WEST CHESTER, Ohio ( TheStreet) -- AK Steel ( AKS), its share price socked earlier in the year as the company faced steeply rising raw materials costs, made good with investors, at least for one day, by easily surpassing Wall Street's second-quarter profit and revenue estimates.AK Steel reported earnings of $26.7 million, or 24 cents a share. Analysts were looking for a per-share earnings of 7 cents, according to Thompson Reuters. A year ago, AK Steel was in the red along with much of the steel industry (losing $47 million, or 43 cents a share) as it idled plants and laid off workers amid a recessionary collapse in steel demand. Revenue surged by more than 100% to $1.6 billion from a year ago. Shipments reached 1.45 million tons, the most steel it's sold since the third quarter of 2008, AK said, and up 95% from the first quarter of 2009. In April, AK Steel warned that it had underestimated the rising price of iron ore, the most critical steel ingredient, and that these costs would hamper its results in the second quarter. Because of drastic changes in the way iron ore is priced on the global market, AK Steel's own contracts for the feedstock have been in flux. The company buys most of its iron ore from Cliffs Natural Resources ( CLF), which uses a formula to arrive at its pricing, part of which involves the global seaborne iron ore price. AK said it had believed the year-over-year increase would be 30%, which it used to calculate its profit for the first quarter, released in April. The company now assumes that the rise will be 65%, much lower than what some analysts had believed. Mark Parr, with KeyBanc Capital Markets in Cleveland, wrote in a note to clients that his model called for an for iron ore price increase of "roughly 90%." To account for the discrepancy in the first-quarter, AK said it booked the difference between the 30% and 65% cost increase in the second quarter. Called a "true-up" expense, it amounts to $18 million, AK said. Excluding that sum, the company said it would have earned $37 million, or 34 cents a share. Earlier this year, the world's three biggest iron ore miners -- Vale ( VALE), BHP Billiton ( BHP) and Rio Tinto ( RTP) -- forced steelmakers in Asia to move from an annual benchmark system to a short-term quarterly one, tied to the iron-ore spot market.
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