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AK Steel anticipates fourth-quarter loss

Keywords: Tags  AK Steel, flat-rolled steel, carbon steel, stainless steel, earnings forecast, Chris Prentice

NEW YORK — AK Steel Corp. said it expects to report a fourth-quarter loss of between 67 and 72 cents per diluted share due to a decline in average selling prices and expected tax expenses.

While the West Chester, Ohio-based steelmaker is forecasting higher shipment volumes in the fourth quarter—between 1.375 million and 1.4 million tons vs. about 1.36 million tons in the third quarter—it also expects to see a 5-percent decline in average selling prices.

AK Steel cited two main reasons for the falling spot prices: a decline in the global economy and lower raw material surcharges.

But while raw material costs have started to pull back, those lower input costs—particularly for iron ore—have not yet fully trickled through to the company’s margins, AK Steel said.

The steel producer said it does not expect to see the benefits of recent price increases on carbon flat-rolled products until the first quarter of 2013 as a "significant" portion of fourth-quarter shipments were booked prior to the increases. Last week, AK Steel led a round of increases on flat-rolled steel prices (, Nov. 6), announcing a $50-per-ton hike on top of a $40-per-ton increase announced in mid-October (, Oct. 17). AK Steel also has announced price increases on stainless products (, Nov. 12).

In addition to pricing and demand challenges, the steelmaker said a non-cash income tax charge will account for 33 cents of the expected loss in the fourth quarter.

In separate statements Tuesday, AK Steel also said it is looking to generate capital through common stock and debt offerings to repay borrowings under its asset-backed credit facility and for general corporate expenses. The company is offering 25 million shares of common stock, $350 million in senior secured notes due 2018 and another $125 million in exchangeable senior notes due 2019.

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