QUOTE AND NEWS
StreetInsider.com  Aug 18  Comment 
52-Week High: Achillion Pharma (Nasdaq: ACHN) $10.10. Achillion Pharma rose today after Deutsche Bank upgraded the stock from Hold to Buy while also raising its price target from $6 up to $17. Shares gained over 9 percent to the new...
Benzinga  Aug 8  Comment 
BioCryst Pharmaceuticals (NASDAQ: BCRX) shares gained 9.92% to reach a new 52-week high of $14.18. JP Morgan initiated coverage on BioCryst Pharmaceuticals with a Overweight rating and a $20.00 price target. AK Steel Holding (NYSE: AKS) shares...
Benzinga  Jul 30  Comment 
U.S. Steel (NYSE: X) is making its biggest one-day move in three years after reporting a massive earnings beat. On top of that, revenue beat Wall Street's expectations for the first time since early 2013. The stock recently traded at $32.75,...
TheStreet.com  Jul 29  Comment 
NEW YORK (TheStreet) -- Shares of AK Steel Holding Corp.  are up 2.22% to $8.97 to hit a two-and-a-half year high today following an unexpected second quarter profit and an upbeat full year outlook, helped by higher steel shipments than the...
StreetInsider.com  Jul 29  Comment 
52-Week High: Windstream Holdings, Inc. (Nasdaq: WIN) $13.30. Windstream Holdings up over 26 percent after it announced plans to spin off certain telecommunications network assets into an independent, publicly traded real estate investment trust...
newratings.com  Jul 29  Comment 
WASHINGTON (dpa-AFX) - AK Steel (AKS) Tuesday said its loss for the second quarter narrowed from a year ago, driven by higher shipments and prices, with results topping Wall Street estimates. The company saw improvements in its businesses despite...
Forbes  Jul 25  Comment 
AK Steel is expected to book a narrower loss than a year ago when it reports second-quarter earnings on Tuesday, July 29, 2014. Analysts are expecting a loss of four cents per share, up from a loss of 15 cents per share a year ago.The consensus...
Benzinga  Jul 22  Comment 
The following are the M&A deals, rumors and chatter circulating on Wall Street for Monday July 17, 2014: AK Steel to Acquire Severstal Dearborn for $700M in Cash The Deal: AK Steel (NYSE: AKS) announced Monday, that it has signed an agreement...
Market Intelligence Center  Jul 21  Comment 
Monday headlines include Google being among the potential bidders for outdoor wireless in New York, earnings from Hasbro and Halliburton, AK Steel buying a plant from a Russian firm and CBS Outdoor acquiring 1,100 billboards. Google Internet giant...




 

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
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