AK Steel (NYSE:AKS) has been working on several business initiatives to cope with the unstable business environment. It generated positive earnings per share of $0.03 in fiscal 2017, the first yearly profit in the past five years. The improvement in steel price and its transformation measures helped to increase revenues and lessen operating expenses.
AK Steel posted revenue of $6.08 billion in fiscal 2017, up 3% from the same period last year. The average growth of 7% in flat-rolled steel price allowed the company to generate higher revenues in last year.
The company says “We are enthusiastic about 2018 as we anticipate solid demand in many of our key end-use markets, and we continue to unlock the opportunities being developed through our recent acquisition of Precision Partners.”
Will Price Rises and Tariffs Affect AK Steel?
AK Steel has also raised prices for all carbon flat-rolled steel products by $30 per ton for all new orders, and they expect higher demand for its products from automotive industry this year.
Analysts, however, don’t believe that higher prices would help the company in widening profits as costs are also increasing at similar pace. “You’re getting pricing to cover costs, but that doesn’t mean you’re making a lot more money,” Credit Suisse analyst Woodworth told Bloomberg. AKS “said they would cover raw material costs, but the point is you’re kind of running to stand still.”
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On the other hand, steel stocks have been pressure over the past couple of weeks despite Donald Trump’s strategy of reviving steel industry through imposing higher tariffs. Steel investors are appreciating Donald Trump plans, but they show concerns over the exemption to the largest importers including Brazil, South Korea, and Australia. Analysts believe higher tariffs will have a positive impact on U.S. steel markets but up to the limited extent.
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