Ispat International N.V., reported a net income of $11 million for the fourth quarter, compared to net income of $51 million for the same time the prior year.
Consolidated sales and operating income for the fourth quarter were $1.4 billion and $22 million, respectively, as compared to $1.3 billion and $29 million, respectively, for the fourth quarter of 2002. Total steel shipments increased by 1 percent to 3.8 million tons.
The company reported sales increased by 6 percent to $1.409 billion in the fourth quarter of 2003 from $1.325 billion the prior year. Total steel shipments increased by 1 percent to 3.8 million tons. Net sales increased by 6 percent during the same period from $1.259 billion to $1.341 billion, primarily due to appreciation of Euro and Canadian dollars.
Ispat Mexicana's net sales were higher by 22 percent due to higher shipments. Shipments increased by 25 percent. Though Ispat Mexicana's principal markets are NAFTA member states, higher demand in Asia, particularly China, resulted in lower imports from Asia and increased demand for Ispat Mexicana's products in its principal markets. Another contributory factor for increase in volumes was that in the fourth quarter of 2002, production was disrupted by a natural gas shortage due to an explosion at the Pemex facilities. Shipments to Asia contributed 22 percent of total shipments compared to none in 2002. Average selling prices were marginally lower largely due to higher freight costs.
The company noted that the cost of sales increased by 13 percent to $1.298 billion even though shipments increased by only 1 percent. Overall, cost per ton increased by 9 percent primarily due to higher prices of iron ore, scrap, natural gas, electricity and transportation cost of inputs.
Ispat Inland's cost per ton increased by 5 percent. The main reasons for the higher cost were steep increase in prices of scrap as well as natural gas and alloys.
Ispat Mexicana's cost per ton increased by 6 percent. This was largely due to higher prices of metallics, energy and labor.
Ispat Sidbec's cost per ton increased by 16 percent primarily due to higher metallic prices including scrap, natural gas combined with higher employment costs and appreciation of the Canadian $.
Cost per ton at Caribbean Ispat increased by 12 percent for DRI and 3 percent for steel. This was largely due to increase in iron ore prices and higher shipping costs.
Ispat Europe's cost per ton increased due to lower shipments caused by weak market and increases in prices of key inputs such as metallics and energy. Costs were also affected by the appreciation of the Euro which strengthened against the US$ by 19 percent during the quarter compared to a year ago.
For the full year the company reported sales increased by 11 percent to $5.441 billion due to a 7 percent increase in average prices, while shipments increased by 1 percent to 15.2 million tons.
Net sales also went up during the same period to $5.914 billion from $4.646 billion, an increase of 12 percent. Overall demand was flat compared to last year with some changes within the geographical location of our subsidiaries.
The company also reported that the costs of sales for the year increased by 13 percent. The increase is largely due to the higher price of iron ore, scrap, electricity and natural gas. Selling, general and administrative expenses were higher by $12 million; however, excluding currency appreciation, it remained at 2002 levels.