QUOTE AND NEWS
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...
StreetInsider.com  Jul 21  Comment 
The following is a list of notable articles to help get you through the lunch hour: EMC (EMC) Worth $35/Share Based on Sum-of-the-Parts, BMO Capital Says -> Read This! Apple (AAPL) Price Target Raised to $115 at UBS on Gross Margin Expectations...
StreetInsider.com  Jul 21  Comment 
Notable Mergers and Acquisitions of the Day: AK Steel (NYSE: AKS) signed an agreement to acquire Severstal North America's integrated steelmaking assets located in Dearborn, Michigan for $700 million in cash. The acquisition also includes a...
TheStreet.com  Jul 21  Comment 
NEW YORK (TheStreet) -- AK Steel  fell Monday after it purchased one of Russian steel manufacturer Severstal's U.S. subsidiaries called Severstal Dearborn. Severstal also sold its Severstal Columbus unit to Steel Dynamics. The combined...
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...
Benzinga  Jul 18  Comment 
Skyworks Solutions (NASDAQ: SWKS) shares surged 12.71% to reach a new 52-week high of $52.23 after the company reported better-than-expected third-quarter results and issued a strong Q4 forecast. Gentiva Health Services (NASDAQ: GTIV) shares...
Forbes  Jul 10  Comment 
Investors in AK Steel Holding Corp. (NYSE: AKS) saw new options become available today, for the August 29th expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the AKS options chain for the new August 29th contracts...
Forbes  Jul 3  Comment 
Investors in AK Steel Holding Corp. (NYSE: AKS) saw new options begin trading today, for the August 22nd expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the AKS options chain for the new August 22nd contracts...
Motley Fool  Jun 28  Comment 
AK Steel's and Nucor's second-quarter earnings will be softer than expected, but this doesn't change the outlook for these companies.
StreetInsider.com  Jun 24  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/AK+Steel+%28AKS%29+Increases+Stainless+Steel+Prices/9609944.html for the full story.




 

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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