QUOTE AND NEWS
Motley Fool  Jul 12  Comment 
A big rise in commodity prices had investors bidding metals and mining stocks higher on Tuesday.
Benzinga  Jul 12  Comment 
Barclays raised its price targets for several metals and energy companies, including: AK Steel Holding Corporation (NYSE: AKS) (Equal Weight): To $5 from $4 Alkermes Plc (NASDAQ: ALKS) (Overweight): To $65 from $50 CONSOL Energy Inc. (NYSE:...
Motley Fool  Jul 7  Comment 
Steel companies swooned after the Brexit vote, but then rallied when the dust cleared. Here's why.
Benzinga  Jul 5  Comment 
In an investor research note Tuesday, Credit Suisse analysts outlined several contrarian calls on stocks. Below is a summary of some of their notable calls and rationale. Outperformers AK Steel Holding Corporation (NYSE: AKS): More optimistic...
newratings.com  Jul 1  Comment 
WASHINGTON (dpa-AFX) - Extending a recent upward move, steel stocks are seeing considerable strength in afternoon trading on Friday. The NYSE Arca Steel Index has surged up by 2.4 percent to its best intraday level in two months. U.S. Steel (X),...
Reuters  Jun 13  Comment 
* AK Steel announces offering of $380 million of senior secured notes and cash tender offer for its 8.750% senior secured notes due 2018 Source text for Eikon: Further company coverage: ...
Benzinga  Jun 8  Comment 
AK Steel Holding Corporation (NYSE: AKS) shares are trading higher by $0.87 (17 percent) at $5.46 in Wednesday's session. The catalyst for the rally is an upgrade from Credit Suisse from Underperform to Outperform, with a $7 price target. The firm...
Benzinga  Jun 8  Comment 
Motley Fool  Jun 8  Comment 
These stocks are gaining on a mildly positive day for the broader market. Find out why.




 

AK Steel Holding Corporation (NYSE:AKS) is a fully-integrated manufacturer of steel, including flat-rolled carbon, tubular products, and electrical and stainless steels. AK Steel Holding has seven steelmaking and finishing facilities in Indiana, Pennsylvania, Kentucky, and Ohio, while AK Tube LLC, a subsidiary, has operations in Indiana and Ohio[1]. AK Steel's operations also include European trading companies that buy and sell steel products.

Business Overview

Business & Financial Metrics[2]

In 2009, AKS incurred a net loss of $74.6 million on revenues of $4.08 billion. This represents a turnaround from 2008, when the company earned $4.0 million on $7.64 billion in revenues.

Business Segments

AKS operates in a single business segment which produces carbon and steel products.[3]

Key Trends & Forces

Steel Industry’s Cyclical Nature: The U.S. Steel industry is traditionally very cyclical and closely connected to the overall state of the general U.S. economy. A significant downturn in the U.S. economy may lead to a noteworthy decline in the demand of steel products.[4]

Contract v Spot Pricing: Sales in the steel industry usually fall within two categories: fixed price contracts typically renegotiated twice a year, or spot market transactions. Depending on a collection of different variables that affect the state of the steel industry (steel prices, prices for raw materials, supply and demand, etc.), both can be beneficial or detrimental to the company that uses them.

It is estimated that 70-80% of AK Steel’s revenues are based on fixed price contracts (the company does not publish exact information). This is advantageous when spot market prices decline over the duration of the contract, and contracts have been negotiated in the company’s favor.

Prices of Essential Raw Materials The profitability of the steel sector is closely tied to the prices of necessary raw materials. Considering the steel industry, these materials include (but are not limited to) iron ore, coal, coke, oxygen, chrome, nickel, silicon, molybdenum, zinc, limestone, carbon, stainless steel scrap, etc. Depending on the holdings of each firm, drastic changes in the prices of these raw materials can have profound effects on revenues and profits[5]. .

Exposure to Other Industries: The U.S. steel industry is gradually becoming further specialized in certain markets within the general steel market. As a result, steel producers are becoming increasingly reliant on the state of their specialized markets.

AK Steel focuses much of its production towards the U.S. automotive sector and the stainless and electrical steel markets. In recent years, the U.S. automotive industry has been experiencing multiple challenging years, while the stainless steel market has lately been undergoing significant pressures[6]. .

Globalization of the Steel Industry: The U.S. steel industry is increasingly being forced to compete with foreign companies, particularly China. China is expected to become a net exporter of steel in the very near future, placing further pressure on domestic producers. The American Iron and Steel Institute (AISI) has reported that applications for the import of steel has been continually increasing.

Competition

AK Steel's operations are focused in the United States whereas some of its larger competitors have a larger international presence. When compared to its closest competitors, AK Steel has significantly more fixed price contracts versus spot market sales. This can either work to the company's advantage or disadvantage given certain changing variables such as steel prices. Furthermore, AK Steel’s sales productions are focused towards the U.S. automotive and stainless steel markets, making its success related to the success of those industries. AKS is in a relatively less favorable position concerning the acquisition of raw materials because its closest integrated steel competitor, US Steel (X), has significant self-sufficiency concerning |iron ore and metallurgical coal; on the other hand, AK Steel does not have the same level of these materials [7]. Also, AKS has more significant pension obligations and post-retirement liabilities than its competitors, although the company has successfully been working to decrease them.

The company's most significant competitors are:

References

  1. AKS 2006 10K, Item 1, pg. 1
  2. AKS 2009 10-K pg. 13  
  3. AKS 2009 10-K pg. 52  
  4. AKS 2006 10K, Item 1a, pg. 6
  5. AKS 2006 10K, Item 1a, pg. 7
  6. AKS 2006 10K, Item 1a, pg. 6-7
  7. AKS 2006 10K
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki