S&P: AK Steel outlook stable

Standard & Poor's said it revised its outlook on AK Steel Corp. to stable from negative. S&P also affirmed its B+ corporate and senior unsecured ratings on the company and its parent, AK Steel Holding Corp.

S&P said the outlook revision reflects the expectation that improved steel industry conditions will remain sustainable well into 2005, which, together with management actions to reduce financial risk, have somewhat reduced the pressures on the company as it seeks to renegotiate with its large unions in the intermediate term. Although S&P remains concerned that union issues are still in flux at AK Steel, these improvements have reduced the likelihood that management could be pressured to take more drastic actions to close a gap with its peers, most of whom have substantially improved their financial profiles by shedding onerous legacy liabilities in bankruptcy.

S&P said the ratings on AK Steel reflect its challenged business position due to its relatively small and high-cost position as an integrated steelmaker; its limited diversity and high exposure to the automotive market; its challenge to offset rapidly escalating input costs under its fixed-price contracts; and burdensome legacy costs.

These factors overshadow the company's good position in its markets, its high concentration of value-added products and its fair liquidity.

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