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AK Steel Warns of Bigger Losses in Third Quarter, Shares Slide

By  +Follow September 20, 2013 7:55AM
Tickers Mentioned:

On September 9, AK Steel (AKS) said that it will be releasing the results from its third quarter before the markets open on October 22.  After the closing bell on Thursday, the producer of flat-rolled carbon, stainless and electrical steels provided outlook for the quarter, warning of a wider-than-expected loss.

West Chester, Ohio-based AK Steel said that it sees a net loss in the range of 22 cents to 27 cents, in part because of an unplanned outage at a Middletown, Ohio blast furnace that cost the company $12 million, or 9 cents per share, in profits, after recovering a portion of the losses through insurance.  Analysts were expected a loss of only 11 cents per share for the third quarter.

The company also said it anticipates more losses to be incurred and insurance recoveries in the fourth quarter related to the blast furnace outage.

In the second quarter, the steelmaker took a charge of $21.6 million related to a planned maintenance shutdown on the Middletown Works blast furnace and was also hit by a $6.2 million expense with the unplanned mechanical failure in June.  Costs associated with planned outages during the third quarter are expected to be $5 million, which is far better than the $28.5 million it claimed in Q3 2012.

The blast furnace is the part of the mill where iron ore, fuel and limestone are heated and reduced to make hot metal.  The Middletown plant wasn’t able to produce any new carbon flat-rolled steel during the shutdowns, affecting shipments to customers in carbon spot markets.  The company used existing inventory and used its Butler Works and Ashland Works factories to service customers until the Middletown furnace was restarted in mid-July.

For the third quarter, AK Steel expects shipments between 1.24 million and 1.26 million tons, compared to 1.32 million tones in the second quarter, a decrease of 5 percent to 6 percent.  Automobile factories shutting down for retooling during the quarter also partially account for the reduction in shipments.

Average selling prices are expected to rise mildly, from $1,061 per ton in the second quarter to $1,065 per ton in the third quarter.   In last year’s third quarter, the company shipped 1.36 million tons at an average price of $1,073 per ton.

The automobile industry has been a bright spot for AK Steel, but demand in other components, such as electrical steel, stainless steel and commodity carbon markets, have kept pressure on profits.

Shares of AKS started 2013 simply terrible, plunging from near $5 each to lows of $2.76 in April, but have managed to slowly rise since to pare the losses, despite the unplanned outage and associated costs.  Shares closed Thursday at $4.44, but have sunk back 10 percent to $4.00 in pre-market trading on Friday following Thursday’s guidance release.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.

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Results for AKS
Marco Di Dionisio
20 Aug 14 10:16:36
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20 Aug 14 07:03:45
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Jack Trader
19 Aug 14 14:01:20
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Samuel Brown
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Business Updates
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$AKS 10.38
Stock Market News
19 Aug 14 09:03:38
$AKS: Steel companies mixed in Q2 http://t.co/FXgB6deCjz http://t.co/P7hq0K6Nt7
19 Aug 14 09:01:02
$AKS go red already!
19 Aug 14 08:46:47
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19 Aug 14 08:38:07
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$AKS 10.48
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$AKS breaking down 10.52
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$AKS short!
Market Updates
19 Aug 14 08:03:34
$AKS: AK Steel Holding (AKS) Touches New 52-Week High at $9.89 http://t.co/SD3JHu2G6O http://t.co/RaYZ17THeq
19 Aug 14 07:53:16
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Pick A Chart
19 Aug 14 07:51:54
I didn't have to look far today to see a comer. $AKS : from a big loss to a gain based on mgmt. For other good pick: http://t.co/XwWJZivZZC
19 Aug 14 07:40:05
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Fahd El
19 Aug 14 07:39:56
took $AKS of..still having $FB short.. looking for that $75 crack
19 Aug 14 07:35:08
$AKS short 10.60
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19 Aug 14 07:09:00
$AKS S 1/2 @ 10.51
Fahd El
19 Aug 14 07:08:16
shorted also $AKS risk on .60’s
Michael Needleman
19 Aug 14 07:02:39
Housing Starts should be help for the rally in Steel stocks to continue #steel #stocks $X $AKS #Makecentsofitall
By  +Follow September 20, 2013 7:55AM



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