Ivaco takes loss, warns of financial challenges
TORONTO, Aug 28 - Steelmaker Ivaco Inc. warned of financial challenges on Thursday as it announced a second-quarter loss, hurt by lower U.S. sales, a stronger Canadian dollar and higher costs for raw materials and energy.
Montreal-based Ivaco, which suspended dividends on preferred shares in May to save cash, said it lost C$12.9 million ($9.2 million), or 45 Canadian cents a share, compared with a profit of C$4.3 million, or 2 Canadian cents a share, in the year-ago quarter.
Sales fell about 15 percent to C$207 million from C$245.3 million. The company said a stronger Canadian dollar cut revenue by about 10 percent as 70 percent of its sales come from U.S. customers.
Ivaco said a stronger Canadian dollar combined with an increase in scrap, transportation and energy costs and U.S. anti-dumping duties on certain types of wire rod has "resulted in liquidity and financing challenges," adding that it is in discussions with lenders.
The company said it is "continuing to address cost-cutting and cost-efficiency measures, including discussions with its unions" to return to profitability.
Ivaco said its Ifastgroupe's Infasco division is operating on two shifts to reduce inventory levels but its Ivaco Rolling Mills and Sivaco Quebec facilities are running full out so far into the third quarter.
Ivaco shares have fallen 57 percent this year, closing at C$1.07 in Toronto on Wednesday. They have underperformed the Toronto Stock Exchange's (News - Websites) S&P/TSX composite index, which has risen 13 percent in the same time. |
