West Chester, Ohio-based flat rolled steelmaker AK Steel reported Tuesday a net loss of $724.2 million for Q2 2012 due to a "non-cash charge of $736 million...for a valuation allowance for the company's deferred tax assets." Excluding the effects of this charge, AK's adjusted net income in Q2 was $11.4 million, compared to a net loss of $11.8 million in Q1 2012, and net income of $33.1 million in Q2 2011.
Net sales also declined over the quarter to 1.54 billion on shipments of 1,335,800 tons, from $1.8 billion on shipments of 1.5 million tons for the year-ago Q2. Average selling prices per ton increase 1 percent from Q1 2012 to $1,152 per ton.
"During the second quarter, sluggish domestic and global economic conditions impacted shipment volumes and selling prices for our steel products," said James L. Wainscott, Chairman, President and CEO of AK Steel.
Later in the conference call with investors, AK Steel said that service centers' flat rolled inventories were about 2.5 months-on-hand at the end of June despite a decline in June distributor shipments as service centers "continue to exhibit a cautious buying mood." Wainscott added that overproduction, bankruptcy of RG Steel, possible sale of ThyssenKrupp and heavy imports all impacted flat steel prices in Q2. Additionally, hot dipped galvanized (HDG) coil lead times have stretched slightly and are now into September, while hot rolled coil lead times are still in early August and cold rolled coil lead times are in late August.
Wainscott also echoed the comments of Nucor's Dan DiMicco in commenting on the ThyssenKrupp assets: "everyone in the world is considering how those assets will fit into their portfolio...but right now, we don't need that...there's no room for it."
AK concluded by explaining that due to continued uncertainty and volatility with respect to near-term economic conditions in the US and in other markets served by the company, it is not providing detailed guidance for the company's Q3 just yet.