International Steel Group Inc. reported net income of $24.9 million for the fourth quarter and a net loss of $23.5 million for the full year 2003. Sales for the fourth quarter and full year were $1.4 billion and $4.1 billion on shipments of 3.5 million tons and 10.4 million tons, respectively.
Last year the company incurred charges of $70.3 million due to the Bethlehem acquisition. These charges related to inventory revaluation, assumed contract revaluation and initial investment in the United Steelworkers of America pension plan for Bethlehem employees.
Rodney Mott, ISG's CEO, said, "Our accomplishments were significant in 2003. We purchased Bethlehem's assets, resulting in the largest acquisition in the domestic steel industry, and thus far we have been successful in integrating the assets and the employees of Bethlehem. In addition, we completed a very successful initial public offering. The proceeds of the IPO were used to reduce our debt and make significant progress toward our goal of achieving investment grade credit metrics. During the fourth quarter, our results improved as compared with our third quarter as production and shipments increased significantly. This led to a 20 percent rise in revenues from the third quarter to the fourth quarter while operating income improved to $53.2 million in the fourth quarter from a $15.7 million loss in the third quarter. We are pleased to have ended the fourth quarter and year with profitable results."
ISG's average realized price per ton shipped was $405 for the fourth quarter of 2003 and $391 for the full year. While ISG's prices improved over the course of the year and relative to 2002, most of this improvement was the result of the richer product mix due to the Bethlehem acquisition. The product mix improved as shipments of cold-rolled steel and other value-added products increased to 54 percent of total shipments in 2003 from 29 percent in 2002.
Shipments in the fourth quarter increased about 600,000 tons to 3.5 million tons as compared with the third quarter of 2003.
In its outlook for this year, ISG noted that the improving domestic economy should allow the company to further increase prices and improve its operating profit margins during 2004. Raw material costs, principally for coke and steel scrap, increased significantly in the fourth quarter of 2003 and have continued to increase in early 2004. Those cost increases and the strength of the steel markets have prompted ISG, like other steel producers, to announce significant price increases and implement surcharges to recover some or all of the increased raw material costs.
Most recently, on February 16, 2004, ISG announced a price increase on hot-band steel from $370 to $420 per ton, and increased its surcharge from $30 to $90 per ton.
ISG expects to ship between 14 and 15 million tons in 2004, an increase of nearly 5 million tons as compared with 2003. ISG's order book is full for the first half of the year.