ISG Sees Strength in Quarter

International Steel Group Inc. reported first-quarter net income of $70.9 million. For the first quarter of 2003, the company reported a net loss of $2.3 million. However, comparisons to that quarter are not meaningful because the acquisition of Bethlehem Steel Corporation's assets in May 2003 more than doubled the size of ISG and significantly improved its product and customer mix.

Net sales increased 25 percent in the first quarter to $1.8 billion from $1.4 billion in the previous quarter. Operating income improved 63 percent over the same period to $86.5 million.

Shipments increased about 10% from the fourth quarter of 2003 as demand from all markets continued strong. The average net sales per ton shipped was $458 for the first quarter compared with $405 in the fourth quarter. Prices have risen as a result of strong demand and surcharges to recover increased raw material costs.

"We saw excellent market strength in the first quarter as increased demand, higher selling prices and improved product mix more than offset the rise in raw material costs. We continue to see the positive impact of the Bethlehem integration that will enable us to take advantage of the strong market going forward to improve our bottom line," said Rodney Mott, ISG’s CEO.

Cost of sales for the first quarter of 2004 and the fourth quarter of 2003 was about 90 percent of sales.

The company also expressed optimism for the second quarter. Production is expected to increase in the second quarter of 2004, however, shipments are expected to remain relatively unchanged due to a significant reduction in inventory that occurred in the first quarter 2004.

Realized selling prices are expected to increase by approximately $50 per ton over the first quarter of 2004.

The company also believes there will be adequate availability of coke supplies. Although the full impact of the current spot coke prices will increase ISG's production costs in the second quarter of 2004, the company expects that the positive trends on realized selling prices due to previously announced price increases should more than offset the expected production cost increase. Therefore, the outlook remains positive, with income from operations expected to rise significantly in the second quarter of 2004.