AK Steel posts net loss for Q4

AK Steel posts net loss for Q4

Middletown, Ohio-based steelmaker AK Steel reported a net loss of $41.5 million, or $0.38 per common share, for the fourth quarter ended December 31, 2005, compared to a net loss of $102.8 million, or $0.95 per share in the fourth quarter 2004. The net loss was largely due to higher operating costs, retiree healthcare costs, and its impaired investment in a joint venture, an electrogalvanizing facility in Cleveland. The company's adjusted net income before taxes fell 12 percent from fourth quarter 2004, from $73.7 million to $65.1 million. Year-to-date net sales for 2005 were a record $5'647.4 million compared to year-to-date net sales in 2004 of $5'217.3 million. This increase in sales figures is accounted for by an increase in steel prices. President and CEO of AK Steel, James L. Wainscott commented on the quarter, "AK Steel achieved outstanding operating and sales performances in 2005. In every core operating metric – safety, quality and productivity, we achieved record performances, and we surpassed our aggressive controllable cost targets. However, the continued volatility in energy, raw materials and spot market pricing underscores AK Steel's need to further lower its operating costs to achieve sustained profitability." Looking forward to first quarter 2006, AK Steel said it expects shipments between 1'575'000 and 1'600'000 tons, with an average selling price per ton 4 percent to 5 percent higher than in the fourth quarter of 2005, with raw material costs higher and natural gas costs similar to fourth quarter 2005 levels. The company said it expects to generate operating profit in the first quarter of 2006 between $33 and $37 per ton. Steel analysts believe that the AK Steel might be a takeover target for German steel giant ThyssenKrupp now that they have dropped out of the Dofasco bidding war. The reasoning behind this is that ThyssenKrupp was looking for a ticket into the North American auto industry by acquiring Canadian flat rolled producer Dofasco, and AK Steel is the largest US producer of automotive steel. Then again, American mega-producer US Steel Corp. might prove just as tempting of a potential asset. AK Steel produces flat rolled carbon, stainless, and electrical steels as well as tubing products for the automotive, appliance, construction, and manufacturing markets.