Novamerican reports net income down 31.9 percent

Novamerican reports net income down 31.9 percent

Despite difficult market conditions, Montreal-based Novamerican Steel Inc., a metals processor and distributor with 23 operating locations in Canada and the U.S., reported its 30th consecutive profitable quarter, June 29. However, the gross margin for the second quarter 2005 decreased to 19.7 percent from 29.8 percent in 2004. Net income for the second quarter decreased by $11.9 million, or 57.8 percent to $8.7 million, or $0.84 per diluted share, versus $20.6 million, or $2.07 per diluted share, for the same period in 2004. Sales for the second quarter increased by $13.7 million, or 6.7 percent, to $218.0 million from $204.3 million for the same period in 2004. Tons sold were down from the same period last year due mostly to the absence of customer hedge buying which characterized the first six months of 2004. Lead times at North American steel mills remained short and many customers reduced inventories to minimum levels in an environment of declining prices. Novamerican's second quarter proved to be more difficult than anticipated because of continued downward price pressure which adversely affected margins. Novamerican specializes in carbon steel, stainless steel and aluminum products which it markets to various steel consuming sectors including automotive, construction, and heavy equipment manufacturers. They also act as an intermediary between primary metal producers and manufacturers