AK Steel Swings to Profit

AK Steel Holding Corp. swung to a second-quarter profit as the steelmaker reduced its exposure to spot prices and focused on more profitable coated products.

The West Chester, Ohio, company's shipments declined 14% to roughly 1.55 million tons for the latest quarter, compared with 1.81 million tons a year earlier. Selling prices per ton improved 2.8% to $957 a ton, compared with $931 a ton a year earlier.

U.S. steelmakers have been starting to benefit from U.S. tariffs on steel imports, which the industry had lobbied in response to high import levels of less expensive goods from abroad —particularly from China—that crushed steel prices last year.

Last week Nucor Corp. posted a steep increase in second-quarter profit and forecast a robust third quarter, thanks to a widening gap between weak commodity markets overseas and stronger domestic prices. U.S. Steel Corp. plans to release its second-quarter results Tuesday after the bell.

Chief Executive Roger Newport said in prepared remarks that the steelmaker's decision to reduce exposure to commodity spot markets, optimize its footprint and focus on higher value products continued to show positive results in the latest quarter.

The reduced exposure to spot markets resulted in a 48% decline in shipments to distributors and converter markets, according to AK Steel. Shipments of higher value coated products, mostly to the automotive market, comprised 53% of total volume, compared with 45% a year earlier.

Over all, AK Steel reported a profit of $17.3 million, or 8 cents a share, compared with a year-earlier loss of $64 million, or 36 cents a share. The latest period included a tax benefit of $106 million.

Revenue decreased 12% to $1.49 billion, mostly owing to lower automotive contract pricing as well as a decrease in shipments.

Analysts polled by Thomson Reuters expected per-share loss of 2 cents and revenue of $1.53 billion.

Total operating expenses declined 15%.

Write to Tess Stynes at [e-mail]

(END) Dow Jones Newswires

July 26, 2016 09:55 ET (13:55 GMT)

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