* Q3 loss 55 cents/shr vs year-ago loss of 3 cts/shr
* Cites 7-percent drop in average steel selling prices
* Shares down 5.4 percent
By Steve James
Oct 23 AK Steel Holding Corp posted a
wider quarterly loss on Tuesday and forecast more red ink for
the fourth quarter as weak domestic and global demand pushed
down steel prices.
The steelmaker's stock fell 5.4 percent to $5.21 in morning
trading on the New York Stock Exchange.
"Challenging domestic and global economic conditions
continue to weigh on shipping volumes and prices," Chairman and
Chief Executive James Wainscott said in a statement.
"Additionally, while we expect to enjoy lower raw material
costs in the future, we are still working through some higher
cost raw material inventories."
AK Steel, which warned last month of the third-quarter loss,
does not normally give a detailed earnings forecast so far in
advance. But on Tuesday it said, based on current conditions, it
expected to incur a net loss for the fourth quarter.
"This anticipated net loss includes a non-cash tax
expense for the fourth quarter as a result of an anticipated
change in its tax valuation allowance, which the company expects
to incur regardless of its fourth quarter pre-tax financial
results," it said.
Analyst Charles Bradford, of Bradford Research in New York,
said a huge tax bill -- $736 million for a valuation allowance
on deferred tax assets -- resulted in a second-quarter loss in
He also said AK Steel was the worst-placed of the U.S.
steelmakers for raw materials, as it has no coal or iron ore
sources of its own and is at the mercy of global markets.
"AK has to pay full market price for iron ore, but it should
get better as prices are coming down now," Bradford said.
The net loss widened to $60.9 million, or 55 cents per
share, from $3.5 million, or 3 cents per share, in the same
quarter of 2011, the Ohio-based steelmaker said.
Excluding tax expenses and an inventory accounting credit,
the adjusted loss was 25 cents per share. On that basis, it beat
Wall Street estimates for a loss of 36 cents per share,
according to Thomson Reuters I/B/E/S.
Sales dropped to $1.46 billion from $1.58 billion, and
shipments fell to 1.364 million tons from 1.369 million tons.
The average selling price for the third quarter was $1,073
per ton, a 7 percent decrease from both the second quarter and
the 2011 third quarter. The company said that was primarily due
to lower spot market prices for carbon steel products and
reduced raw material surcharges.