AK Steel's problems stemmed from a variety of factors: low demand for steel, a rough housing market, and poor industry pricing have all hurt its bottom line, analysts say. Some issues, however, are unique to the 113-year old company. Analysts at Morningstar note that AK's (AKS, Fortune 500) has suffered from high pension costs, substantial leverage and "troubled business relationships" in the past but that management has "turned the company around." Still, the report notes that its position is weak relative its peers.
The company is known for producing high-quality steel, but has found it difficult to do so at a competitive cost while still turning a healthy profit. The company has been free cash flow negative for the past four years. It lost money in every quarter of 2012, including $70 million in the third quarter. The rest of this year is expected to be even worse.
Shares tanked in November after the company predicted a greater-than-expected loss for the fourth quarter. The company also estimated that prices for its steel would fall 5%.
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