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Tuesday, February 3, 1998
Stelco revenue hits record
By SIMON AVERY
Steel Industry Reporter The Financial Post
Record Canadian steel consumption drove Stelco Inc. revenue to a record high in the fourth quarter, but profit did not keep pace because of capital expenditures and a loss on the sale of a subsidiary.
Stelco reported revenue of $795 million for the three months ended Dec. 31, up from $727 million a year earlier.
Profit was $21 million (17› a share), compared with $23 million (19›) for the same period a year earlier.
The Hamilton, Ont.-based steel maker also said it would tap its healthy cash reserves - $322 million at the end of 1997, up from $165 million a year earlier - to redeem all its outstanding class B shares, half its class C shares and 5% of its common shares.
The steel maker was able to charge more for its products in the fourth quarter compared with a year ago. The average price per ton rose to $676 from $638, but overall production of semifinished steel fell to 1.2 million tons from 1.4 million tons.
"We had a fair amount of work on our capital projects in the fourth quarter that did affect our overall output," said president and chief executive James Alfano.
A $105-million upgrade and expansion at the Lake Erie Steel Co. Ltd. unit reduced output. Stelco also recorded a one-time charge of 10› a share after selling subsidiary Stelco Fasteners Ltd. at the end of the quarter.
Anna Sorbo, an analyst with CIBC Wood Gundy Securities Inc., said the buyback announcement, on the heels of Stelco's $250-million capital expenditure program in 1997, shows the company is confident in its cash-generating abilities in 1998.
Stelco shares (STEa/TSE) closed at $11.60 yesterday, up 10›.
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