IPSCO announces record '06 earnings

North American steel pipe manufacturer and fabricator IPSCO Inc. this week announced record financial results achieved in the fiscal year of 2006. For the full year, the company posted a record net income of $643.1 million compared to $585.8 million in 2005 and net sales of $3.79 billion compared to $3.03 billion in 2005. The increased earnings are primarily due to higher sales volumes and higher selling prices for its products. "We are pleased to report IPSCO's fifth consecutive year of record sales and production levels. Our challenge in 2006 was to improve on the record financial results achieved in 2005. Our employees and facilities responded with another record setting performance where we were able to increase earnings per share by 12 percent over our previous record," said David Sutherland, President and Chief Executive Officer. The company also reported that its fourth quarter net income fell 18 percent from the previous year due to higher costs. The company's net income in Q4 2006 was $139 million, compared to $170.2 million in Q4 2005. Net sales in Q4 2006 increased to $982.3 million, up 15 percent from $852.2 million in Q4 2005. The increase in sales can be explained by the eight percent year-on-year increase in the company's average product price, and a seven percent year-on-year increase in shipments. However, the gross margin decreased to 26 percent from 30 percent due to higher amortization costs, maintenance outages and related expenses. Looking towards the first quarter, the company predicts that the market for its tubular and plate products will remain strong though first quarter margins may be compressed by higher scrap costs and continued inventory reduction. IPSCO is one of the world's leading producers of steel plate and pipe with operations in 25 geographic locations across the US and Canada. In December 2006, IPSCO acquired NS Group, thus further expanding IPSCO's US market presence by offering seamless and welded oilfield tubular goods.