AK Steel Holding Corporation AKS announced that members of the United Auto Workers (UAW), Local 3462, have ratified a new three-and-a-half year labor agreement. The new contract was ratified in voting held on Mar 22, 2016 in Coshocton, OH and will be in effect until Sep 30, 2019.
The agreement covers about 333 hourly production and maintenance employees at the company's Coshocton Works. The new agreement is a competitive labor contract that is in the best interest of the company and its employees.
AK Steel is a leading producer of flat-rolled carbon, stainless, electrical steel and tubular products. The company’s adjusted earnings outshone the Zacks Consensus Estimate in the fourth quarter of 2015. However, sales fell year over year owing to lower shipments and missed expectations.
Challenging steel market conditions and lower pricing continued to weigh on the company’s results in the fourth quarter. High levels of unfairly traded imports led to a 6% decline in AK Steel’s average selling price.
While AK Steel remains exposed to weak steel market fundamentals, it should benefit from strength in the automotive market and higher shipment of steel products to automakers, supported by increased automotive builds. AK Steel witnessed continued momentum in the automotive market in 2015. Automotive contribution to the company’s revenues was 60% for the year.
Moreover, the acquisition of the Severstal Dearborn plant provided AK Steel with access to highly modernized and upgraded steelmaking equipment and facilities. The company should also benefit from its strategic investments to procure about half of its iron ore and coal requirements internally.
AK Steel currently has a Zacks Rank #2 (Buy).
Some other companies worth considering in the basic materials sector are Usinas Siderurgicas de Minas Gerais S.A. USNZY, Fortuna Silver Mines Inc. FSM and Harmony Gold Mining Company Limited HMY. Each of these stocks carries the same Zacks Rank as AK Steel.
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