Montréal – Ivaco Inc. performed admirably under extremely challenging economic and market conditions during 2001 and is well positioned to capitalize on an upturn in the North American economy this year.
Paul Ivanier, President and Chief Executive Officer of Ivaco, told shareholders attending the Company’s annual general meeting today that Ivaco’s outlook is significantly better than it was a year ago, not just because the economy is improving but because Ivaco has taken initiatives to strengthen its operating and financial positions.
“We demonstrated last year that we had successfully positioned ourselves to perform well during hard economic times,” Mr. Ivanier said. “Our first quarter results this year show that we are equally well positioned to capitalize on the economic upturn as it develops.”
Mr. Ivanier pointed out that the pace of economic activity increased noticeably in the first quarter, raising hopes that the economy will continue to strengthen as the year progresses. “For Ivaco, a sustained period of recovery will almost certainly be accompanied by increased market demand and better margins for our products,” he said.
“As we move ahead in 2002, we will continue to improve our competitive position and enhance our profit potential by continuing to diversify our product range, producing more high margin value added products, and focusing on operating efficiencies and cost reductions in all our businesses. The combination of these internal initiatives and strong market demand for wire rod and wire products make us optimistic about the balance of the year.”
During the last few years, Ivaco has taken major steps to modernize equipment, expand its ability to produce high quality products, narrow its business focus, and position itself strategically as leaders in each of its businesses.
“All these initiatives paid off last year,” Mr. Ivanier said. “We were one of only a few North American steel companies able to maintain positive operating earnings and cash flow in 2001 - and we did this in each of our three business segments. By any yardstick, this was an impressive performance.”
Ivaco’s first quarter results this year, which it reported at the end of April, were significantly better than the restated first quarter results last year and an even bigger improvement over the weak results in the third and fourth quarters last year. Operating earnings in the first quarter were $25.2 million compared with $15.9 million in 2001. Sales increased to $230.2 million from $222.3 million and earnings before taxes were $5.0 million compared with a loss of $300,000. Cash flow from operations was $17.9 million compared with $4.2 million and net earnings were $2.8 million compared with $800,000 last year.
“We were one of only a very few steel producing companies that were able to report positive operating earnings and net income as well as positive cash flow for the first quarter,” Mr. Ivanier said.
All of Ivaco’s business segments had improved operating earnings in the first quarter. In addition, Ivaco Rolling Mills set an all-time monthly production record of 76,200 tons of wire rods in March and topped that by producing 76,300 tons in April.
“We expect that for the full year 2002 we will report substantially higher operating earnings compared with last year,” Mr. Ivanier said. “This improvement should be very apparent in the second half.”
Underlying Ivaco’s improved performance has been the achievement of goals it set for itself in a strategic plan implemented several years ago. These goals include becoming the most modern and efficient producer in its product lines, maximizing the penetration of value added products and divesting surplus assets that don’t fit into the company’s long range plans.
“As a result, Ivaco is emerging from these recessionary times stronger than ever before - operationally and financially as well,” Mr. Ivanier concluded. “This will enable us to reap significant rewards as the economy returns to normal levels and that will be good news for our shareholders.”
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). |
