Shares for AK Steel Holding Corporation (AKS) , one of the larger US producers of steel and iron, was trading lower throughout Tuesday’s session after the company’s early morning release of its balance sheet for the third quarter.
Tuesday’s earnings report showed the company at a loss of $31.7 million, or $0.23 per share on revenue of $1.33 billion, compared to the year earlier period when losses were much larger at $60.9 million, or $0.55 per share, on revenue of $1.46 billion. The average of analyst estimates had the company losing $0.24 per share.
During the recently ended period, the company was selling one ton of steel for an average price of $1,071, only a slight change on the prior year period, and up sequentially from Q2 2013 as a result of a more profitable mix of value-added products that cushioned sales from lower surcharges for raw materials, and delayed shipments.
The dip in shares had some help however from UBS, whose analyst Matt Murphy cut AK’s rating from Neutral to Sell, a decision he explained by saying “The company has suffered from weak margins and high leverage, compounded by debt and high legacy liabilities. AKS is benefitting from an improving US auto sector; however, it will be some time before it can realize any benefit from its raw materials integration strategy, which is underway. The largest issue we see for AKS is the cash drag from required pension payments notwithstanding an improving economy and rising interest rates.”
Shares were down over two percent to just a hair underneath $4 in midday trading. AK has had a rough year overall, down some 12 percent, though things have picked up in the recent quarter, with shares adding nearly 20 percent.