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AK Steel Holding Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: October 26, 2012 04:04PM

AK Steel Holding Corp. (AKS) filed Quarterly Report for the period ended 2012-09-30. Ak Steel Holding Corporation has a market cap of $609.5 million; its shares were traded at around $5.19 with and P/S ratio of 0.1.



Highlight of Business Operations:

As a result, in the third quarter of 2012, the Company reported a net loss of $60.9, or $0.55 per diluted share of common stock. Included in that net loss was $33.1, or $0.30 per diluted share, for the non-cash change in the valuation allowance referred to above. Also contributing to the loss was a decline in revenue of approximately 8% from the third quarter of 2011. This was principally attributable to a decline in average selling prices compared to the third quarter of 2011, combined with a slight decline in shipments. The Company s average selling price for the third quarter of 2012 was $1,073 per ton, a decrease of approximately 7% from the Company s average selling price of $1,158 per ton for the third quarter of 2011, principally due to lower spot market prices for carbon steel products, reduced raw material surcharges, and a lower value-added product mix. The Company also incurred planned major maintenance outage costs of approximately $28.5 in the third quarter of 2012, primarily related to outages at the Company s Ashland Works blast furnace and Middletown Works hot strip mill. The Company s steelmaking raw material and energy costs were lower in the third quarter of 2012 compared to the same period in 2011, primarily as a result of lower costs for carbon scrap, iron ore and energy, partially offset by higher costs for coke. The benefit of the lower raw material costs, however, could not overcome the negative effect of the overall economic, business and tax conditions faced by the Company in the third quarter.

The decline in total shipments in the third quarter of 2012 compared to the prior year was attributable principally to unfavorable spot market and international electrical steel shipments, partially offset by increased automotive shipments. For the three months ended September 30, 2012, value-added products comprised 81.2% of total shipments compared to 81.6% for the three months ended September 30, 2011. For the nine months ended September 30, 2012, value-added products comprised 83.7% of total shipments compared to 83.3% for the nine months ended September 30, 2011. The Company continued to focus on maximizing profitability through product mix adjustments based on current and projected market demands—both domestically and internationally. The following table presents net shipments by product line:

For the three months ended September 30, 2012, net sales were $1,463.5, an 8% decrease from net sales of $1,585.8 for the three months ended September 30, 2011. For the nine months ended September 30, 2012, net sales were $4,510.6, a 9% decrease from net sales of $4,958.8 for the nine months ended September 30, 2011. The Company s average selling price for the third quarter of 2012 was $1,073 per ton, a decrease of approximately 7% from the Company s average selling price of $1,158 per ton for the third quarter of 2011. The Company s average selling price for the nine months ended September 30, 2012 was $1,120 per ton, a decrease of approximately 3% from the Company s average selling price of $1,151 per ton for the nine months ended September 30, 2011. The lower average selling price for third quarter 2012 compared to third quarter 2011 was driven principally by lower selling prices for spot market carbon sales, lower selling prices for sales of electrical steel, particularly to the international market, and by reduced raw material surcharges as a result of lower raw material costs. Net sales to customers outside the United States for the three and nine months ended September 30, 2012 totaled $198.4 and $648.0, respectively, compared to $243.6 and $734.5, for the three and nine months ended September 30, 2011, respectively. This decline was primarily the result of weak economic conditions in Europe.

The Company reported an operating loss of $12.0 and an operating profit of $48.8 in the three and nine months ended September 30, 2012, respectively. These results compare to operating profit of $11.4 and $99.4 in the three and nine months ended September 30, 2011, respectively. For the nine months ended September 30, 2012, the Company experienced year-over-year decreases in its average selling price, lower sales volumes and higher coke costs, partially offset by decreases in iron ore, carbon scrap and energy costs. Included in operating profit (loss) was operating profit (loss) related to SunCoke Middletown of $13.2 and $(4.4) for the three months ended September 30, 2012 and 2011, respectively, and $31.7 and $(5.9) for the nine months ended September 30, 2012 and 2011, respectively.

That market has been continually improving and the growth in sales to that market is one of the Company s success stories in 2012. Since dropping to only about 8.5 million units in 2009, North American light vehicle production has steadily recovered and reached 13.0 million units in 2011. It is expected to increase to 15.0 million units in 2012, and continue to increase in 2013 and thereafter. As a result of this improving trend, as well as a concerted effort by the Company to increase its share of the automotive market, the Company s shipments of both carbon and auto-chrome stainless steels have increased significantly since last year. In the first nine months of 2012, the Company s direct shipments to its automotive customers of carbon and auto-chrome stainless steels increased approximately 20% compared to the same period of 2011.

Read the The complete Report



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