Write-Down Leads To Wider Loss At AK Steel Holding Corporation (NYSE:AKS)

It would have been a little bit better for AK Steel Holding Corporation (NYSE:AKS) in 1Q2015 had it not been for the impact of write-down in the quarter. The company also blamed pressure from imports for its 1Q woes that saw loss widening compared to the same quarter a year earlier. However, given the strong demand for steel in the automotive sector, the company managed to post significant uptick in sales.

Where do analyst foresee upcoming resistance in AKS?

Shipments up 39%

Investment in Magnetation LLC, a joint venture focused on iron-ore pellets, dragged down the performance of AK Steel Holding Corporation (NYSE:AKS) in 1Q, leading the company to report a larger than expected loss. The company disclosed that its shipments in 1Q rose 39% thanks to strong demand and a boost from an asset it acquired. Demand was particularly strong in the automotive sector.

Sales in the automotive sector have been impressive, AK Steel Holding Corporation (NYSE:AKS) had earlier cautioned that imports could pose challenge in the market. However, it stage successful battle to increase shipments in the quarter.

Impacts on performance

While write-down caused the major impact on results in the latest quarter, AK Steel Holding Corporation (NYSE:AKS) also reported an adverse impact a year due to server winter. The harsh weather condition caused power outages and also raised the cost of energy thereby denting earnings.

1Q earnings numbers

AK Steel Holding Corporation (NYSE:AKS) managed to increase its sales by 27% to $1.75 billion in 1Q, beating the consensus estimate of $1.74 billion. However, EPS deteriorated compared to a year ago as the company posted a loss of $1.72 per share compared to a loss of $0.63 per share a year earlier. On an adjusted basis, the loss per share was $0.28.

In addition to pressure from imports, AK Steel Holding Corporation (NYSE:AKS) also cited that its selling price in the quarter fell by nearly 9%, contributing to the overall adverse impact in the quarter.

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Stinson is US Markets Daily’s Senior Producer for News & Public Affairs.

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