Shares of steelmaker AK Steel Holding Corporation (NYSE: AKS) are down 13% as of 11:20 a.m. EDT, after earlier falling as much as 15.2% in response to the company reporting a modest third-quarter loss. AK Steel earned two cents per share "adjusted" for one-time items in the quarter, but Wall Street had predicted the company would earn $0.03 -- also adjusted.
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That's the good news. The bad news is that, as calculated under GAAP (generally accepted accounting principles), AK Steel actually didn't earn any profit, but lost $0.02 per share. The company's quarterly revenues of $1.49 billion likewise fell slightly short of analyst estimates.
And it gets worse. Although AK's revenues fell short of estimates, the company sales actually grew 3% year over year. However, whereas one year ago AK Steel had earned $0.21 per share on less revenue, in this year's third quarter it lost money despite doing more business -- and despite enjoying higher average selling prices for its steel.
How did that happen? AK management blamed higher LIFO charges to inventory value, plus "higher raw material costs, particularly for scrap, chrome, zinc and other alloys," for not earning a profit this quarter. The good news is that analysts don't seem to think these problems will recur in Q4. To the contrary, consensus estimates call for AK to earn as much as $0.07 per share in the final quarter of this year -- and to end the year with a $0.49-per-share full-year profit.
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