Resulting Fourth Quarter loss will be $120-140 million
HAMILTON, ON, Feb. 7 /CNW/ - Stelco Inc. (TSX:STE) today announced that it has completed the major components of the operational restructuring that it commenced upon exiting from the CCAA process. This operational restructuring had three key components:
- Productivity improvement initiatives and reduction in the labour
force.
- Reducing production costs through workflow improvement.
- Optimizing capital projects.
In order to complete this program, it was necessary to close certain
production facilities for a period of time during the fourth quarter. These
shutdowns coincided with a softening in demand for steel. The net result of
these initiatives is that Stelco expects to report a loss before income taxes
in the range of $120 million to $140 million for the fourth quarter ending
December 31, 2006.
The closure of production facilities enabled the company to successfully
complete several strategic capital projects, including:
- the reline and upgrade of the blast furnace at the Hamilton plant to
significantly increase throughput and to extend the interval for the
next furnace reline to 2018; and
- the Phase II expansion of the Lake Erie hot strip mill, which is
expected to increase throughput by 20% over previous levels.
With these two major projects now complete, Stelco does not anticipate any further significant mill outages in 2007.
As mentioned above, fourth quarter results were also adversely impacted by lower demand in the automotive and steel service centre sectors, which contributed to a reduction in spot prices for steel and shipments during the quarter. In addition, higher costs were incurred due to increases in the cost of energy and certain raw materials.
Mr. Rodney Mott, President and CEO stated that, "The economic outlook for 2007 appears positive and the demand for steel has improved markedly." Shipment and semi-finished steel production in January improved significantly over the respective monthly averages for the fourth quarter. January shipments were 309,000 tons and semi-finished steel production was 380,000 tons, which compares to fourth quarter monthly averages of 225,000 tons and 204,000 tons respectively. Spot prices have also improved for January as compared to the fourth quarter. Mr. Mott added that, "With these steps of our operational restructuring program now complete we have significantly enhanced our efficiency, reduced operating costs, and are poised to compete effectively in this improving economic environment."
The Corporation expects to release its annual results in early March 2007.
About Stelco
Stelco is one of Canada's largest steel companies. It is focused on its two Ontario-based integrated steel businesses located in Hamilton and in Nanticoke. These operations produce high quality value-added hot rolled, cold rolled, coated sheet and bar products. To learn more about Stelco and its businesses, please refer to our Web site at www.stelco.com.
CAUTION REGARDING FORWARD-LOOKING INFORMATION
This press release contains "forward-looking information" that is based on Stelco's expectations, estimates and projections as of the date of this press release or as of the date which such information is identified to be given. This forward-looking information includes, among other things, factors relating to the business, financial position, operations and prospects of Stelco, including: expected losses for the fourth quarter ending December 31, 2006; expected increase to throughput at Lake Erie; and no expected planned significant mill outages. Often, but not always, forward-looking information can be identified by the use of words and phrases such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or states that certain actions, events or results "may", "could", "would", "might", or "will" be taken, occur or be achieved.
Forward-looking information involves known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Stelco to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Actual results, performance and achievements are likely to differ, and may differ materially, from those expressed or implied by the forward-looking information contained herein. Such forward-looking information is based on a number of assumptions which may prove to be incorrect, including, but not limited to: exchange rates, energy and other anticipated and unanticipated costs; pension contributions and expenses; the supply and demand for, deliveries of, and the level and volatility of prices of, steel and raw materials; the continued availability of financing on appropriate terms; market competition; the impact on Stelco of various environmental regulations and initiatives; and Stelco's ongoing relations with its employees and staffing levels. While Stelco anticipates that subsequent events and developments may cause Stelco's views to change, Stelco specifically disclaims any obligation to update this forward-looking information. This forward-looking information should not be relied upon as representing Stelco's views as of any date subsequent to the date of this press release.
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