DOW JONES NEWSWIRES
AK Steel Holding Corp. (AKS) posted a 97% tumble in third-quarter profit as shipments plunged 29% amid continuing weak demand.
Shares rose 1.7% premarket to $19.10 as results beat analysts' expectations. The stock has more than doubled this year.
Chairman and Chief Executive James L. Wainscott said, "While the results may pale in comparison to the year-ago records, in many respects the performance is even more remarkable, given that" revenues fell 52%.
On top of a 41% jump in shipments from the second quarter--the company in July projected at least a 25% increase--growth of 24% is seen sequentially in the fourth quarter with average prices down 2%.
While results have been improving from earlier this year for the steel industry, global sales are expected to remain mired below last year's peak at least until 2011. The sector also is concerned about a carbon-emissions cap-and-trade system included in the proposed U.S. climate bill.
Recent higher operating rates have been attributed to customers simply replacing inventory rather than any real demand surge. Earlier Tuesday, United States Steel Corp. (X) swung to a loss as weak demand crimped orders and capacity use. Nucor Corp. (NUE) fell into the red last week.
AK Steel said profit fell to $6.2 million, or 6 cents a share, from $188.3, or $1.67 a share, a year earlier. Net sales skidded 52% to $1.04 billion.
Analysts were expecting a 1-cent profit on revenue of $1.03 billion.
Gross margin slumped to 10.7% from 19.3% as average selling prices fell 32%. The price decline from the second quarter was 7%.
-By Mike Barris and Kevin Kingsbury, Dow Jones Newswires; 212-416-2330; mike.barris@dowjones.com;