MONTREAL, QUEBEC--Five years of strategic investment in new plant and equipment are paying off for Ivaco Inc.
Paul Ivanier, President and Chief Executive Officer of Ivaco, told shareholders attending the Company's annual general meeting today that completion of a $305 million modernization and expansion program designed to increase production of value added products is having a favorable impact on operating results despite the slowdown in the North American economy.
"By improving our efficiency, expanding production capacity, investing in new plant and equipment, and strengthening our financial position we have successfully restructured our Company and positioned each of our core businesses as leaders in their respective industries," Mr. Ivanier said.
Ivaco's operating performance improved sharply in 2000. Operating earnings increased 18 per cent to $121 million, primarily as a result of gains in the steel and fabricated steel products operations, and sales volumes remained strong throughout the year.
The economic slowdown had an impact on Ivaco's earnings in the first quarter of 2001. Sales were $222.3 million compared to $244.6 million last year and operating profit was $25.2 million compared to $31.0 million last year. Nevertheless, the favorable impact of the modernization and expansion program continued to be reflected in the results.
"It should not be overlooked that Ivaco was one of the very few steel producers in North America that reported positive earnings for both the fourth quarter of 2000 and the first quarter of 2001," Mr. Ivanier said.
Ivaco also took significant steps during 2000 to strengthen its financial position. Following up on promises made at last year's annual meeting, Ivaco sold surplus property in Montreal, Rexdale, St. Thomas, Nanticoke and Dartmouth for $11.9 million, and sold its 50 per cent interest in Bakermet Inc., a regional metals recycler in Ottawa, for $7.6 million. This year the Company has sold another property in Rexdale for $9 million and its interest in Bel-Air Fence, a distributor of fencing and fencing products in Quebec, for $7.2 million.
The Company has also signed an agreement whereby payment of the US$57.9 million secured notes received on sale of the Atlanta property in December 1999 will be advanced from a payment date of December 14, 2001 to August 30, 2001.
Prospects for the rest of this year hinge primarily on the performance of the North American economy, Mr. Ivanier said. Adjustment of inventories at the customer level are expected to be completed in the second quarter and we believe that the economy should start to accelerate in the second half of the year. A recent increase in wire rod prices by US$20 per ton effective July 1st is also expected to have a positive impact on results in the second half.
"The good news for Ivaco is that we are well positioned to capitalize on the economic upturn when it occurs," Mr. Ivanier said. "We are also continuing to further diversify our product range, expand into more high margin value added products, and focus on operating efficiencies and cost reductions. As a result of all of these factors, we believe Ivaco can look forward to a good second half in 2001."
The current economic uncertainty has caused Ivaco to postpone its plans to address and deal with its Second Preferred Shares, Series 1, 2, 3 and 5. "Until the trend of the North American economy is clearly defined, prudence must be the order of the day," Mr. Ivanier said.
Ivaco is a Canadian corporation and is a leading North American producer of steel, fabricated steel products and precision machined components. Ivaco's modern steel operations include Canada's largest rod mill, which has a rated production capacity of 900,000 tons of wire rods per annum. In addition, its fabricated steel products operations in Canada and the United States have a rated production capacity in the area of 400,000 tons per annum of wire and wire products and over 200,000 tons per annum of fastener products. Shares of Ivaco are traded on the Toronto Stock Exchange (IVA). |
