AK Steel’s 2Q15 Earnings and Outlook

Mohit Oberoi, CFA - Author

Aug. 3 2015, Published 4:21 p.m. ET

AK Steel’s 2Q15 earnings

AK Steel (AKS) reported its 2Q15 earnings on July 28. It reported a net loss of $64 million as compared to a net loss of $17.1 million in 2Q14. However, the net loss narrowed from 1Q15 when AK Steel incurred a net loss of $306.3 million. In 1Q15, AK Steel had written off its entire investment in Magnetation. Magnetation is AK Steel’s joint venture that is engaged in iron ore mining.

After adjusting for the Magnetation write-off, AK Steel’s loss has actually widened in 2Q15 as compared to the previous quarter. Steel market conditions remain challenging as China’s slowdown continues to put pressure on the global steel industry.

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Series overview

In this series, we’ll analyze AK Steel’s 2Q15 earnings. AK Steel’s share price rose sharply after it released its 2Q15 earnings. However, AK Steel has lost ~50% of its market capitalization since the beginning of 2015, as the previous chart shows.

In this series, we’ll explore how AK Steel is positioned under the current market scenario. We’ll also discuss how AK Steel’s key financial metrics changed during 2Q15. Currently, AK Steel forms 2.85% of the SPDR S&P Metals and Mining ETF (XME) and 0.08% of the iShares Core S&P Small-Cap ETF (IJR).

2Q15 earnings

The 2Q15 earnings season has gone well so far for steel companies.

  • Steel Dynamics (STLD) released its 2Q15 earnings on July 20. It reported an EPS (earnings per share) of $0.13. The results were in line with market expectations as well as the guidance provided by STLD.
  • Nucor (NUE) released its 2Q15 earnings on July 23. It delivered an EPS of $0.39 during the quarter, which was better than the average analyst expectations.

In the next part, we’ll go into more detail about AK Steel’s 2Q15 earnings.


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