Dofasco reports net loss for the third quarter 2005
Canada's largest steel producer, Docasco Inc., reported its net sales for the third quarter 2005 rose a meager 1.4 percent from the same period last year due to a decline in spot market pricing as well as the effect of the stronger Canadian dollar.
Net income for the third quarter of 2005 was CA$5.2 million (Canadian), or CA$0.07 per diluted share, compared to the record CA$115.0 million, or CA$1.49 per diluted share, reported in the third quarter of 2004. Year-to-date net income was reported as CA$142.6 million down from CA$280.1 million in the first nine months of last year.
Net sales for the third quarter 2005 were CA$1.1 billion compared to CA$1.08 billion for the same period in 2004. Year-to-date 2005 net sales were CA$3.03 billion compared to CA$3.23 billion for the same period in 2004.
Dofasco president and CEO Don Pether commented on the quarter, “We are disappointed with the results achieved this quarter in Hamilton, which were adversely impacted by difficult business conditions that hit both revenues and costs. On the revenue side, there was a significant decline in spot market pricing and the stronger Canadian dollar negatively impacted both spot market and contract pricing. On the cost side, the premium that we paid for slabs purchased late last year impacted costs in the third quarter by more than CA$40 million over that experienced in the same quarter of 2004. This, along with the high cost of other inputs including
iron ore, coal and energy, including the high cost of electricity in Ontario, also had a significant negative impact.”
Looking forward to the fourth quarter, he said, “Spot prices began to recover in September and we expect further recovery throughout the fourth quarter, which will have a beneficial impact at both Hamilton and Gallatin. However, we expect that this will be mitigated somewhat by
scrap price increases and the stronger Canadian dollar. In addition, the premiums paid on purchased slabs will continue to work their way through inventory in the fourth quarter.”
Dofasco, based in Hamilton, Ontario, produces high-quality flat rolled,
tubular steels and laser-welded blanks for customers in
Canada, the United States, and
Mexico. Dofasco has advanced
manufacturing facilities in Hamilton, Ontario and Gallatin, Kentucky.