Business
Stelco Reports Results for 2006
Stelco Reports Results for 2006.
About this update from Starr Peak Mining Ltd
[{"type":"text","content":"\n\n\n\nHAMILTON, ON, March 7 /CNW/ - Stelco Inc. (TSX:STE) reported a fourth\nquarter loss before income taxes of $145 million compared with $103 million\nfor the fourth quarter of 2005. For the nine month period since exiting from\nCCAA the company reported a loss before income taxes of $187 million, which\nincludes unusual items relating to fresh start accounting and the operational\nrestructuring totalling $110 million. Net sales for the nine month period\nending December 31, 2006 were $1.83 billion on shipments of 2,562,000 tons.\n\n\nDuring the fourth quarter, production facilities were closed for a period\nof time to enable the company to complete several strategic capital projects,\nincluding:\n\n\n- The reline and upgrade of the blast furnace at the Hamilton plant to\n increase throughput and to extend the interval for the next furnace\n reline to 2018; and\n\n- The phase two expansion of the Lake Erie hot strip mill, which is\n expected to increase throughput by 20% over previous levels.\n\n\nAs a result of these upgrades and lower demand, production for the\nquarter fell to 611,000 tons, representing a decline of 33% over the third\nquarter.\n\n\nWith these two major projects now complete, Stelco does not anticipate\nany further significant mill outages in 2007.\n\n\nFourth quarter results were also negatively impacted by lower demand in\nthe automotive and steel service centre sectors, which contributed to a\nreduction in spot prices for steel and lower shipments during the quarter. In\naddition, Stelco experienced higher input costs during the fourth quarter.\n\n\nSince exiting from CCAA on March 31, 2006, Stelco has made significant\nprogress in its operational restructuring program, which comprises four key\ncomponents:\n\n\n- The work force was reduced from 4,954 on March 31, 2006 to 4,051 in\n January 2007 through voluntary programs and attrition. Based on this\n reduction in the number of employees, labour costs are estimated to\n be $65 million lower on an annualized basis.\n\n- Production and administrative costs were reduced through workflow\n improvement and a de-centralized approach to managing the business.\n Compensation incentives were implemented or modified across the\n organization.\n\n- Capital expenditures have been optimized through increasing the\n return on investment threshold and enhancing the...