AK Steel noted that, in the absence of a global benchmark price for 2010 iron ore purchases, the company used an assumed 65 percent increase from the 2009 benchmark price for purposes of its second quarter 2010 financial results.
For purposes of its first quarter 2010 financial results, the company had assumed a 30 percent increase from the 2009 benchmark price. As a result, the company's second quarter 2010 results include the impact of higher iron ore costs versus the first quarter 2010. In addition, the company recognized as an expense in the second quarter the incremental amount of the assumed 65 percent benchmark increase that is attributable to its first quarter results. This "true-up" pre-tax expense recognized in the second quarter was approximately $18.0 million. Excluding the effect of the first quarter true-up for iron ore costs in the second quarter, net income for the second quarter would have been approximately $37.4 million.
Net sales for the second quarter of 2010 were $1,596.1 million on shipments of 1,449,400 tons. Second quarter 2010 shipments represent the company's fourth consecutive quarter of increased shipping levels and the highest level since the third quarter of 2008. The company said its average selling price for the second quarter of 2010 was $1,101 per ton, a 9 percent increase over the $1,014 per ton in the first quarter of 2010.
The company further reported an operating profit for the second quarter of 2010 of $65.6 million, or $45 per ton.
AK Steel said it expects shipments in the third quarter of 2010 to be approximately 3 percent higher than its second quarter 2010 shipments. The company anticipates that its average per ton selling price will be about 5 percent lower than the second quarter of 2010. The company also expects planned maintenance costs to decrease by approximately $4 million compared to the second quarter. Assuming a 65 percent increase in the iron ore benchmark price, AK Steel expects to generate an operating profit of approximately $15 per ton for the third quarter.