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PITTSBURGH — Despite weaker demand from key auto industry customers, AK Steel Holding Co. still expects second-quarter operating losses to shrink compared with first-quarter results, the steel maker's chief executive said Thursday.
James L. Wainscott, also the West Chester, Ohio-based company's chairman and president, did not provide detailed figures, but said AK Steel anticipates improved results despite plant shutdowns and other recent actions by General Motors Corp. and Chrysler LLC.
Plummeting sales by the Detroit automakers in recent months have meant fewer orders for AK Steel, which supplies steel used in exhaust systems and other vehicle parts. It also sells steel to the automakers' suppliers. About 32 percent of AK Steel's sales revenue last year came from the auto industry.
Facing huge losses, GM has announced plans to idle more than half of its North American plants for up to nine months and is expected to seek bankruptcy protection within days. Chrysler, meanwhile, has filed for bankruptcy protection and said it would idle all of its plants until it re-emerges.
"While these actions will impact our business, we expect to see an improvement ... over our first-quarter results, which is an important next step toward returning to operating profitability later in the year," Wainscott said in remarks broadcast over the Internet from AK Steel's annual shareholder meeting in Chicago.
In April, AK Steel reported a first-quarter loss of $73.4 million and an operating loss of $99.9 million due to lower shipments of the metal. That compared with a year-earlier net profit of $101.1 million and an operating profit of $169.7 million.
It was the company's second consecutive quarterly loss and further evidence of the particularly severe toll taken on the steel industry by the U.S. recession and global economic slowdown, which has hurt important steel markets such as autos, construction and industrial equipment.
Earlier this month, AK Steel said production cuts at the automakers would result in a larger-than-expected second-quarter operating loss of $75 million to $80 million. That was wider than AK Steel's previous loss estimate of $50 million but still narrower than first-quarter results.
Analysts expect an operating loss of $82.7 million, according to a survey by Thomson Reuters.
Like other steel companies, AK Steel has responded to dwindling demand in recent months by scaling down production, reducing pay and furloughing workers.
Shares of AK Steel rose 32 cents, or 2.4 percent, to close at $13.89. The stock has traded between $5.20 and $72.99 over the past 52 weeks.
