AK Steel Reports 2nd Quarter Results
07/22/2009 - AK Steel reports a net loss of $47.2 million on net sales of $793.6 million for the second quarter, and a net loss of $120.6 million on sales of $1,715.8 million for the first six months of 2009.
AK Steel reported a net loss of $47.2 million on net sales of $793.6 million for the second quarter, and a net loss of $120.6 million on sales of $1,715.8 million for the first six months of 2009.
Second Quarter Results—The $47.2-million net loss ($0.43 per diluted share of common stock) compares to net income of $145.2 million ($1.29 per diluted share) for the year-ago second quarter. Results represent a 35% improvement over the previous quarter’s net loss of $73.4 million ($0.67 per diluted share).
Net sales of $793.6 million compare to sales of $2,236.6 million for the year-ago second quarter. Shipments of 740,600 tons compare to shipments of 1,737,800 tons for the year-ago second quarter and shipments of 778,800 tons for the previous quarter.
The company said its average selling price for the quarter was $1,072/ton, a 9% decrease from $1,184/ton price in the previous quarter of 2009 and about 17% lower than the $1,287 per-ton price for the year-ago second quarter.
The company experienced an operating loss of $72.5 million ($98 per ton), which compares to an operating profit of $237.9 million ($137/ton) for the year-ago second quarter. Operating results represent a $27.4 million ($30/ ton) improvement over the first quarter of 2009.
"Considering that the continuing global recession resulted in an all-time low quarterly shipment level, the effort by AK Steel employees to significantly improve our results over the first quarter is notable and remarkable," said James L. Wainscott, Chairman, President and CEO. "While we can never be satisfied with an operating or net loss, the improvements speak volumes about AK Steel's business model and the resolve of our entire team to weather this unprecedented recession and emerge with an even stronger company."
Six-Month Results—The $120.6-million net loss ($1.10 per diluted share) compares to net income of $246.3 million ($2.18 per diluted share) for the corresponding 2008 period. Sales of $1,715.8 million compare to sales of $4,028.0 million in the first half of 2008.
Shipments of 1,519,400 tons compare to shipments of 3,316,200 tons in the first half of 2008.
The company reported an operating loss of $172.4 million ($113 per ton) for the first half of 2009, which compares to an operating profit of $407.6 million ($123 per ton) for the first half of 2008. The company attributed the loss to significant declines in shipments, sales and income, all the result of severe decline in the overall global economy and substantial reduction in demand in the automotive and all other markets the company serves.
The company made $100.0 million in early pension fund contributions in the first six months, as well as a $65.0-million contribution associated with the Middletown Works VEBA settlement. In that same time period, the company also repurchased $26.4 million of its 7 3/4% senior notes and approximately 1.6 million shares of its common stock.
Third-Quarter Outlook—AK Steel said it expects shipments of approximately 940,000 tons for the third quarter of 2009, reflecting an increase of nearly 27% over second-quarter 2009 shipments. The company anticipates that its average per-ton selling price will be approximately equivalent to the second quarter of 2009 level.
The company expects planned maintenance costs to be approximately $6 million lower compared to the second quarter, primarily the result of the early-July completion of the planned Middletown Works blast furnace maintenance outage. AK Steel said it also expects to benefit from lower operating and raw material costs in the third quarter compared to the second quarter.
The company said it expects to achieve an approximate breakeven in operating profit, which would represent an improvement of about $70 million (about $100 per ton) over second-quarter results.
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 6100 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 250 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.
