AK Steel Reports Record 3rd Quarter Net Income
10/22/2008 - AK Steel reports record quarterly net income of $188.3 million on net sales of $2,157.6 million for the third quarter, and record net income of $434.6 million on record sales of $6,185.6 million for the first nine months of 2008.
AK Steel reported record quarterly net income of $188.3 million on net sales of $2,157.6 million for the third quarter, and record net income of $434.6 million on record sales of $6,185.6 million for the first nine months of 2008.
Third Quarter Results—The $188.3 million record quarterly net income ($1.67 per diluted share of common stock) compares to net income of $108.4 million ($0.97 per diluted share) for the third quarter of 2007. Net sales of $2,157.6 million on shipments of 1,476,300 tons compare to sales of $1,721.7 million on shipments of 1,603,000 tons for the year-ago quarter.
The company said its average selling price was a record $1,462 per ton, approximately 36% higher than the $1,074 per-ton average price realized in the third quarter of 2007. The company attributes the decrease in shipments (as compared to the year-ago quarter) primarily to lower shipments to automotive, appliance and construction markets, which were partially offset by higher shipments to service center markets. Higher selling prices are attributed to a richer shipment mix, higher contract and spot-market pricing, and increases in raw material and energy surcharges.
Operating profit was a record $309.6 million (a record $210 per ton), which compares to operating profit of $163.5 million ($102 per ton) for the third quarter of 2007. The company attributes the year-over-year operating profit improvement primarily to higher selling prices, a richer product mix and solid cost controls.
"AK Steel and its employees again posted record results, punctuated with per-ton operating profit above two hundred dollars for the first time in company history," said James L. Wainscott, AK Steel’s Chairman, President and CEO.
Speaking to the forward challenges posed by the current financial market turmoil, Wainscott remarked, "AK Steel has repeatedly demonstrated its ability to overcome adversity. We will draw upon that experience and our inherent manufacturing flexibility to navigate the bumpy economic road that lies ahead."
Nine Month Results—Record net income of $434.6 million ($3.86 per diluted share) compare to net income of $281.0 million ($2.51 per diluted share) for the corresponding 2007 period. The company said the nine-month net income and earnings per share exceeded its full-year 2007 record net income and per-share earnings.
Record sales of $6,185.6 million compare to sales of $5,311.1 million in the first nine months of 2007, while shipments of 4,792,500 tons compare to shipments of 4,910,600 tons for the first nine months of 2007. The company said its decline in shipments was due primarily to lower shipments to the automotive market, partially offset by higher shipments to the service center market.
Operating profit was a record $717.2 million ($150 per ton), which compares to operating profit of $470.9 million ($96 per ton) for the first nine months of 2007. The company said that this improvement was due primarily to higher selling prices, higher spot market shipments and lower retiree benefit costs. The company ended the third quarter with $441.4 million of cash and $698.0 million of availability under its credit facility.
Fourth-Quarter 2008 Outlook—AK Steel said it expects shipments to be approximately 1,400,000 tons for the fourth quarter of 2008, and it expects raw material and energy costs to be lower than in the third quarter. Average per-ton selling prices are expected to be about 10% lower than in the third quarter, with operating profit in the range of approximately $100 per ton.
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 6,500 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.
