Dofasco expects lower-than-estimated Q3 earnings

Dofasco expects lower-than-estimated Q3 earnings

Soft steel prices and a strong Canadian dollar have minimized steelmaker Dofasco Inc’s revenue at its core Hamilton facility, the company announced Wednesday (September 14). The company is warning that third-quarter earnings will be “significantly lower” than analysts’ estimates, resulting in a small net loss for the company’s Hamilton operations. Dofasco first predicted low third quarter earnings last month after its posted second quarter earnings revealed a far lower-than-expected profit of CA$59.2 million (Canadian), or CA$0.77 cents per share, down from CA$110.5 million, or CA$1.44 per share, a year earlier. This week, analyst forecasts for the third quarter ranged from CA$0.54 to CA$1.21 per share Dofasco does not expect its third quarter earnings to meet these expectations. The company said Wednesday that its customers are still using steel inventories from last year rather than placing new orders. The steelmaker’s cost per ton produced also increased during the quarter because of lower production levels and because it is using steel slabs purchased when prices were at their peak. Add in a high Canadian dollar, rising costs for scrap and natural gas, and production disruptions, and all profits are gone. Despite the company’s grim forecast, analysts expect Dofasco, as well as other steelmakers, to bounce back eventually. Dofasco’s third quarter results will be released Monday, October 31.