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Losses pile up for producers: in their recent conference calls with analysts and investors, steel and aluminum producers report losses suffered during a first quarter characterized by declining metal prices and evaporating demand.

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AK Steel

50% Decline in Sales Results in 1Q Loss

Net sales plunged nearly 50 percent for AK Steel during the first quarter of 2009. The West Chester, Ohio-based steelmaker reported net sales of $922.2 million, down 48.5 percent from the same period in 2008.

Declining sales led to a loss of $73.4 million for the quarter. For the same period in 2008, AK Steel reported a net income of $101.1 million.

Quarterly shipments of 778,800 tons were down 50.6 percent from the 1.6 million tons shipped in the comparable three months of 2008. The company's average selling price of $1,184 per ton actually increased 4 percent from the $1,135 per ton during the first quarter, though it was down 13 percent from the $1,359 per ton in the fourth quarter of 2008.

The year-over-year increase in average selling price resulted from a higher percentage of stainless and electrical steel shipments, partially offset by lower spot market prices. The decrease in the average selling price from the fourth quarter of 2008 to the first quarter of 2009 resulted primarily from lower spot market prices and lower surcharges.

"Despite the worst market conditions in decades, AK Steel employees responded with outstanding cost and quality performances in the first quarter," said James L. Wainscott, chairman, president and CEO. "The hard work our company has performed over the past five years allowed us to endure a quarter of record low steel shipments, and positions us well to make the most of improving markets the balance of the year."

AK Steel said it expects shipments in the second quarter of 2009 to be approximately 800,000 tons, slightly higher than the first quarter. The company anticipates that its second-quarter 2009 average per-ton selling price will be approximately 4 percent below the first-quarter 2009 level. AK Steel expects to benefit from lower operating and raw material costs in the second quarter, and to incur an operating loss of approximately $50 million, a 50 percent improvement from the first quarter.

Alcoa

Managing Through Price, Demand Decline

The overall economic downturn and historic decline in aluminum prices resulted in a substantial quarterly loss for Pittsburgh-based Alcoa. The aluminum maker reported a 27 percent sequential drop in revenue resulting in a loss of $480 million for the first quarter of 2009.

Revenues for the first quarter totaled $4.1 billion, down from $5.7 billion in fourth-quarter 2008, and off 36 percent from the comparable quarter last year. The sharp drop in revenue was the result of the economic downturn on Alcoa's end markets--automotive, transportation, building and construction, and aerospace. As demand weakened during the quarter in those markets, realized metal prices fell an additional $558 a ton, a 26 percent price decline, resulting in prices that are now about 60 percent lower than in the summer of 2008.

"Alcoa responded swiftly with a program that dramatically repositions our balance sheet and operational cost structure," said Klaus Kleinfeld, president and CEO of Alcoa. "The result has been a rapid increase in liquidity during the quarter and significant operational cost savings."

The company's flat-rolled products segment suffered a $62 million loss during the...

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