AK Steel reported net income of $39.8 million on net sales of $1,319.9 million for the fourth quarter and a net loss of $74.6 million on net sales of $4,076.8 million for the full year 2009.
Fourth Quarter Results — The $39.8 million net income ($0.36 per diluted share of common stock) compares to a net loss of $430.6 million ($3.87 per diluted share of common stock) for the year-ago fourth quarter. Results include a $5.1 million charge related to a state tax law change in Pennsylvania, while the 2008 fourth quarter results included $699.5 million in pre-tax, non-cash pension charges primarily related to the company's unique "corridor" accounting requirement. There were no corridor charges in 2009.
AK Steel to Make $75-Million Pension Trust Fund Contribution
In a separate release, AK Steel also announced that its board of directors has authorized the company to make a $75-million contribution to its pension trust fund.
The contribution will meet a significant portion of the company's 2010 funding requirements.
The company said that it intends to make the contribution during the first quarter.
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Net sales of $1,319.9 million compare to net sales of $1,458.7 million in the year-ago fourth quarter, and shipments of 1,368,300 tons compare to shipments of 1,073,500 tons in the fourth quarter of 2008. While the increased quarterly shipments reflect improved demand for steel year-over-year, 2009 fourth-quarter revenues and average selling prices were lower than in the 2008 fourth quarter as U.S. and global markets continue a gradual recovery.
Operating profit was $87.0 million ($64 per ton), compared to an operating loss of $689.2 million ($642 per ton) for the year-ago fourth quarter, which included the pre-tax, non-cash charges previously mentioned.
Full-Year Results — The $74.6 million net loss ($0.68 loss per share) compares to net income of $4.0 million ($0.04 per share) for 2008. Results include the $5.1 million charge related to a state tax law change, and 2008 full-year results include the previously mentioned $699.5 million pre-tax, non-cash charges.
Net sales of $4,076.8 million compare to sales of $7,644.3 million in 2008, and shipments of 3,935,500 tons compare to shipments of 5,866,000 tons for 2008. AK Steel's average selling price was $1,036 per ton, approximately 20% below its 2008 average of $1,303 per ton.
The company noted that the decline in shipments and revenues reflect the significant decline in the economy and the resultant decline in demand for steel products, especially in the first half of 2009.
The company posted a $70.1-million ($18 per ton) operating loss for 2009, which compares to a $28-million ($5 per ton) operating profit for 2008. The 2008 results included the non-cash charges previously mentioned.
AK Steel ended 2009 with a cash balance of $461.7 million and $600.4 million availability under its revolving credit facilities, for total liquidity of more than $1 billion.
Management Comments — "AK Steel met the severe economic crisis of 2009 head-on and emerged as a stronger company," said James L. Wainscott, Chairman, President and CEO of AK Steel. "Our quick action and relentless focus on the fundamentals in 2009 allowed us to return to operating and net profitability by the third quarter, and we expect to build upon that success in 2010."
First Quarter 2010 Outlook — AK Steel said it expects its first quarter 2010 shipments to approximate its fourth quarter 2009 levels, while average selling prices are expected to rise approximately 4 to 5% over the previous quarter levels. The company anticipates lower operating and maintenance costs compared to the fourth quarter of 2009.
While the company recorded a significant LIFO credit in the fourth quarter of 2009, it expects to incur a LIFO charge in the first quarter of 2010, as well as higher costs for raw materials. On this basis, AK Steel expects to report an operating profit of approximately $35 per ton for the first quarter of 2010.
AK Steel produces flat-rolled carbon, stainless and electrical steels, primarily for automotive, appliance, construction and electrical power generation and distribution markets. The company employs about 6,200 men and women in Middletown, Mansfield, Coshocton, and Zanesville, Ohio; Butler, Pa.; Ashland, Ky.; Rockport, Ind.; and its corporate headquarters in West Chester, Ohio.
AK Tube LLC, a wholly owned subsidiary of AK Steel, employs about 300 men and women in plants in Walbridge, Ohio, and Columbus, Ind. AK Tube produces carbon and stainless electric resistance welded (ERW) tubular steel products for truck, automotive and other markets.