Stelco guidance update

HAMILTON, ON, June 1 /CNW/ - Stelco Inc. (TSX:STE) announced today that,
while it continues to expect solid performance in the second quarter of 2005
from a historical perspective, operating earnings in the quarter are now
expected to be considerably below the level of the first quarter of 2005
largely due to lower spot market prices as well as higher energy costs and the
flow through of higher cost inventory produced in the first quarter.
The Corporation indicated on May 10, 2005 when it reported its first
quarter results that it was reviewing its guidance for 2005 previously issued
on March 8, 2005. Stelco continues to anticipate strong performance during
2005 from a historical perspective. However, due to the continued uncertainty
around spot market pricing, market demand, shipment levels and input costs the
Corporation does not believe that it can reasonably provide specific guidance
on 2005 operating earnings or shipments at this time. Depending on visibility
and other factors, the Corporation may choose to re-institute specific
operating earnings or other guidance at a later time.
The Corporation advises that operating earnings is a non-GAAP financial
measure and as such does not have standardized meaning prescribed by GAAP and
therefore may not be comparable to similar measures presented by other
companies. However, Stelco's published quarterly and annual financial
statements do report operating earnings, separately disclosing key items of
net sales, costs and expenses included therein. The Corporation's published
financial statements also disclose the statement of earnings line items which
the Corporation does not include in operating earnings. Consistent with
Stelco's past practice, a reconciliation of earnings before income taxes (a
GAAP financial measure) to operating earnings would include financial
expenses, principally interest as well as reorganization expenses which are
mainly expenses arising as a result of the CCAA process. The operating
earnings measure is provided to assist users in analyzing operating
profitability before non-operating expenses.

Certain statements made in this news release, including, but not limited
to, the statements in respect of the Corporation's expectations for second
quarter operating earnings, and other statements that are not historical
facts, are forward-looking statements which involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Corporation, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. These forward-looking
statements are based on certain material assumptions, including exchange rates
remaining stable, and that the Corporation continues in CCAA through the
period, and involve significant risks and uncertainties and should not be read
as guarantees of future performance or results, and will not necessarily be
accurate indications whether or not such results will be achieved. The
Corporation also cautions that its expectations for second quarter operating
earnings do not include possible adjustments to operating earnings that may be
required as a result of the sale of non-core assets, the claims reconciliation
process or other restructuring related matters that may arise prior to
finalization of second quarter 2005 results. Such adjustments could be
material. Additional information about other material factors that could cause
actual results to differ materially from the results discussed in the  
forward-looking statements are discussed under "General Development of the
Business - Risk Factors" set out in the Corporation's Annual Information Form
filed on SEDAR. Although the forward-looking statements made herein are based
upon what management of the Corporation believes are reasonable assumptions,
the Corporation cannot assure investors that actual results will be consistent
with these forward-looking statements. These statements reflect current
expectations regarding future events and operating performance and speak only
as of today's date and the Corporation assumes no obligation to update or
revise them to reflect new events or circumstances.

About Stelco
Stelco Inc. is a large, diversified steel producer. Stelco is involved in
major segments of the steel industry through its integrated steel business,
mini-mills, and manufactured products businesses. This news release may
contain forward-looking information with respect to the Corporation's business
operations, financial performance and conditions. Actual results may differ
from expected results for a variety of reasons including factors discussed in
the Corporation's Management's Discussion and Analysis section of the
Corporation's 2004 Annual Report. To learn more about Stelco and its
businesses, please refer to our Web site at www.stelco.ca.

%SEDAR: 00001549E