AK Steel Holding Corporation (AKS) expects to post loss in third-quarter 2013 as lower steel pricing coupled with Middletown blast furnace outage is expected to dent its bottom line in the quarter. The market reacted negatively to the news and the company's shares skid as much 13% in regular trading last Friday. The stock eventually closed at $4.08 on Sep 20, reflecting a roughly 8% decline for the day.
AK Steel expects to incur a loss of 22 cents to 27 cents per share in the third quarter based on lower steel prices on year-over-year basis and reduced shipments. Shipments are expected to be in the range of 1,240,000 to 1,260,000 tons in the third quarter, a decline of 5%-6% from the sequentially prior quarter and 1,363,500 tons a year ago. The reduction in shipments is attributed to the unplanned outage at the company's Middletown Works blast furnace as well as a seasonal reduction in shipments to the automotive market.
The company forecasts a loss of about $12 million or 9 cents per share in the third quarter on account of the blast furnace outage. AK Steel also expects to recognize roughly $14 million in insurance recoveries during the third quarter related to the outage.
AK Steel, however, expects prices to increase slightly from the second quarter to about $1,065 per ton due to a more favorable mix of value-added products. However, that represents a fall from $1,073 per ton registered a year ago.
AK Steel expects to record a non-cash income tax expense of roughly $7 million, or 5 cents per share in the third quarter. The company also expects to record about $5 million planned maintenance outage costs, representing a sequential decline of roughly $17 million.
AK Steel currently carries a Zacks Rank #3 (Hold).
Other companies in the steel industry with favorable Zacks Rank are Nippon Steel & Sumitomo Metal Corp. (NSSMY), Companhia Siderurgica Nacional (SID), and Shiloh Industries Inc. (SHLO). All of them hold a Zacks Rank #1 (Strong Buy).
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment