AK Steel Holding Corporation (NYSE:AKS) net income in 2Q2016 came at $17.3 million against a net loss of $64.0 million in the same period, a year earlier. The adjusted EBITDA was $99.3 million compared to $47.6 million reported in 2Q2015. It can be attributed to a better product mix, a continued focus on minimizing costs, lower energy and raw material costs, and operational improvements.
Roger K. Newport, the CEO said that the strategic decision to optimize footprint and shift focus on higher value products with reduced exposure to commodity spot markets have helped them to post a robust performance. They continue to achieve operational enhancements and persistently pursue margin improvements. The results of all these strategic initiatives is evident on financial results.
The performance
AK Steel reported that net sales in 2Q2016 came at $1.49 billion compared to $1.69 billion in the comparable period, a year earlier. It can be attributed to lower automotive contract pricing when compared to pricing a year ago, along with decline in shipments. In 2Q2016, the shipments declined 14% to almost 1.555 million from 2Q2015.
The company’s plan to lower exposure to the commodity spot market led in a decline in shipments to the converters and distributors markets. Higher value coated products shipments jumped to 53% of the AK Steel’s total shipments in 2Q2016 from 45% a year ago.
The financial report of 2Q2016 included a LIFO charge amounting to $20.7 million, against a LIFO credit of $34.8 million in 2Q2015. Additionally, the unrealized hedge losses amounted to $14.1 million, up from $1.1 million over the previous year second quarter.
The highlights
AK Steel closed 2Q2016 with total liquidity of $945 million, largely due to diligent working capital management and successful equity offerings in 2Q2016. The company also lowered its debt by repaying funds under its credit facility.
