West Chester, Ohio-based AK Steel reported Tuesday a net loss of $47.2 million for the second quarter of 2009, ended June 30, 2009, compared with earnings of $145.2 million in the same quarter last year. The results, however, represent a 35 percent improvement over the first quarter of 2009, when the company's net loss totaled $73.4 million.
The flat rolled steelmaker's Q2 loss was driven mostly by declining shipments, sales and income. However, the company expects to break even in the third quarter, on increasing shipments and lower operating costs.
Net sales in Q2 were $793.6 million, versus $2.2 billion in the same quarter of last year, and below analysts' projection of $824.4 million. AK Steel shipped 740,600 net tons of steel in the second quarter, versus more than 1.7 million tons in the same quarter of the previous year, and 778,800 tons during Q1 of 2009. The selling price went down 17 percent year-over-year and nine percent from Q1 to Q2.
The firm experienced an operating loss for the second quarter of 2009 of $72.5 million, or $98 per ton, compared to an operating profit of $237.9 million, or $137 per ton, for the second quarter of 2008.
For the first half of 2009, AK Steel reported a net loss of $120.6 million compared to net income of $246.3 million the first half of 2008. Sales in the first semester fell to $1.7 billion from sales of $4 billion the first half of 2008. Shipments for the first half of 2009 totaled 1,519,400 tons, compared to 3,316,200 tons in the first half of 2008.
The company reported an operating loss of $172.4 million, or $113 per ton, for the first half of 2009, compared to an operating profit of $407.6 million, or $123 per ton, for the first half of 2008. The firm explained that the decline in shipments, sales and income come as a result of the global financial crisis, and in particular, the decline in demand from the automotive market.
"Considering that the continuing global recession resulted in an all-time low quarterly shipment level, the effort by AK Steel employees to significantly improve our results over the first quarter is notable and remarkable," said James L. Wainscott, chairman, president and CEO. "While we can never be satisfied with an operating or net loss, the improvements speak volumes about AK Steel's business model and the resolve of our entire team to weather this unprecedented recession and emerge with an even stronger company."
Going forward onto the third quarter, AK Steel expects to break even and increase its shipments to about 940,000 tons, or 27 percent up from Q2.
As a result of the completion in early July of the planned blast furnace maintenance outage at the Middletown Works, the firm expects maintenance costs in Q3 to fall by $6 million. Moreover, AK Steel also expects to benefit from lower operating and raw materials costs.