Business
Stelco reports results for first quarter 2006
Stelco reports results for first quarter 2006.
About this update from Starr Peak Mining Ltd
[{"type":"text","content":"\n\n\n\n\nHAMILTON, ON, May 11 /CNW/ - Stelco Inc.(TSX:STE) today reported a net\nloss of $122 million for the first quarter ended March 31, 2006, including the\nimpacts of discontinued operations and reorganization costs. This compares to\nnet earnings of $49 million in the first quarter of 2005, and a net loss of\n$120 million in the fourth quarter of 2005. The results reported today are\nrelated to Stelco prior to emerging from Court protection at the end of the\nday on March 31, 2006, and prior to implementing the Corporation's Plan of\nArrangement and Reorganization. As such, the first quarter results are\nreferred to as those of the \"Predecessor\" in the Consolidated Financial\nStatements. Any reference to Stelco after implementation of the CCAA Plan is\nreferred to as the \"Successor\".\nThe results reported today include a $43 million after-tax loss on\ndiscontinued operations which represents the businesses of the Mini-mill and\nManufactured Products segments, the sales of which were completed in the first\nquarter. As well, reorganization costs on a pre-tax basis in each of the first\nquarters of 2006 and 2005 amounted to $21 million compared to $29 million in\nthe fourth quarter of 2005.\nThe following information excludes discontinued operations.\nNet sales revenue in the first quarter of 2006 was $674 million compared\nto $728 million for the same period in 2005. This 7% decrease was mainly due\nto renewal of customer contracts at lower prices and lower spot market prices,\na lower value-added mix as a result of the fourth quarter 2005 Lake Erie\nSteel's hot strip mill outage and the negative impact of the higher Canadian\ndollar.\nCost of sales for the first quarter of 2006 was $695 million compared to\n$593 million for the same quarter of 2005. This 17% increase was primarily due\nto higher spending for repairs and maintenance, purchased services and\nsupplies; higher natural gas, coal, ore and zinc costs; the flow through of\nhigh cost inventories produced in the previous quarter; and the impact of the\nfourth quarter 2005 Lake Erie Steel's hot strip mill upgrade, which included\nthe high cost of outside conversion of slabs to hot roll coils. These costs\nwere partly offset by lower purchased coke, scrap and electricity costs; a\nlower value-added mix of sales, and reduced labour costs at Hamilton Steel,\nresult...