Steel Mills

Blast Furnace Outage Impacts AK Steel Earnings

October 22, 2013

AK Steel has posted losses for the past four quarters and has added third quarter 2013 to that trend. The company reported a net loss of $31.7 million compared to a loss of $40.4 million the previous quarter and $60.9 million in third quarter 2012.

Net sales were $1.33 billion on shipments of 1.24 million tons compared to $1.4 billion in second quarter on shipments of 1.32 million tons and $1.46 billion on shipments of 1.36 million tons in third quarter 2012.

The unexpected blast furnace outage at Middletown Works resulted in delays to some customers and overall reduction of shipments during the quarter. Uninsured loss from the outage is anticipated at approximately $20-$23 million before taxes. Uninsured pre-tax loss and partial insurance recoveries of $11.8 million and $18 million were included in third quarter results. AK Steel expects to recognize the balance of insurance recoveries in the fourth quarter depending on when an agreement is reached with insurance underwriters.

Average selling price of $1,071 per ton in the third quarter was down slightly from third quarter 2012 but up 1.0 percent from second quarter 2013. Third quarter increases in the carbon spot market were offset by lower raw material surcharges and commitments to buyers for lower-price orders placed prior to the Middletown outage. Electrical steel market pricing also dropped in the third quarter due to weak global economic conditions.

Nine month results include sales of $4.11 billion on shipments of 3.85 million tons. A net loss of $82 million was reported for the first nine months of 2013 with EBITDA at $167.8 million, or $44 per ton, compared to $164.4 million, or $41 per ton, in the first three quarters of 2012.

AK Steel provides detailed guidance in December but said it expects an improved fourth quarter.