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Essar Steel posts fifth consecutive loss

Jun 20, 2013 | 07:19 PM |

Tags  steel, Essar Steel Algoma, Kalyan Ghosh, sheet, plate, earnings report, Catherine Nga

NEW YORK — Essar Steel Algoma Inc. posted its fifth consecutive quarterly loss on the back of lackluster market conditions and declining shipments.

The Sault Ste. Marie, Ontario-based flat-rolled steelmaker’s net loss for its fiscal fourth quarter ended March 31 soared to Canadian $92.7 million ($89.3 million) from C$18 million in the same period last year on sales that fell 14.6 percent to C$447.7 million ($431.26 million) from C$524 million.

For the full year, the company posted a net loss of C$203.3 million ($195.83 million) in contrast to net income of C$38.1 million the previous year as sales declined 13.6 percent to C$1.87 billion ($1.8 billion) from C$2.16 billion.

"Despite continued cost-reduction measures, operating efficiencies and an improving product market mix, lackluster market conditions and contracted raw material input costs combined to negatively impact our fiscal 2013 performance," chief executive officer Kalyan Ghosh said in a statement.

"Recently announced improvements to our iron ore contract and credit agreements position the company more favorably for fiscal 2014 and beyond," he added.

Steel product sales in the fiscal fourth quarter averaged $634 per net ton, down 15.5 percent from $750 a year earlier, which the company attributed to lower steel selling prices worldwide, particularly in North America.

Steel sheet shipments totaled 555,000 net tons in the fiscal fourth quarter, down 4.3 percent from 580,000 tons in the fiscal third quarter, while steel plate shipments rose 9.2 percent to 83,000 tons from 76,000 tons in the same comparison. "Shipment volumes decreased by 18,000 tons from the (fiscal) third quarter due to the impact of severe winter weather," the company said.

Looking ahead, Essar Steel Algoma said it faces a number of challenges, including low mill utilization rates and soft demand.

"Despite improving macro indicators, order book and market conditions remain lackluster thus far in the current quarter," the company said. "For the first quarter of fiscal 2014, we expect higher sales volumes, lower costs and lower selling prices compared to the last quarter. (However), the company has seen some recent improvement on pricing in the market and has also increased (hot-rolled coil) prices by $50 per ton."

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