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Algoma Steel turns a profit

Algoma Steel has moved into the black, reporting its first quarterly profit in two years. The company has posted a second-quarter profit of $21.6 million or $1.03 per share. That compares to a net loss of $47.8 million for the same quarter last year.
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Algoma Steel has moved into the black, reporting its first quarterly profit in two years.

The company has posted a second-quarter profit of $21.6 million or $1.03 per share.

That compares to a net loss of $47.8 million for the same quarter last year.

Senior company officials were in Toronto for a board meeting today and did not come to the Sault for a scheduled 1 p.m. news conference.

Local media found themselves with nothing to photograph but the boardroom speakerphone and themselves interviewing the device. Our photographer decided that MCTV's Kim Fewchuk and Radio Canada's Caroline Boily (both shown above) were the most photogenic among an otherwise tawdry group of local journalists.

The company attributed the improved results to higher steel prices, increased shipments, lower operating costs and the benefits arising from the company's restructuring.

Sales up $56 million

The second quarter earnings were achieved on sales of $287.2 million, up from $230.9 million during the same period last year.

Steel shipments totalled 576,000 tons, compared to 484,000 during the second quarter of 2001. Shipments of sheet steel were up 121,000, and plate shipments improved 29,000.

"The second quarter results reflect the company's improved performance since completion of its restructuring on January 29, 2002," said Algoma Steel chairman Benjamin Duster.

"We are encouraged by the month-over-month improvement in operating performance that has been maintained since the restructuring.

Positive performance expected to continue in third quarter

"Based on current market conditions, we expect this positive performance to continue in the third quarter.

"Market conditions for the fourth quarter are less certain, particularly in light of the adverse finding on hot rolled sheet in the safeguard investigation," Duster said.

All but $2 million of profit attributable to extraordinary circumstances

However, $9.5 million of the company's reported profit can be attributed to revaluation of its scrap, coal and ore inventories.

Another $9.5 million is attributable to a foreign exchange gain, mostly on U.S. denominated long-term debt.

President and Chief Executive Officer Sandy Adam said that the company also benefited about $21 million as a result of improved steel prices.

No room for euphoria

Speaking to reporters, Adam cautioned against euphoria over today's results.

"There's no room for any letup in continuing to work on being the low-cost producer," he said.

"I don't want to see any fallback or complacency. There just isn't any room for that in this industry."

$22 million of debt paid down

The improvement in second-quarter cash flow allowed Algoma Steel to pay down $22.1 million of its $76.6 million in bank indebtedness.

The company also reported that it will curtail steelmaking operations for about six days in October for blast furnace maintenance.

Search for a CEO

Chairman Duster told journalists today that the search for a replacement for Sandy Adam is proceeding on schedule and that a new president and CEO will be in place when Adam takes his previously announced retirement in September.

More than 10 candidates have been considered for the job.

A short list has been developed and there's more than two names on it, Duster said.

He said he's pleased with the quality of candidates.

Power costs

Asked about the effect of power costs in Ontario's deregulated electricity market, company officials said only minor disruptions are expected because most of Algoma Steel's contracts are locked in at fixed prices. Detailed financial results can be accessed by clicking here.

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David Helwig

About the Author: David Helwig

David Helwig's journalism career spans seven decades beginning in the 1960s. His work has been recognized with national and international awards.
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