Gerdau Ameristeel reports strong 2005 results
Gerdau Ameristeel Corporation has reported that its net income rose to $80.4 million for the December quarter of 2005, compared to $66.4 million or $0.23 per diluted share for the same quarter last year. Year-to-date net income was reported as $295.5 million, on net sales of $3.9 billion for the full year ended December 31, 2005, compared to a net income of $337.7 million on net sales of $3.0 billion for the full year ended December 31, 2004.
In November of 2004, Gerdau Ameristeel acquired four long steel product minimills as well as four downstream facilities, referred to as North Star Steel, from Cargill Incorporated.
In May of 2005, Gerdau Ameristeel halted operations at its Beaumont, Texas mill, a former North Star plant, in order to resolve a labor dispute. This interruption to the labor cycle resulted in a direct fixed cost of $14 million for the year ended December 31, 2005. A final contract has not been concluded with the union representatives, but on December 12, 2005, the mill started to resume normal operations. The cost of idling facilities obviously did not hurt Ameristeel badly, and possibly help to maintain the price level in a sluggish
wire rod market. Several former North Star plants are still operating without a labor contract.
President and CEO, Mario Longhi, commented on 2005 results and for 2006 outlook:
The overall supply and demand picture for our steel products appears reasonably well balanced as we enter 2006, and we expect to see our normal seasonal strengthening of demand as we approach springtime. This should help support good metal spreads. Importantly, our fabricated
rebar backlog is strong in terms of price and volume, and our Gallatin joint venture is fully booked through most of the first quarter. Even with the challenges that our Company and the industry face, we believe our organization is fully prepared to optimize this favorable environment through relentless execution of our core values and business strategies.
When looking to the coming year, Longhi stated, Overall we see the potential to build off of our solid 2005 results, although we still recognize that we work in a cyclical and changing sector with limited forward visibility. With safety at the forefront, we endeavor to maintain an exceptional human resource base, an unparalleled operating and technical knowledge platform, and a strong balance sheet with the flexibility to benefit from a wide range of potential economic scenarios.
Gerdau Ameristeel is recognized as the second largest minimill steel producer in
North America with 8.4 million tons of finished mill products, serving customers primarily in the eastern two-thirds of
North America. The company generally sells products to steel service centers, steel fabricators, and original equipment manufacturers, to be used in a variety of industries.