AK Steel Revenue Rises 36% on Auto Sector Demand, Acquisition

   By Tess Stynes 
 

AK Steel Holding Corp. (AKS) said its fourth-quarter revenue rose 36% on sharply higher shipments, spurred by strong automotive sector demand and a boost from a recent acquisition.

Shares rose 3.7% to $4.20 in recent premarket trading as per-share profit, excluding items, beat expectations. AK Steel and other major U.S. steelmakers have benefited from strong demand for automobiles but continue to face challenges from lower-priced imports. However, a recent drop in oil prices potentially could decimate a portion of the steel industry that has been built up over the last few years to supply drillers in places like the Marcellus Shale and the Gulf of Mexico.

Overall, AK Steel reported a profit of $13.5 million, or seven cents a share, down from $35.2 million, or 26 cents a share, a year earlier. Excluding items such as acquisition-related expenses and pension-related charges, earnings were 14 cents. The company expected per-share earnings of five cents to 10 cents.

Revenue increased 36% to $2 billion, while analysts polled by Thomson Reuters expected $1.99 billion.

Average selling prices decreased 4.3% from a year earlier, mostly on the higher proportion of hot-rolled coil shipments in the overall sales mix stemming from its September acquisition of Dearborn Works from Severstal PAO (CHMF.MZ). Shipments soared 42%, amid strong demand in the automotive sector and the Dearborn Work acquisition.

On Monday, U.S. Steel Corp. said Monday it would temporarily curtail operations at two plants in Alabama and one in Texas, potentially affecting 1,918 workers, as the collapse of oil prices leads oil and gas drillers to cancel orders for steel pipes and tubes made at the sites.

Nucor Corp. (NUE) is expected to report its fourth quarter earnings later Tuesday morning, while U.S. Steel comes after the market closes. Steel Dynamics Inc. (STLD) is set for Wednesday after the bell.

Write to Tess Stynes at [e-mail]

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