AK Steel Sees Q1 Loss Per Share Of $0.44 To $0.49 - Quick Facts

(RTTNews) - AK Steel Holding Corp. (AKS) said that it expects to report a net loss of $0.44 to $0.49 per share in its first quarter 2014. Analysts polled by Thomson Reuters expect the company to report earnings of $0.06 per share for the first-quarter. Analysts' estimates typically exclude special items.

The expected net loss was driven principally by several significant factors during the first quarter that the company does not expect to continue during the rest of the year, including higher energy costs related to the extreme cold weather, an unplanned blast furnace outage, the acceleration of a planned blast furnace outage, and a charge for a tentative legal settlement.

AK Steel expects shipments of approximately 1.25 million to 1.275 million tons in the first quarter of 2014, an approximate 10% to 12% decrease from 1,420,000 tons in the fourth quarter of 2013. The reduction in shipments for the first quarter is attributable principally to the effects of the unplanned outage at the company's Ashland Works blast furnace resulting in a decline in shipments of carbon steel to the spot market and a decline in shipments of electrical steel, partially offset by higher automotive shipments.

The company said it expects its average selling price for the first quarter of 2014 to increase by approximately 6% to approximately $1,095 from its average selling price of $1,031 per ton in the fourth quarter of 2013. The increase in average selling price is primarily due to a richer shipment mix of value-added products.

The company said that the extreme cold weather conditions in the United States during the first quarter of 2014 impacted its operations and caused severe spikes in energy costs. More specifically, the company expects the cost of natural gas and electricity to increase by approximately $30 million in the first quarter of 2014 compared to such costs in the fourth quarter of 2013.

A second major driver of the company's projected loss for the first quarter was the previously disclosed incident in late February at the company's Ashland Works blast furnace that temporarily resulted in an unplanned outage of that furnace. The company immediately began repairs and the blast furnace resumed operations in March.

The company expects to incur approximately $18 million in the first quarter related to that unplanned outage at Ashland Works. In addition, the company expects to incur approximately $29 million for planned outage costs for the first quarter of 2014 compared to $1.5 million in the fourth quarter of 2013.

The higher planned outage costs in the first quarter of 2014 include the acceleration of the majority of a previously disclosed planned maintenance outage at Ashland Works that previously had been scheduled for the second quarter of 2014.

The company does not have any other significant outages planned for the second quarter of 2014. During the first quarter, the company also expects to incur a charge for a tentative settlement of pending litigation in the amount of $5.8 million.

In addition to these four significant cost drivers, the company said that it also expects to incur higher pre-tax costs in the first quarter of 2014 compared to the fourth quarter of 2013 from higher iron ore and carbon scrap costs.