West Chester, Ohio-based AK Steel Holding Corp. released its revised its second quarter earnings forecast Tuesday, in which the company estimated that it will incur a $75 to $80 million operational loss due to reduced steel demand from the US automotive sector.
The flat rolled steelmaker, which generates about one-third of its revenue from the US automotive industry, had originally expected a second quarter loss of about $50 million. However, since AK's previous Q2 forecast, General Motors announced plans to idle more than half its North American plants for up to nine weeks, beginning in mid-May. Also, Chrysler LLC filed for bankruptcy and will idle all plants while it sells its principal assets. AK Steel estimates these auto production cuts will cost the company approximately an additional $25 to $30 million.
The production cuts will also result in the company reducing its expected second quarter steel shipments from 800,000 nt to about 725,000 nt.
Furthermore, AK Steel announced that it expects its average selling price for steel to fall approximately three percent to four percent in the second quarter from the first quarter.
A second quarter loss would be the third consecutive quarterly loss for AK Steel. AK Steel reported an operating loss of $99.9 million in the first quarter.