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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
22 Oct 14 14:03:24
iSENTIUM Post-Market Sentiment Report: Breaking alerts on $IBIO, $AKS, $YELP, $NOK http://t.co/05qd9lPjwW
Daily Contracts
22 Oct 14 12:51:03
Real-Time feed of company contracts, original agreements and executive updates from AK Steel Holding Corporation $AKS http://t.co/TxgZOD5uJc
22 Oct 14 12:25:36
Done and covered $AKS, walking away with profits..
22 Oct 14 11:56:50
Added to short on $AKS new avg 6.68
22 Oct 14 11:29:22
SHorted $AKS at 6.66 will add more in the next spike or so but i dont want to miss it the afternoon fade.....
22 Oct 14 11:13:37
Top gains currently held for our recent buy signals: $VHC +22% $AKS +15% $REGN +15% $NXPI +14% $DHI +14% $MU +12% http://t.co/cU63u2lGkR
22 Oct 14 10:07:47
only hold $BFDI and $AKS, both swings longs and barely down both
22 Oct 14 10:03:07
$AKS 6.72 - was a great idea. Came out of it too quickly! Always better to be safe than sorry I guess...
22 Oct 14 09:59:10
Covered $AKS @ 6.72 (from 6.94) will re short on a bounce
Valeriu Crainic
22 Oct 14 09:48:31
Taken profit on $AKS, now waiting to see $INFN earnings and $AAPL creeping up to $104/105
22 Oct 14 09:37:53
$AKS holding my short from 6.94 still fading and trending down nicely
22 Oct 14 08:51:28
Still holding short on $AKS , trend now is bearish.....
22 Oct 14 08:38:01
Picked up $AKS @ $7, thinking a bust through this area would be strong, Didn't look at the volume on the move.
22 Oct 14 08:29:04
@MonacoTrader came backto $AKS shorted @ .94
22 Oct 14 08:24:06
re-shorted $AKS @ 6.94 with tight stop loss at 6.98
Oscar Tobón Valencia
22 Oct 14 08:21:34
RT @DTAespanol: $AKS going up well.Straight from our Watchlist http://t.co/Ws2vsaR8Lh
22 Oct 14 08:13:42
Holding my other "bounce" plays from last week: $AKS (from 5.40's) - tgt $8, $IFON (from 1.40's) - tgt $2.10, $SLB (from $88;s) - tgt $105.
22 Oct 14 08:13:30
covered $AKS at 7 - took my morning profits and a little bit more. nevermind lets move on.
Nathan Michaud
22 Oct 14 08:11:57
$AKS $7s up
Valeriu Crainic
22 Oct 14 08:03:12
Hopefully traders will come to their senses and short $AKS, I'm off to play Project CARS.
22 Oct 14 08:02:30
7 is a wall For $AKS when it breaks through its going to be powerful
22 Oct 14 07:59:27
$AKS going up well.Straight from our Watchlist http://t.co/KKkpQ8kVEi
22 Oct 14 07:59:26
$AKS going up well.Straight from our Watchlist http://t.co/Ws2vsaR8Lh
22 Oct 14 07:42:26
$AKS great lil swing here...still workn it.
PennyStock Zone
22 Oct 14 07:34:23
RT @Sw1ng_Trader: http://t.co/f2NOHjFUBa <--- 40% sale on Jason Bond picks $SCOK $SHOR $VHC $IMGN $DRYS $RSH $LAKE $APT $VSR $NQ $AKS $HER…
22 Oct 14 07:30:21
$AKS can really get it http://t.co/59qCQi2HLC
22 Oct 14 07:28:20
oops $AKS
Nathan Michaud
22 Oct 14 07:23:05
$AKS nice ramp red/green we were accumulating dips anticipating this $7 magnet
22 Oct 14 07:20:33
Sold wannabee $AKS +.12c/share pike.
22 Oct 14 07:19:33
$AKS on r/g.
trader j
22 Oct 14 07:18:22
$aks out $6.86 green trade but too slow however shorts be cautious
22 Oct 14 07:17:15
$ACI $AKS $AMBA $CLF $HIMX $HLSS $IRBT $TKMR $WLT autocharts @ http://t.co/hj7PGeTQk3
22 Oct 14 07:12:21
added short $AKS .79
trader j
22 Oct 14 07:09:20
With respect to my friend (he knows who he is) I'm long $aks very cheap and it's been upgraded to PT $10 should run to $7+
Girolamo Aloe
22 Oct 14 07:09:04
@InvestorsLive , I am looking $AKS. if the volume stay lower than yesterday. maybe it could be a good short opportunity. What do you think?
Russell Barbour
22 Oct 14 07:03:54
http://t.co/f2NOHjFUBa <--- 40% sale on Jason Bond picks $SCOK $SHOR $VHC $IMGN $DRYS $RSH $LAKE $APT $VSR $NQ $AKS $HERO $IBIO
22 Oct 14 07:00:57
@MonacoTrader $AKS failed attempt to r/g now lets see her real true colors and yes patient is need it.
22 Oct 14 07:00:09
In some wannabee $AKS long on that dip to .80s.
22 Oct 14 06:53:38
Shorted $AKS @ 6.80 will add more for a possible r/g fakeout
trader j
22 Oct 14 06:52:49
Just bought $aks i'm thinking we pass this morning's premarket HOD just saying
22 Oct 14 06:52:24
added short $AKS .81
22 Oct 14 06:51:47
@MonacoTrader $AKS might want to go for the r/g move .. i will short around it ...a little now , not to miss it and more around r/g fail
trader j
22 Oct 14 06:51:40
$aks ridiculously oversold IMO
22 Oct 14 06:47:42
short $AKS .79
22 Oct 14 06:41:47
$AKS covered with profit..now looking at adding $INFN
22 Oct 14 06:40:04
out $AKS .72 (from .83 average) - will revisit again
22 Oct 14 06:38:43
Covered $AKS @ 6.65 (from 6.83) will short the bounce
22 Oct 14 06:32:39
add short $AKS
22 Oct 14 06:32:08
Shortd more of $AKS new avg $ 6.84 still
22 Oct 14 06:28:17
SHorted $AKS @ 6.84 will add on spike....
By  +Follow September 20, 2013 7:55AM



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