AK Steel to Close ‘Largely-Idled’ Ashland Works by End of 2019

AK Steel on Monday reported its Q4 2018 and full-year earnings, posting net income of $33.5 million in the fourth quarter and adjusted net income of $48.0 million (compared with a loss in Q4 2017).
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For the full year, AK Steel reported net income of $186.0 million and adjusted net income of $200.5 million (up 25% from 2017).
“We made good progress in 2018, generating our highest net income and adjusted EBITDA in a decade and further strengthening our balance sheet,” CEO Roger K. Newport said. “Additionally, during the course of the year we expanded our portfolio of steel solutions, as our advanced steel operations accelerated collaboration with our downstream stamping, tooling and tubing businesses at Precision Partners and AK Tube.
“As we enter 2019, we are well positioned after the successful renegotiation of our annual customer contracts and expect another solid year.”
The company posted adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) of $563.4 million in 2018, up from $528.5 million in 2017.
“Higher steel selling prices and shipments during 2018, particularly to the distributors and converters market, more than offset higher costs for certain raw materials and supplies, including graphite electrodes, compared to a year ago,” the company’s earnings release stated.
In operational news, the company announced it would close the “largely-idled” Ashland Works facility by the end of 2019 to “increase utilization” at its other U.S. operations. The plant employs 230 people and the closure would yield approximately $40 million in annual cost savings, according to the company.
“More than three years ago, AK Steel idled most of the Ashland Works operations, including the blast furnace, but continued to operate a single hot dip galvanizing coating line with 230 employees,” the company release stated. “The company plans to increase its operating efficiency and lower its costs by completing the shutdown of the blast furnace and steelmaking operations within the next several months, and by working with its customers to transition products coated at Ashland Works to other AK Steel operations in the United States with available capacity before the end of this year. This will increase those operations’ utilization rates.”
The company plans to offer the Ashland Works employees positions at other facilities, the release stated.
The company touted the cost savings from the plant closure and the Trump administration’s trade policies as beneficial to its long-term growth picture.
“These savings, combined with the positive impact of the Administration’s policies to address unfair trade practices, will help facilitate the company’s longer term growth plans,” the release stated. “It will also help maintain and enhance the company’s more cost effective steelmaking facilities and further drive growth and innovation.”
In other earnings report news, the company announced it will begin providing guidance on an annual basis, and will no longer provide quarterly guidance.
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The company expects 2019 net income to be between $160 million and $180 million, with an expected adjusted EBITDA range of $515 million to $535 million.