(By Salman - iStockAnalyst Writer)
AK Steel Holding Corporation (NYSE:
) is scheduled to report second quarter 2009 earnings at approximately 8:30 a.m. Eastern Time on Tuesday, July 21, 2009. Analysts currently expect the company to report a loss of 51 cents a share on revenue of $825.09 million. In the year ago period, the company earned $1.29 a share on revenue of $2.24 billion.
AK Steel Holding Corporation produces flat-rolled carbon, stainless, and electrical steels, and tubular products primarily in the United States and internationally.
Like other steel companies, AK Steel too has suffered a crushing blow amid a severe economic downturn, which has erased orders from key customers in the automotive, construction and industrial equipment industries. In late July, the steelmaker will shut down most of the operations at its Ashland, Kentucky, plant. Early in May, AK Steel Holding Corp. lowered its second quarter shipment guidance.
The company expects that its
second quarter shipments likely will be closer to 725,000 tons rather than the 800,000 tons estimated in its initial guidance. The company also said that it anticipates its
average per-ton selling price for the second quarter to decline by approximately 3% to 4% compared to the first quarter. The company said it expects to incur an operating loss of $75 million to $80 million for the second quarter, higher than its prior forecast of $50 million loss.
In the fiscal first quarter, the West Chester, Ohio-based company posted a net loss of $73.4 million or 67 cents a share for the first quarter, compared to a net income of $101.1 million or 90 cents a share in the year-ago period. Net sales sharply declined to $922.2 million in the quarter from $1.791 billion in the same period last year. It was the company's second consecutive quarterly loss.
A prolonged slump in auto industry in recent months have meant fewer orders for AK Steel, which supplies steel used in exhaust systems and other vehicle parts. It also sells steel to the automakers' suppliers. About 32 percent of AK Steel's sales last year came from the auto industry. AK Steel Holding stands to lose more than $9 million as a result of
General Motors Corp.’s Chapter 11 bankruptcy filing, while indirect losses could push the total much higher. AK Steel Holding was GM's 33rd largest unsecured creditor.
AK Steel recently increased spot market prices for all carbon and stainless flat rolled steel products but industry experts called the move as premature. Though there are early signs of recovery, the global economy still remains fragile. The
World Bank said on Monday that the global economy will contract 2.9% in 2009, deeper than the 1.7% decline it projected in March.
Global trade is expected to decline by 9.7% in 2009 and total gross domestic product for high-income countries is likely to shrink by 4.2%. The report said further that economic growth in developing countries should slow to 1.2 percent - but excluding relatively strong China and India, developing economies will contract by 1.6%.
Though steel utilization at domestic mills is rising as auto plants increase production, construction is still weighing upon the industry. Moreover, the overall macroeconomic picture still remains uncertain. According to
US Federal Reserve, U.S. industrial production declined 0.4% in June after a 1.2% decline in May. Economists expected June's industrial output to fall 0.6%. Capacity utilization dropped to a record low 68% in June from 68.2% in the previous month.
Shares of the company are currently trading at roughly 18 times consensus 2010 EPS estimates. In terms of stock performance, AK Steel shares have gained 88% since the beginning of the year. On Thursday, shares of the company rose 29 cents or 1.55% to $18.99 in early trade.
Disclosure: Author doesn’t own any of the stocks mentioned here.
