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Mills produce record results: sluggishness in the U.S. economy wasn't enough to keep some U.S. producers of steel, aluminum and specialty metals from reporting record sales and income during recent fourth-quarter and year-end financial reports to analysts and shareholders.

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AK Steel

2007 Sales Eclipse $7 Billion for First Time AK Steel topped $7 billion in revenues for the first time in company history in 2007. Net sales of $7.00 billion were more than 15 percent higher than the $6.07 billion recorded during the previous year. The record sales contributed to a more profitable year for the West Chester, Ohio-based steel company. AK Steel reported net income of $387.7 million, a dramatic improvement from the $12.0 million totaled in 2006. "Our management and employees delivered record results in every key metric, and we have taken another huge step toward realizing the potential of our company," Chairman and CEO lames Wainscott told investors and analysts during the company's yearend conference call last month. "Importantly, shareholders were rewarded during the year with a substantial increase in the market value of AK Steel."

Shipments were also up for the full year, a 5 percent increase to 6,479,000 tons. The company's average selling price for the year was $1,081 per ton, 10 percent higher than the 2006 average of $984 per ton. AK averaged $103 per ton in adjusted operating profit, achieving a long-sought goal.

The fourth quarter was a driver in AK Steel's record year. The company reported $106.7 million in net income in the quarter, compared to a net loss of $49.3 million during the same period of 2006. Net sales in the quarter totaled $1.69 billion, up 7 percent from the fourth quarter the previous year. The company's shipments of 1.57 million tons were 3 percent ahead of the same period of 2006.

The strong finish to 2007 has AK Steel executives optimistic entering 2008.

"We are realizing the benefits in 2008 of our cost-reduction efforts, our capital investments and higher selling prices negotiated in our contract-sales agreement. Our fundamentals are improving. Things aren't perfect, but they are better than they have been in a long time" Wainscott said.

AK Steel announced five spot market price increases for carbon steel in the previous year, and three in the month prior to the conference call. AK's carbon steel prices jumped $140 after the three increases.

"Each of these price increases has been in response to higher demand for carbon steel products, as well as the need to recover higher costs for steelmaking inputs," Wainscott said. Prices may not have peaked, he added.

"Just about every steel producer around the world is experiencing rising input costs," he said. "All of these factors--low inventory, low imports and rising input costs--support even higher steel prices in the months ahead."

AK Steel expects shipments in the first quarter of 2008 to be comparable to the fourth quarter of 2007. The company anticipates that its first quarter 2008 average per-ton selling prices will be 5 to 6 percent higher than in the fourth quarter of 2007.

While acknowledging some softness in the automotive and appliance markets, Wainscott pointed to an expected pickup in orders from service centers, where inventories have dropped to their lowest levels since 1999.

The company held firm to its optimistic projections even with the plunge in worldwide markets in the days before the company's conference call.

"While some are espousing views of a recession, or that we are already in one, we don't subscribe to that theory," Wainscott said. "We have built our business plan anticipating a slow growth scenario, with the operative word being growth, not recession."

Additionally, the company is somewhat cushioned against a domestic recession through its increased presence around the globe. The company forecasts a 40 percent increase in international shipments in 2008.

Alcoa

Annual Records Set in Sales, Income, Expansion Continues Aluminum giant Alcoa reported record results across the board for the full year...

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