AK Steel Holding Corporation AKS has provided its outlook for the second quarter of 2015, wherein it anticipates reported net loss in the range of 37−42 cents per share. According to the company, its second-quarter results will be adversely affected by lower carbon steel prices as significantly high levels of unfairly traded imports continue.
Shares of AK Steel witnessed a fall of almost 3% in after-hours trading yesterday following the guidance announcement.
However, the company expects shipments to increase by around 3% from the first quarter of 2015, to roughly 1.8 million tons in the second quarter. The sequential increase in shipments is mainly associated with higher shipments to the carbon steel spot market and continued improvement in the automotive market.
AK Steel anticipates average selling price to decline by around 7% from the first quarter of 2015, to around $929 per ton in the second quarter owing to the adverse impact of the continued rise in imports on selling prices in the carbon spot market. Additionally, the average selling price will be negatively impacted by a less rich product mix, stemming from increased shipments to the carbon spot market in the second quarter versus the first quarter. However, these impacts are expected to be partly offset by lower raw material and energy costs.
For the second quarter, AK Steel also anticipates incurring income tax expense of roughly 8 cents per share, using the discrete method of accounting for income taxes. AK Steel’s income tax provision is associated with the company’s LIFO reserve, which helps in tax valuation allowance adjustment related to the company's deferred tax assets.
AK Steel currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the steel space include Haynes International, Inc. HAYN, Evraz Highveld Steel & Vanadium Ltd. HGVLY and Commercial Metals Company CMC. While Haynes International sports a Zacks Rank #1 (Strong Buy), both Evraz Highveld and Commercial Metals carry a Zacks Rank #2 (Buy).
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