2 million ($1.29 per diluted share of common stock) net income compares to net income of $109.9 million ($0.98 per diluted share) for the second quarter of 2007. The record net sales of $2,236.6 million compare to sales of $1,869.5 million for the second quarter of 2007. Record shipments of 1,737,800 tons compare to shipments of 1,711,400 tons for the year-ago quarter.
The company said its average selling price for the second quarter was a record $1,287 per ton, a 13% increase over the $1,135 per-ton mark set in the first quarter of 2008, and about 18% higher than the $1,092 per-ton price for the second quarter of 2007. The company said the increase in per-ton selling prices resulted from higher contract and spot-market pricing driven by strong demand and record raw material and energy cost increases.
Operating profit was $237.9 million ($137 per ton), both records, compared to $187.4 million ($109 per ton) in the second quarter of 2007. The year-ago quarter was impacted by a pre-tax, non-cash pension curtailment charge of $24.7 million related to a labor agreement for the company's Middletown Works. The company said the year-over-year operating profit improvement was primarily the result of higher spot-market shipments and overall higher selling prices in all markets the company serves, coupled with continued strong cost controls.
"Despite unprecedented raw material and energy cost increases and weakness in several markets, AK Steel employees have shown they can 'forge ahead' and deliver record operating and financial performances," said James L. Wainscott, Chairman, President and CEO. "AK Steel has once again demonstrated its expertise as a world-class steelmaker."
Six-Month Results—The $246.3 million net income ($2.19 per diluted share) compare to net income of $172.6 million ($1.55 per diluted share) for the corresponding 2007 period. Record sales of $4,028.0 million compare to sales of $3,589.4 million in the first half of 2007.
Operating profit was $407.6 million ($123 per ton), compared to operating profit of $307.4 million ($93 per ton) for the first half of 2007. The company said this improvement was primarily the result of higher shipments, higher selling prices and lower operating costs. Operating profit for the first half of 2007 was impacted by pre-tax, non-cash pension curtailment charges totaling $39.8 million related to new labor agreements for the company's Middletown Works and Mansfield Works.
During the first half of 2008, the company made $150.0 million in early pension fund contributions and ended the second quarter with $380.8 million of cash on hand and $680.9 million of availability under its credit facility.
Third-Quarter 2008 Outlook—AK Steel said it expects shipments for the third quarter of 2008 to be approximately 1,550,000 tons, which will be lower than second quarter 2008 levels. The sequential drop in shipments results primarily from expected seasonally lower automotive shipments and a planned five-day outage at the company's Middletown Works hot strip mill.
The company also expects higher raw material and energy costs relative to the second quarter.
AK Steel anticipates that its third-quarter 2008 average per-ton selling prices will be about 10% higher compared to the second quarter of 2008, and the company expects to generate operating profit in a range between $170 and $175 per ton, which would represent a record performance.
AK Steel produces flat-rolled carbon, stainless and electrical steels, primarily for automotive, appliance, construction and electrical power generation and distribution markets. The company employs about 6500 men and women in Middletown, Mansfield, Coshocton and Zanesville, Ohio; Butler, Pa.; Ashland, Ky.; Rockport, Ind.; and its corporate headquarters in West Chester, Ohio.
AK Tube LLC, a wholly owned subsidiary of AK Steel, employs about 300 men and women in plants in Walbridge, Ohio, and Columbus, Ind. AK Tube produces carbon and stainless electric resistance welded (ERW) tubular steel products for truck, automotive and other markets.
