Stelco Inc. Reports Second Quarter Results

Stelco Inc. reported a net loss of $82 million in second quarter 2003 compared with net earnings of $6 million in second quarter 2002 and a first quarter 2003 net loss of $44 million.

Net sales for the quarter of $700 million decreased 7 percent compared with $755 million in the same quarter of 2002. Steel shipments in the quarter of 1.258 million tons were 4 percent lower than second quarter 2002 levels, primarily due to weak market demand and increased supply from North American producers and imported steel. Average revenue per ton in the quarter of $557 was $17 lower than second quarter 2002 primarily due to a lower-value-added sales mix and the significant appreciation of the Canadian dollar. Production of semi- finished steel of 1.261 million tons in second quarter 2003 was 7 percent lower than second quarter 2002 due to the market conditions and planned steel inventory reductions.

Cost per ton increased $75 to $604 in second quarter 2003 from $529 in second quarter 2002. The increase in costs was primarily due to the negative impact of reduced production levels at steelmaking, and at rolling and finishing operations; higher costs of natural gas, scrap, and wages and benefits; and increased costs at some of the mining properties.

The major factors contributing to the reduced second quarter results compared with first quarter 2003 were a $37 reduction in average revenue per ton, the negative cost impacts of lower production levels, and higher costs at some of the mining properties. The reduced average revenue per ton resulted in only a 1 percent increase in sales despite an 8 percent increase in shipments.