AKS AK Steel Holding Corp

Effective immediately, AK Steel Holding Corporation (AKS) increased the current spot market base prices for all carbon flat-rolled steel products by $60 per ton.

Recently, AK Steel posted its second-quarter 2011 results, delivering an EPS of 30 cents compared with 24 cents during the year-ago quarter. However, the EPS was below the Zacks Consensus Estimate of 50 cents per share.

Net sales, as reported by the company, were $1,791.9 million on the shipments of 1,497,000 tons versus $1,596.1 million and 1,449,400 tons in the prior-year quarter. Net sales also missed the Zacks Estimate of $1,804 million. Average selling price for the quarter was $1,185 per ton, up 8% from $1,101 per ton reported in the second quarter of 2010.

Value-added shipments including stainless/electrical, Cold-rolled and Tubular product increased to 245.7, 318.1 and 32.8 tons, respectively, compared with 218.9, 284.7 and 32.6 tons, respectively, in the year-earlier quarter. However, shipments of coated product came down to 631.3 tons from 685.2 tons in the year-ago quarter.

According to management, shipments in the third quarter of fiscal 2011 are expected in the range of 1,400,000 and 1,450,000 tons. The company also anticipates its average per-ton selling price to be about 1% lower and that of raw material costs to be a bit higher compared with the second quarter. The operating profit is expected to be approximately $15 per ton for the third quarter of fiscal 2011.

AK Steel is uniquely positioned to focus on products with high margins. Electrical steel continues to be the company’s strongest product line, with demand recovering in the U.S. and abroad, though at a slower rate. AK Steel is operating its plants at above 80% capacity and is well positioned to serve the end markets when the demand rebounds.

However, higher input costs, particularly iron ore, is eroding margins of the company. Iron ore pricing concerns have led to a negative outlook for steel manufacturers. A K Steel currently retains a Zacks #3 Rank (short-term Hold rating).

Ohio-based AK Steel Holding Corporation is a leading producer of flat-rolled carbon, stainless, electrical steel and tubular products. It operates 7 steel-making and finishing plants in Ohio, Pennsylvania, Indiana and Kentucky.

The basic raw materials required for the steel manufacturing are iron ore, coal, coke, chrome, nickel, silicon, manganese, zinc, limestone and carbon and stainless steel scrap.

Natural gas, electricity and oxygen are the sources of power for steel manufacturing operations. The company competes with companies like Nucor Corporation Common Stock (NUE), U.S. Steel Corp. (X) and Steel Dynamics Inc. (STLD).

 
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