Photo courtesy of Algoma Steel Group Inc.
Algoma Steel Group Inc., a steel producer based in Sault Ste. Marie, Ontario, reports a year-on-year increase in its revenue but a decline in net income in its fiscal year 2024 second quarter, which ran from July 1 to Sept. 30.
The company's consolidated revenue of CAD$732.6 million ($534.4 million) offered a 22 percent increase compared with the CAD$599.2 million ($437.1 million) it garnered in last fiscal year’s second quarter.
Algoma’s reported net income of CAD $31.1 million ($22.7 million) in its most recently completed quarter represents a 64 percent drop from the CAD$87.2 million ($63.6 million) it earned in the same time frame last year.
Michael Garcia, CEO of Algoma, says lower steel prices yielded tighter operating margins this summer. “We delivered results in the fiscal second quarter that were in line with our previously disclosed outlook," he says. "Our results were impacted by significant declines in steel prices leading up to the now resolved labor stoppages at auto manufacturers in the United States.
“While we do expect the impact strikes had on the price environment, along with lower anticipated production due to our usual planned maintenance ahead of winter to have a material downward impact on Q3 fiscal year 2024 results, index prices have risen and forward curves have rebounded sharply on recent price increase announcements and news of tentative agreements between the United Auto Workers and automakers. With the strikes behind us, we expect further recovery in steel demand and pricing.”
Garcia says Algoma remains on track and largely on budget as it prepares to convert its steelmaking complex in Sault Ste. Marie to scrap-fed electric arc furnace (EAF) production.
"During the last quarter, [we] made significant progress in our transformative electric arc furnace, or EAF project, including achieving two important milestones in securing the necessary power supply for our EAFs," he says.
“This means we will have access to the power required to operate the EAFs at our current run rate annual business plan range of 2.2 million to 2.4 million shippable tons without relying on hot metal.
“As of Sept. 30, we have invested a total of CAD$455.7 million [$332.4 million] in the development of the EAF project, which represents approximately 54 percent of the anticipated project cost. Importantly, we have already secured contracts for approximately 80 percent of the forecasted total project expenses, with approximately 95 percent of these contracts being fixed price agreements. We anticipate finalizing contracts for the remaining forecast project expenses by end of the fiscal year.”
Following the conversion to EAF technology, Algoma’s facility is expected to reach an annual raw steel production capacity of approximately 3.7 million tons, matching its downstream finishing capacity and to generate an approximate 70 percent reduction in the company’s annual carbon emissions.