Chris: 3Q results look very good, but I would say that it will only help support current share price - don't look for a big run up in price. A lot of steelmakers are hurting now, with dumping, overcapacity, etc..
By the way, ARP results look less than what was hoped for. Likely to drift down. FWIW
-----------------------
Monday October 26, 10:25 am Eastern Time
Company Press Release
SOURCE: Dofasco Inc.
Dofasco posts excellent 3rd quarter results
HAMILTON, ON, Oct. 26 /CNW-PRN/ - Dofasco Inc. today announced excellent earnings for the third
quarter of 1998. Consolidated net income attributable to common shares for the quarter was $49.3 million or
$0.57 per common share. This result compares very favourably to the $43.6 million or $0.51 per share
reported for the third quarter of 1997. These strong earnings were primarily attributable to excellent
performance at the Company's Hamilton operations.
John Mayberry, Dofasco's President and Chief Executive Officer said, ''Dofasco's third quarter results are
among the best of those posted by all North American steelmakers. This is a significant accomplishment within
the very competitive steel marketplace, and is evidence of the success of our continuing efforts to improve
quality and customer service, and reduce costs.''
Consolidated sales in the quarter were $746.7 million on steel shipments of 989,000 tons, compared to sales
revenue of $741.3 million in the second quarter of 1998 on shipments of 1,006,000 tons.
In Hamilton, average revenue realized per ton of steel shipped during the quarter increased because of a higher
value-added product mix. Despite this change, sustainable cost reduction, increased shipments and reduced
scrap costs contributed to a decline in the cost per ton of steel shipped during the quarter. At Gallatin Steel, the
company's joint venture minimill in Kentucky, weak market conditions primarily attributable to the over-supply
of hot rolled steel in the U.S. marketplace contributed to poor financial results. Performance at Quebec Cartier
Mining Company, the joint venture iron ore mining operation in Quebec, continued strong.
Commenting on the marketplace, Mr. Mayberry said, ''North American steel markets face a period of
continued uncertainty in 1999. Although steel consumption remains at good levels, the recent unprecedented
surge in imports of unfairly traded hot rolled and cold rolled products into North America from Asia and
Eastern European countries has resulted in reduced operating levels at several U.S. steelmakers.''
To address the trade situation, Canadian steelmakers, including Dofasco, are currently preparing anti-dumping
complaints, and in the United States, the Department of Commerce has initiated an investigation into imports of
hot rolled product as a result of complaints filed by U.S. mills.
Mr. Mayberry continued, ''Looking ahead, we have sufficient inventory levels in place to maintain shipment
levels for the balance of the year from our Hamilton operations where major maintenance initiatives are
underway. Gallatin is implementing cost reduction initiatives while operating on a reduced schedule until market
conditions improve. QCM will post higher earnings in 1998 compared to 1997.''
Dofasco is a leading North American steel producer, with 1997 shipments of more than 4 million tons. Product
lines include hot rolled, cold rolled, galvanized and tinplate flat rolled steels, as well as tubular products.
Dofasco's wide range of steel products is sold to customers in the automotive, construction, steel distribution,
packaging, pipe and tube, manufacturing and appliance industries.
DOFASCO INC.
Consolidated Statements of Income
(Unaudited)
-------------------------------------------------------------------------
Three Months Nine Months
Ended Sept. 30 Ended Sept. 30
(Dollars in millions except
per share amounts) 1998 1997 1998 1997
-------------------------------------------------------------------------
Sales $ 746.7 $ 743.6 $ 2,266.2 $ 2,257.5
-------------------------------------------------------------------------
Cost of sales 587.1 596.6 1,809.0 1,802.2
Depreciation 61.7 63.0 187.3 188.9
----------------------------------------
648.8 659.6 1,996.3 1,991.1
-------------------------------------------------------------------------
Operating income 97.9 84.0 269.9 266.4
Interest on long term debt (17.1) (18.9) (52.9) (57.2)
Interest and other income 3.0 2.2 17.4 18.4
----------------------------------------
Income before income taxes 83.8 67.3 234.4 227.6
Income tax expense (34.5) (23.5) (89.4) (77.5)
----------------------------------------
49.3 43.8 145.0 150.1
Minority interest .2 - .2 -
----------------------------------------
Net income 49.5 43.8 145.2 150.1
Preferred share dividends (.2) (.2) (.5) (11.3)
-------------------------------------------------------------------------
Net income attributable to
common shares $ 49.3 $ 43.6 $ 144.7 $ 138.8
-------------------------------------------------------------------------
Earnings per common share $ .57 $ .51 $ 1.68 $ 1.62
Raw steel production and
purchased semi-finished
steel processed (net tons 000's) 1,262 1,182 3,780 3,406
Steel shipments (net tons 000's) 989 1,010 3,043 3,028
--------------------------------------------------
DOFASCO INC.
Consolidated Balance Sheets
(Unaudited)
--------------------------------------------------
As at September 30
(Dollars in millions) 1998 1997
--------------------------------------------------
Current assets:
Cash and short term
investments $ 181.7 $ 162.1
Accounts receivable 432.7 421.4
Income and other taxes
recoverable - .3
Inventories 815.1 712.1
Deferred income taxes 7.6 7.5
-----------------------
1,437.1 1,303.4
-----------------------
Fixed assets 2,026.7 2,060.6
Investments and other
assets 53.3 65.7
-----------------------
2,080.0 2,126.3
--------------------------------------------------
Total assets $ 3,517.1 $ 3,429.7
--------------------------------------------------
Current liabilities:
Bank borrowings $ 45.1 $ 36.4
Accounts payable and
accrued charges 393.1 373.5
Income and other taxes
payable 14.7 -
Dividends payable 21.6 21.6
Current requirements
on long term debt 98.8 78.4
-----------------------
573.3 509.9
-----------------------
Long term liabilities:
Long term debt 628.5 720.3
Accruals for:
Relining blast furnaces
and other 18.9 5.7
Pension and other post-
employment benefits 143.1 158.8
-----------------------
790.5 884.8
-----------------------
Deferred income taxes 301.2 301.2
-----------------------
Minority interest 19.9 -
-----------------------
Shareholders' equity:
Preferred shares 12.7 12.9
Common shares 906.3 907.7
Retained earnings 913.2 813.2
-----------------------
1,832.2 1,733.8
--------------------------------------------------
Total liabilities and
shareholders' equity $ 3,517.1 $ 3,429.7
--------------------------------------------------
DOFASCO INC.
Consolidated Statements of Cash Flows
(Unaudited)
-------------------------------------------------------------------------
Three Months Nine Months
Ended Sept. 30 Ended Sept. 30
(Dollars in millions) 1998 1997 1998 1997
-------------------------------------------------------------------------
Cash derived from (used for)
operations:
Net income and charges not
involving cash outlays $ 114.8 $ 103.3 $ 332.6 $ 326.3
Changes in operating
working capital (40.7) (27.7) (72.5) (106.6)
----------------------------------------
74.1 75.6 260.1 219.7
-------------------------------------------------------------------------
Cash used for (derived from)
investment activities:
New facilities 60.9 26.0 163.7 89.5
Increase (decrease)
in investments .2 .1 (28.1) (1.1)
Net proceeds from sale of
ownership interest in Ferrum Inc. - - - (46.1)
----------------------------------------
61.1 26.1 135.6 42.3
-------------------------------------------------------------------------
Dividends paid 21.6 21.6 64.9 81.9
----------------------------------------
Cash derived from (used for)
financing activities:
Decrease in long term debt (16.2) (18.4) (72.4) (47.5)
Equity contribution by
minority interest 9.5 - 20.1 -
Redemption of preferred shares (.2) - (.2) (318.1)
Common shares issued - 2.5 .7 7.3
Common shares purchased (3.8) - (3.8) -
----------------------------------------
(10.7) (15.9) (55.6) (358.3)
-------------------------------------------------------------------------
Increase (decrease) in cash (19.3) 12.0 4.0 (262.8)
Cash and short term
investments less short
term bank borrowings:
Balance at beginning of period 155.9 113.7 132.6 388.5
----------------------------------------
Balance at September 30 $ 136.6 $ 125.7 $ 136.6 $ 125.7
-------------------------------------------------------------------------
- SUPPLEMENTARY INFORMATION -
Summary of Quarterly Gross Income (Unaudited) Dofasco Inc.
-------------------------------------------------------------------------
(in millions except shipments and per ton amounts)
--------------------------------
1998 1997
--------------------------------
Third Second Third
Quarter Quarter Quarter
------------------------------------------------------------------------
Sales
Quebec Cartier Mining $ 69.3 $ 83.1 $ 78.9
Gallatin 43.8 60.0 58.7
Steel Operations(x) 657.0 660.1 652.3
Intercompany Adjustments (23.4) (61.9) (46.3)
------------------------------------------------------------------------
Consolidated Sales $ 746.7 $ 741.3 $ 743.6
------------------------------------------------------------------------
------------------------------------------------------------------------
Cost of Sales
Quebec Cartier Mining $ 52.1 $ 61.1 $ 60.1
Gallatin 51.4 55.5 53.6
Steel Operations(x) 509.6 524.9 525.8
Intercompany Adjustments (26.0) (59.3) (42.9)
------------------------------------------------------------------------
Consolidated Cost of Sales $ 587.1 $ 582.2 $ 596.6
------------------------------------------------------------------------
------------------------------------------------------------------------
Gross Income
Quebec Cartier Mining $ 17.2 $ 22.0 $ 18.8
Gallatin (7.6) 4.5 5.1
Steel Operations(x) 147.4 135.2 126.5
Intercompany Adjustments 2.6 (2.6) (3.4)
------------------------------------------------------------------------
Consolidated Gross Income $ 159.6 $ 159.1 $ 147.0
------------------------------------------------------------------------
------------------------------------------------------------------------
Consolidated Depreciation $ 61.7 $ 65.6 $ 63.0
------------------------------------------------------------------------
Consolidated Operating Income $ 97.9 $ 93.5 $ 84.0
------------------------------------------------------------------------
------------------------------------------------------------------------
------------------------------------------------------------------------
Shipments
QCM Iron Ore (000's tonnes)(xx) 1,811 1,956 2,156
---------------------------------
---------------------------------
Flat Rolled and Tube
Gallatin (000's net tons)(xx) 98 132 134
Hamilton operations (000's net tons) 897 883 876
Less: Intercorporate (000's net tons) 6 9 -
------------------------------------------------------------------------
Total Flat Rolled and Tube 989 1,006 1,010
------------------------------------------------------------------------
Sales Per Ton
Quebec Cartier Mining $ 38 $ 42 $ 37
Gallatin $ 444 $ 455 $ 438
Steel Operations(x) $ 732 $ 748 $ 745
Gross Income Per Ton
Quebec Cartier Mining $ 9 $ 11 $ 9
Gallatin $ (78) $ 35 $ 38
Steel Operations(x) $ 164 $ 154 $ 144
------------------------------------------------------------------------
(x) Steel Operations include Hamilton operations, Dofasco USA and
Dofasco's share of Baycoat, DNN, DoSol Galva, Sorevco and Wabush.
Ferrum was included in this group prior to its sale on April 25,
1997.
(xx) Represents Dofasco's 50% share.
SOURCE: Dofasco Inc. |
