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AK Steel Holding Corporation (
- Analyst Report
anticipates a loss in third-quarter 2012 as a non-cash tax expense coupled with lower pricing is expected to drag down its bottom line in the quarter. These factors are expected to lead to a loss of between 60 cents and 65 cents per share in the quarter.
The Ohio-based steelmaker expects to incur a tax charge of roughly $29 million (or 26 cents a share) in the third quarter associated with a valuation allowance for its deferred tax assets. The expected third quarter results also reflect a maintenance outage charge of $29 million, mostly related to a blast furnace outage at the company’s Ashland Works facility.
In addition, the company sees its average per-ton selling price, for the third quarter, to slip roughly 7% from the second quarter of 2012. The expected sequential decline is partly triggered by lower spot market prices for carbon steel products as a result of weaker global economic and business conditions, and lower raw material surcharges.
On a positive note, AK Steel expects shipments to increase around 3% over the second quarter to roughly 1,375,000 tons in the third quarter. Shipments rose roughly 0.7% sequentially in the second quarter to 1,335,800 tons.
AK Steel reported lackluster second-quarter 2012 results in July. The company turned into red in the quarter, hit by a non-cash tax charge of $736 million.
AK Steel logged a net loss of $724.2 million (or $6.55 a share) in the second quarter compared with a profit of $33.1 million (or 30 cents a share) a year ago. The company noted that weak global economic conditions affected volume and steel pricing in the quarter.
AK Steel, like and other major players in the steel space such as Nucor Corporation ( NUE - Analyst Report ) and U.S. Steel Corp. ( X - Analyst Report ) , are contending with weak steel demand, oversupply in the industry and pricing pressure.
The company is also hamstrung by weak construction and housing sectors. Moreover, it is exposed to macroeconomic uncertainties, stemming from the recessionary conditions in Europe and sluggish growth in Asia.
AK Steel holds a short-term Zacks #3 Rank (Hold). We currently have a long-term Underperform recommendation on the stock.
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