Higher raw material costs contribute to AK Steel earnings warning

AK Steel (AKS) reduced its earnings outlook, partially due to higher material costs:

“The company’s revised third quarter outlook primarily reflects costs associated with the acceleration of planned maintenance work at its Ashland (KY) blast furnace, as well as higher raw material and operating costs than were expected at the time of its previous guidance…

…The impact of these changes on the company’s original guidance for the third quarter would result in an operating loss of approximately $20 per ton for the third quarter of 2010. The company’s original guidance was for an operating profit of $15 per ton for the third quarter. Nearly half of the lower expected financial results for the third quarter are attributable to the acceleration of the Ashland blast furnace outage.”

AKS goes on to state that it is expecting that the 2010 global iron ore benchmark price will increase higher than the company’s previous expectations for a 65% year-over-year gain.

Full disclosure: author owns shares in AKS


One Comment on “Higher raw material costs contribute to AK Steel earnings warning”

  1. […] Steel increases prices to offset rising material costs By Dr. Duru Yesterday, AK Steel (AKS) warned investors that earnings would be lower than expected partly due to increasing … (mainly iron ore). Today, AK Steel told its customers that prices will increase as part of an […]

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