AK Steel Holding Corporation (AKS) provided its outlook for the first quarter of 2014. The company expects to incur a loss in the range of 44 cents to 49 cents per share in the first quarter mainly due to higher energy costs and an unplanned outage at the company's Ashland Works blast furnace.
Due to the outage, AK Steel expects its steel shipments to decline by 10%–12% sequentially to about 1,250,000 to 1,275,000 tons in the first quarter of 2014. However, AK Steel expects its average selling price to rise by roughly 6% to about $1,095 from $1,031 per ton in the fourth quarter of 2013 due to a richer shipment mix of value-added products.
The cost of natural gas and electricity used to make steel is also expected to increase by about $30 million from the preceding quarter due to cold weather. The company will incur a charge of about $47 million related to unplanned and planned outages. The company also expects to incur a charge of $5.8 million for a tentative settlement of pending litigation. However, the company will record an income tax benefit at an effective tax rate of approximately 29% for the first quarter of 2014.
AK Steel is slated to release its first quarter 2014 results on the April 22, 2014 before the market opens. The Zacks Consensus Estimate for the quarter is currently break-even reflecting 100% growth year over year. We believe a revision to the estimate is on the cards following the company’s guidance of a loss for the quarter.
The company currently holds a Zacks Rank #1 (Strong Buy).
Other companies in the steel and related industries with favorable Zacks Rank are NN Inc. (NNBR), Worthington Industries, Inc. (WOR) and Timken Co. (TKR), each retaining a Zacks Rank #2 (Buy).
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