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Kallanish Kallanish

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April, 6th 2020

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FEB 20
15:44

AK earnings slide ahead of Cleveland merger

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On the eve of its acquisition by US iron ore producer Cleveland-Cliffs, domestic steelmaker AK Steel finished a turbulent 2019 with profits of less than a tenth of their 2018 levels, Kallanish reports. 

AK earned $11.2 million on sales of $6.4 billion in 2019, down from earnings of $186m on sales of $6.8 billion in 2018. AK’s 2019 earnings were affected by a $26.9m pension charge and a $69.3m charge for the closure of its Ashland, Kentucky, facility. 

The bulk of the drop can be attributed to “...significantly lower steel spot market selling prices, lower shipments to the automotive and distributor and converter markets, and higher costs for iron ore, coal and coke during 2019,” the company says. “These factors more than offset higher automotive market selling prices, lower costs for outages, energy and certain raw materials, including scrap and alloys, and higher unrealized gains on iron ore derivatives compared to a year ago.”

As of 13 March, AK Steel will operate as the steelmaking wing of Cleveland-Cliffs, according to ceo Roger Newport. The combined new company will be split in ownership 68:32, with the lion’s share being held by Cleveland shareholders. 

“We continue to be excited about the value-creation potential of the transaction, which we anticipate will close on 13 March, subject to regulatory review and shareholder approval.”