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AK Steel releases earnings report

By Eric Robinette

The strength of the automobile industry has rubbed off on AK Steel Corp., boosting the company to a net income of $16.2 million, or $.15 per diluted share, for the second quarter.

AK released its quarterly earnings Friday, revealing an overall increase in shipments and revenues, after having lost $33.4 million in the first quarter. Last year at this time, AK had earned $2.4 million in the second quarter.

The company shipped a record 952,000 tons of steel to the automotive industry, besting its previous record of 827,000 in the first quarter, said James L. Wainscott, chief financial officer. The automotive industry has seen record shipments of nearly 1 million tons, he added.

“AK had an excellent chance to be back on track, and I’m pleased we delivered on expectations,” said AK Chief Executive Officer Richard M. Wardrop Jr.

The company’s vice president of public affairs, Alan McCoy, explained, “The automotive industry commands better margins than most businesses we can sell to. With 0 percent financing and rebates, sales in the auto industry have been very robust, and they have continued.”

One of the most important products within the automotive industry is steel that’s coated to help prevent corrosion. Because these are high-grade products, they command better margins, so AK wants to grow that product, McCoy said.

“We are at an interesting crossroads ... we want to grow, not just survive. To adequately serve our customers, we need more coating capacity, and higher contract prices,” Wardrop said.

Revenues for the second quarter were $1.14 billion, about 16 percent higher than the $984.2 million made a year ago, Wainscott said, with operating profit at $69.9 million, or $46 per ton shipped. The average flat-rolled selling price in the second quarter was up about 7 percent to $708 per ton, as opposed to $663 per ton in the first quarter.

Wardrop also noted a continued strong safety record and award-winning products. He called the Middletown Works “the safest coke plant in the industry,” and said this was the second consecutive year without a recorded injury.

The company also won awards from Subaru and Ford, with AK being the only U.S. supplier honored by Ford.

Wainscott said he expected third-quarter revenues to drop because auto makers are retooling their manufacturing lines for new model cars. He predicted that the company would ship about 152,000 fewer tons this quarter.

AK’s stock closed at $10.01 per share Friday, down 51 cents from Thursday. The 52-week low was $7.50, the high $14.85.



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