Steel makers fall after peer AK Steel sees shipments flat on slowing auto sector
Shares of steel makers, including U.S. Steel (X) and Nucor (NUE), fell sharply from their opening highs while executives at steel making peer AK Steel (AKS) spoke on their earnings conference call earlier. AK STEEL EARNINGS. Before the market open, AK Steel reported first quarter earnings per share of 19c on revenue of $1.5B. Analysts on average were expecting EPS of 15c on revenue of $1.48B. The company's adjusted EBITDA of $142.9M, or 9.3% of net sales, for Q1 increased 76% from adjusted EBITDA of $81.1M, or 5.3% of net sales, for the year ago first quarter. "Our first quarter performance reflected the ongoing benefits of our margin enhancement activities, strong operational focus and an improved pricing environment," said AK Steel CEO Roger Newport. "We also made great progress in the quarter on new product development, as we continue to focus on introducing innovative products." CONFERENCE CALL DOWNER: AK Steel's CFO Jaime Vasquez spoke to the decline in automotive shipments, down 5% from the year ago quarter. "The decline in automotive shipments from a year ago reflects inventory adjustments being made by several major automotive manufacturers, a transition from steel and select vehicle platforms and the phasing out of certain passenger car models." Looking ahead, Vasquez forecast adjusted Q2 adjusted EBITDA margin to be slightly higher than Q2 a year ago, but down from the recent Q1. Vasquez attributed the change to expectations for a slight reduction in automotive shipments and higher raw material costs. The company is also anticipating Q2 shipments to be relatively flat compared to Q1, as increased shipments of the infrastructure and manufacturing markets are offset by a marginal decline in carbon automotive shipments. Moreover, the company sees its average selling price in Q2 marginally higher than Q1. PRICE ACTION: Shares of AK Steel are near session lows, down 9% to $6.50 per share, U.S. Steel, which reports quarterly earnings after the close, opened in the green but is now down 2.5% to $30.41, and Nucor reversed direction and is now down 0.8% to $60.69 per share in afternoon trading.