AK Steel Says Imports Negatively Impacting Shipments
03/20/2015 - AK Steel provided guidance for its first quarter 2015 financial results, saying it expects to report a net loss of US$0.23 to US$0.28 per diluted share of common stock for the first quarter of 2015.
AK Steel said that the company's results of operations for the first quarter of 2015 have been significantly and negatively impacted by lower than expected carbon steel spot market shipments and prices due to unexpectedly high levels of what AK Steel believes are unfairly traded imports.
For the first quarter of 2015, AK Steel expects shipments of approximately 1,730,000 tons, a decrease of approximately 14% from the fourth quarter of 2014. The company's shipments of carbon and stainless steels to the automotive market are expected to remain strong due to market demand. However, excess global steelmaking capacity and continued challenging global economic conditions have resulted in a substantial increase in the level of steel imports into the United States. More recently, the strengthening United States dollar also has contributed to an increase in steel imports. Imports of flat rolled carbon steel products increased by nearly 60% in 2014, and have averaged more than one million tons per month in January and February of 2015. These conditions have negatively affected the company's shipments to the carbon spot market in the first quarter of 2015, as well as the selling price of the company's steel to that market.
AK Steel expects an average selling price of approximately US$995 per ton for the first quarter of 2015, or about 1% higher than for the fourth quarter of 2014. The expected increase in average selling price is primarily attributable to a richer product mix (i.e., a higher percentage of value-added shipments in relation to total shipments for the quarter). Carbon steel spot market selling prices have declined throughout the first quarter of 2015 and continue to decline, which AK Steel believes is primarily the result of increased imports.
AK Steel expects to benefit in the first quarter of 2015 from lower raw material (principally carbon scrap and iron ore pellets) and energy costs, as well as stable and consistent operations. However, the collective benefit of these items is expected to be significantly out-weighed by the negative financial effects of the shipment volume and selling price declines described above.
The company said that it expects to record income tax expense of approximately US$7.0 million, or US$0.04 per diluted share, for the first quarter of 2015 using the discrete method of accounting for income taxes. The company's income tax provision is primarily related to changes in the company's LIFO reserve, which results in a tax valuation allowance adjustment related to the company's deferred tax assets.
For the first quarter of 2015, AK Steel expects shipments of approximately 1,730,000 tons, a decrease of approximately 14% from the fourth quarter of 2014. The company's shipments of carbon and stainless steels to the automotive market are expected to remain strong due to market demand. However, excess global steelmaking capacity and continued challenging global economic conditions have resulted in a substantial increase in the level of steel imports into the United States. More recently, the strengthening United States dollar also has contributed to an increase in steel imports. Imports of flat rolled carbon steel products increased by nearly 60% in 2014, and have averaged more than one million tons per month in January and February of 2015. These conditions have negatively affected the company's shipments to the carbon spot market in the first quarter of 2015, as well as the selling price of the company's steel to that market.
AK Steel expects an average selling price of approximately US$995 per ton for the first quarter of 2015, or about 1% higher than for the fourth quarter of 2014. The expected increase in average selling price is primarily attributable to a richer product mix (i.e., a higher percentage of value-added shipments in relation to total shipments for the quarter). Carbon steel spot market selling prices have declined throughout the first quarter of 2015 and continue to decline, which AK Steel believes is primarily the result of increased imports.
AK Steel expects to benefit in the first quarter of 2015 from lower raw material (principally carbon scrap and iron ore pellets) and energy costs, as well as stable and consistent operations. However, the collective benefit of these items is expected to be significantly out-weighed by the negative financial effects of the shipment volume and selling price declines described above.
The company said that it expects to record income tax expense of approximately US$7.0 million, or US$0.04 per diluted share, for the first quarter of 2015 using the discrete method of accounting for income taxes. The company's income tax provision is primarily related to changes in the company's LIFO reserve, which results in a tax valuation allowance adjustment related to the company's deferred tax assets.
