Several major US steelmakers specializing mainly in flat rolled products - including AK Steel, US Steel and Steel Dynamics Inc. - have announced their earnings for the second fiscal quarter ended June 30.
Middletown, Ohio-based AK Steel reported stellar earnings in the second quarter of 2007, with a net income that more than tripled from Q2 '06. AK reported a net income of $109.9 million, compared to $29.1 million a year ago. Net sales were a record $1.87 billion compared to $1.5 billion a year ago.
"AK Steel's excellent second quarter results reflect strong shipment levels and prices for our products, an outstanding operating performance, and our unrelenting efforts to reduce costs," said AK Steel CEO James L. Wainscott.
AK's Q2 financial results are also especially strong compared to the year-ago period, since in the second quarter of 2006, the company was still in the midst of the lockout at its Middletown plant. AK Steel said it expects shipments for the third quarter of 2007 to be lower than second quarter 2007 levels due to a planned maintenance outage at the Middletown hot strip mill, and expects its average per-ton selling price to be about two percent lower than in the second quarter of 2007. However, the company expects its operating costs to improve from second quarter levels.
Pittsburgh-based United States Steel Corp.'s earnings fell in the second quarter, while income increased slightly. US Steel reported Q2 earnings of $302 million, compared to $404 million a year earlier. The company attributed this 25 percent decrease to a $23 million pre-tax charge resulting from debt redemption, as well as the $2 billion acquisition of Lone Star Technologies and decreased shipments in the second quarter. US Steel's net sales rose 2.9 percent to $4.23 billion from $4.11 billion in the second quarter of 2006.
CEO John P. Surma, commenting on the outlook for Q3, stated, "We expect continued strong performance by our three reportable segments in the third quarter of 2007, with overall operating results improving from the second quarter, excluding any charges resulting from Lone Star integration activities."
Also hurt by the slow flat rolled market in Q2 was Fort Wayne, Indiana-based Steel Dynamics Inc., which also reported decreased earnings in the second quarter. The company posted earnings of $93.9 million in the second quarter, down slightly from the $96.9 million earned in the year-ago period. Sales for the quarter totaled $911.2 million, up 11 percent from $821.1 million in Q2 '06.
SDI attributed the decrease in earnings to the weak demand for its flat rolled products, which resulted in lower shipment volumes and lower prices. At the same time, costs and operating expenses rose in the second quarter.
Looking to the third quarter, SDI's CEO Ken Busse commented: "Our outlook for the third quarter is very positive. The cost of ferrous resources for delivery mid-to-late second quarter has trended down and third quarter scrap prices appear to be stable. We expect selling prices to remain relatively steady or improve somewhat, setting the stage for an expected improvement in profit margins for the third quarter. All of SDI's long product divisions are experiencing solid order books, strong shipping rates, and strong selling values."