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AK Steel Reports Second Quarter 2011 Results
07/27/2011 - AK Steel reported net income of $33.1 million on net sales of $1,791.9 million for the second quarter and net income of $41.8 million on net sales of $3,373.0 million for the first six months of 2011.
AK Steel reported net income of $33.1 million on net sales of $1,791.9 million for the second quarter and net income of $41.8 million on net sales of $3,373.0 million for the first six months of 2011.
Second Quarter Results — The $33.1 million net income ($0.30 per diluted share of common stock) compares to net income of $26.7 million ($0.24 per diluted share) for the year-ago second quarter. Current results include a $2.0 million ($0.02 per diluted share) charge related to state tax law changes.
Net sales of $1,791.9 million compare to sales of $1,596.1 million for the year-ago second quarter, while shipments of 1,497,000 tons compare to shipments of 1,449,400 tons for the year-ago second quarter. The company said its average selling price for the current quarter was $1,185 per ton, a 7% increase over the $1,109 per ton in the previous quarter (1Q2011) and about 8% higher than the $1,101 per ton reported for the year-ago second quarter.
The company also reported an operating profit of $68.5 million ($46 per ton), which compares to an operating profit of $65.6 million ($45 per ton) for the year-ago second quarter.
"AK Steel's second quarter results represent another quarter of solid progress, as we continue along the 'road to recovery' in 2011," said James L. Wainscott, Chairman, President and CEO. "In fact, despite experiencing much higher iron ore prices than anticipated, we achieved our best quarter in the past six quarters in terms of shipments, operating profit, net income and earnings per share."
Six-Month Results — The $41.8 million ($0.38 per diluted share) net income for the first six months compares to net income of $28.6 million ($0.26 per diluted share) for the first six months of 2010. Current results include the $2.0 million ($0.02 per diluted share) charge related to state tax law changes., while the 2010 first-half results include a $25.3 million ($0.23 per diluted share) non-cash charge in the first quarter related to federal healthcare legislation.
First-half sales of $3,373.0 million compare to sales of $3,001.8 million in the first half of 2010. Shipments of 2,920,100 tons compare to shipments of 2,835,200 tons in the first half of 2010.
The company reported an operating profit of $88.0 million ($30 per ton) for the first half of 2011, which compares to an operating profit of $123.2 million ($43 per ton) for the first half of 2010. The increase in sales was offset by significant increases in raw material costs, particularly costs for iron ore and coal.
During the first half of 2011, the company made $170.0 million in pension trust fund contributions and a $65.0-million contribution to a Voluntary Employees Beneficiary Association trust established to assume responsibility for all health and welfare postretirement benefit obligations formerly owed by the company to a group of retirees from the company's Middletown Works.
Third Quarter 2011 Outlook — AK Steel said it expects shipments in the third quarter of 2011 to be between 1,400,000 and 1,450,000 tons. The company anticipates that its average per-ton selling price will be about 1% lower, and that raw material costs will be higher than it experienced for the second quarter of 2011. As a result, the company expects to generate an operating profit of approximately $15 per ton for the third quarter of 2011.
The company noted that its outlook excludes the financial effects of the recent EAF incident at the Butler Works on July 1, 2011. While AK Steel carries insurance, which the company expects to cover losses related to the incident above deductible amounts, the company cannot accurately predict at this time the financial effect of this incident on its 2011 third quarter results due to uncertainty related to the costs incurred and the timing and amount of the ultimate insurance recovery.
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 6200 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.
