CHICAGO AK Steel Corp. spilled red ink in the first quarter as an unplanned blast furnace outage at its Ashland, Ky., facility, cold weather and an antitrust settlement hammered results.
The West Chester, Ohio-based steelmakers net loss for the three months ended March 31 widened from the same period last year, with maintenance costs accounting for 55 percent of the loss, according to earnings data released April 22.
AK Steel lost $18 million due to the unplanned outage at its Ashland Works and a further $29.4 million on maintenance outages originally scheduled for the second quarter. The Ashland Works blast furnace resumed operations in March after an "incident" in late February (amm.com, March 21), and the steelmaker said it does not have any significant planned outages on tap for the rest of the year.
Shipments in the first quarter slipped 2.1 percent to 1.26 million tons from 1.29 million tons a year earlier due mostly to the Ashland Works blast furnace problems, AK Steel said. The drop meant fewer tons of electrical steel and carbon steel to sell on the spot market, although that spot shortfall was offset in part by higher automotive shipments, the company said.
Results also were chilled by the cold weather, which AK Steel said caused "severe spikes" in energy prices, and natural gas and electricity costs were $30 million higher than in the first quarter of 2013.
The first-quarter loss also was driven by a $5.8-million charge related to an antitrust lawsuit settlement. The company said the accusations leveled against it "lacked merit" but agreed to the settlementwhich remains subject to court approvalto avoid litigation costs.
A class-action lawsuit filed in September 2008 accused several U.S. steelmakers of violating federal antitrust laws by making an allegedly concerted effort to restrict production. Irving, Texas-based Commercial Metals Co. also has reached a settlement in the case (amm.com, March 14).
"Having worked through those challenges, we believe that AK Steel is well-positioned for a much-improved second quarter," chairman, president and chief executive officer James L. Wainscott said in a statement.