Production cuts at General Motors Corp. and Chrysler LLC will leave AK Steel with a larger-than-expected loss in the second-quarter, the steel maker said Tuesday.
AK Steel Holding Corp., which generates about a third of its revenue from the troubled automotive industry, has been hit hard by a U.S. recession and credit crisis that has forced millions out of work and made it tough for consumers to put up cash or borrow money for new cars.
The company supplies steel used in exhaust systems and other vehicle parts. It also sells the metal _ representing about 62 percent of an average car's weight _ to suppliers for the Detroit automakers, which are suffering from plummeting sales.
In the face of huge losses, GM plans to idle more than half of its North American plants for up to nine weeks, beginning in mid-May. The largest U.S. automaker is nearing a June deadline to restructure or face bankruptcy protection and is surviving on billions in government aid. Chrysler, now operating under bankruptcy protection, will idle all of its plants.
AK Steel said the automakers' production cuts will lower its second-quarter steel shipments to about 725,000 from 800,000 tons, resulting in an operating loss of $75 million to $80 million.
That was wider than AK Steel's previous loss estimate of a $50 million, and bigger than analysts' forecast of $39.2 million, according to a survey by Thomson Reuters.
Shares of the company fell $1.68, or nearly 11 percent, to $13.98 in afternoon trading Tuesday.
The company also said it expects its average per-ton selling price for steel to fall 3 percent to 4 percent in the second-quarter from the first quarter.
Last month, AK Steel reported a loss of $73.4 million, reflecting lower shipments of the metal. It was the company's second consecutive quarterly loss and further evidence of the particularly severe toll taken on the steel industry by the U.S. recession and global slowdown, which has undermined key steel markets such as autos, construction and industrial equipment.
Like other steel companies, the West Chester, Ohio-based company has responded to weaker demand in recent months by scaling down production, reducing pay and furloughing workers.