AK Steel ends string of losses with 3Q profit

By DANIEL LOVERING

posted: 29 DAYS 9 HOURS AGO

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PITTSBURGH -AK Steel Holding Corp. posted a sharply lower third-quarter profit Tuesday compared with a year ago, but nonetheless broke a string of three consecutive quarterly losses and said it expects shipments to pick up in the final months of the year.

AK Steel is a supplier to the U.S. auto industry. Automakers ramped up production in recent months in response to the government's wildly successful Cash for Clunkers program.

Like other steel companies, AK Steel has faced sharply lower demand since late last year, when the economic downturn undermined important steel buyers in the auto and construction industries. That forced AK Steel to lay off workers and idle plants.

But the steel industry has improved in recent months, with prices and production rising during the quarter. Still, the market for the metal used in everything from refrigerators to pickup trucks remained much weaker that it was a year earlier.

Its shares tumbled $1.70, or 9 percent, to $17.09 in afternoon trading.

Analysts say AK Steel — which garnered about a third of its 2008 sales from auto companies — is particularly well-positioned to benefit from an eventual auto industry recovery.

In a note to investors, Morgan Stanley analyst Mark Liinamaa wrote that AK Steel's projection of a 24 percent increase in shipments in the fourth quarter indicates that "auto production level will indeed hold up through the quarter even though auto sales will decline from artificially inflated (third quarter) levels, resulting from Cash for Clunkers."

The company, based in West Chester, Ohio, said it earned $6.2 million, or 6 cents per share, for the three months ended in September. That compares with a profit of $188.3 million, or $1.67 per share, during the same period a year earlier.

Revenue slid 52 percent to $1.04 billion from $2.16 billion a year earlier.

Analysts expected AK Steel to earn a penny per share on revenue of $1.03 billion, according to a survey by Thomson Reuters. Wall Street typically excludes one-time charges in its earnings estimates.

2009-10-27 13:34:36