AK Steel Issues 4Q Guidance - Analyst Blog
19 12월 2011 - 5:00PM
Zacks
AK Steel Holding
Corporation (AKS) finally issued its fourth-quarter 2011
guidance, having deferred it earlier because of the uncertain and
volatile economic conditions .
The company expects non-cash,
pre-tax corridor charge of approximately $250 million in the fourth
quarter. The $250 million estimate was arrived utilizing the
current estimated discount rate and asset return rate based on
calculation. The final amount is subject to fluctuations in market
performance and interest rate assumptions from now until December
31.
AK Steel expects shipments and
selling prices to rise in the fourth quarter from a year earlier,
while operating costs are expected to fall from the previous
quarter.
The steelmaker expects to incur an
operating loss of $40 to $45 per ton for the fourth quarter. The
company forecasts shipments to increase 3% to $1.4 million tons.
Average per-ton selling prices are expected to increase 5% from a
year ago, but to slip 8% sequentially due to lower spot-market
pricing and a lower value-added product mix.
As per the company, operating costs
would be lower compared with the third quarter on the back of
product mix and the effect of a credit from an accounting method
called LIFO, partially offset by lower operating rates. The company
had previously expected to incur a LIFO charge.
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 the company’s margins. 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 Nucor Corporation (NUE),
U.S. Steel Corp. (X) and Steel Dynamics
Inc. (STLD).
AK STEEL HLDG (AKS): Free Stock Analysis Report
NUCOR CORP (NUE): Free Stock Analysis Report
STEEL DYNAMICS (STLD): Free Stock Analysis Report
UTD STATES STL (X): Free Stock Analysis Report
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