Ipsco CEO sees strong growth for steelmaker; company raises dividend
11:12 AM EDT Apr 30
cbc.ca
REGINA (CP) - Coming off a year of record revenue, Ipsco Inc. expects robust profits to continue over the next few years as demand for steel products provided to the energy sector continue to build, the company's CEO said Thursday.
Most steelmakers across the continent have been reporting record earnings in recent quarters as steel prices hit cyclical peaks, through they are beginning to drop off.
However, the main markets Ipsco serves - including large diameter pipe for multibillion-dollar pipeline projects coming on stream in the next few years - "buttresses" the company for growth as global demand for oil and gas continues to rise, said chief executive David Sutherland.
"Ipsco is clearly reinforcing its position to take advantage of these opportunities in the energy sector over the next few years," Sutherland told shareholders in Regina at the annual meeting of the Canada-U.S. steelmaker.
Among the biggest pipeline projects are a proposed $7-billion line to ship gas southward down the Mackenzie Valley in the Northwest Territories and plans for a 5,600-kilometre, $20-billion US pipeline from Alaska to energy-thirsty U.S. markets.
Even without those projects, industrial demand for large diameter pipe from 2006 and beyond "is anticipated to be very strong," Sutherland said.
Sutherland's optimism follows a strong 2004 performance by the company, whose net profits reached $439 million, or $8.24 per share, up from $17 million or nine cents per share in 2003. Annual revenue was a record $2.5 billion, up from $1.3 billion in 2003.
On Tuesday, the company reported earnings of $154 million US or $3.05 a diluted share in the three months ended March 31, up from $31 million US or 57 cents a share in last year's first quarter.
It also announced an increase of its cash dividend on common shares to 14 cents per share, from 12 cents.
A number of major pipeline projects are being proposed to bring new oilsands oil production from northern Alberta and B.C. to markets in Canada, the United States and overseas, including proposals by TransCanada Corp. (TSX:TRP), Enbridge Inc. (TSX:ENB) and Terasen Inc. (TSX:TER).
Ipsco is the largest North American supplier of large-diameter pipe for oil and gas transmission, and the only supplier on the continent which makes all of its own steel. That factor "gives the company an edge in competing" for "the hundreds of thousands of tonnes of large diameter pipe that will one day almost certainly be used to bring Arctic gas to markets in the south."
Ipsco is also the largest supplier of energy tubular goods in Canada for oil and gas producers and has benefited as high energy prices have supported strong demand for more drilling.
Another large part of Ipsco's business involves steel plate, used in the manufacturing of ships, barges, bridges, rail cars, construction and industrial equipment, among other uses.
North American demand for plate has recovered after four years of light infrastructure spending, as projects were delayed amid a slow economy, Sutherland said.
"Also, demand for these products have been growing all around the world, as many people project in these markets for several years to come in countries such as India, China and other parts of the world as they develop the infrastructure to support a more developed economy," Sutherland said.
Shares in Ipsco (TSX:IPS) fell $1.09 Thursday on the Toronto Stock Exchange, closing at $58.70. |
