AK Steel Drops After Citing `Substantial Uncertainty' in Iron-Ore Prices
AK Steel Holding Corp., the third- largest U.S. steelmaker by 2009 sales, fell the most in more than two months after saying rising iron-ore costs could harm second-quarter profit.
AK Steel declined $1.48, or 7.1 percent, to $19.35 at 4:15 p.m. in New York Stock Exchange composite trading, the largest drop since Feb. 4.
“There remains substantial uncertainty with respect to global iron ore pricing for 2010,” and if the price increases beyond the 30 percent assumed in the first quarter, it will have a “negative impact” on profit in the current period, the company said today in a statement announcing earnings results for the first three months.
“While AK Steel only buys a small amount of their iron priced to global, there is a formula for the rest that is loosely based on the global price,” Michelle Applebaum, who runs a steel-research firm in Highland Park, Illinois, wrote in a report today. “AK Steel is among the most exposed to iron prices in North America, but we’d wager that the company’s exposure is less than half of a global competitor who buys everything on the seaborne market.”
The company today reported first-quarter net income of $1.9 million, or 2 cents a share, compared with a net loss of $73.4 million, or 67 cents, a year earlier. Profit, excluding a one-time item, was 25 cents a share, beating the 24-cent average estimate of 14 analysts surveyed by Bloomberg.
AK Steel had $4.08 billion in 2009 sales, ranking it behind Nucor Corp. and U.S. Steel Corp. among publicly traded steelmakers based in the U.S.
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