The Cincinnati Enquirer
a slumping stock price, continuing losses and major
environmental and pension liabilities, the chairman of AK
Steel says the Middletown steel maker expects to weather the
"It's too early to push any panic buttons," chairman
Richard Wardrop told investment analysts during a conference
call Friday to discuss the company's second-quarter loss of
$78.2 million, or 72 cents a share.
AK's stock closed down 49 cents, or 16 percent , Friday at
$2.64 a share after reporting the wider-than-expected loss
blamed on a combination of lower steel prices; higher raw
material, energy and maintenance costs; and several one-time
In the second quarter last year, AK Steel reported a profit
of $16.2 million, or 15 cents a share.
For the three months ended June 30, shipments declined
about 7 percent from a year ago. Sales were $1.02 billion on
shipments of 1.39 million tons. AK said its average
flat-rolled selling price slipped 4 percent to $682 a ton from
a year ago.
Besides a weak steel market, the 100-year-old steel company
• An estimated $80 million to bring its Middletown
steel-making operations into compliance with new air pollution
rules taking effect in 2006 and potentially millions of
dollars in fines from a pending federal pollution lawsuit.
• Potential pension and health-care "legacy" costs
estimated at more than $5 billion last year by actuaries for
its 30,000 eligible retirees and survivors.
Some steel companies have sought bankruptcy reorganization
to get out from under their pension legacy costs, but Wardrop
said AK Steel has no such plans.
The company has said it is studying the possibility of
ending steel-making operations at its Middletown mill, to
resolve some of the environmental and pension cost issues.
That move could eliminate 1,000 jobs in Middletown, where the
company now employs about 5,000.
Last month, the company initiated discussions with employee
unions at its Middletown and Butler, Pa., plants over ways to
improve the competitiveness of those operations.
Wardrop told analysts that the company is studying whether
it makes sense to end basic steel-making operations and import
semi-finished steel slabs to finish into coated-carbon and
stainless steel for its automotive and appliance customers.
AK estimates that it will cost about $1 billion in the next
decade to continue making steel at Middletown and other mills.
Wardrop said the company is weighing whether it makes more
sense to spend that money elsewhere.
Since losing out to rival US Steel Corp. to acquire
National Steel Corp out of bankruptcy in April, some analysts
have questioned AK's viability in the wake of industry
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