Sault steelmaker says it has completed the final stages of commissioning the first phase of a modernization of its troubled plate mill
Algoma Steel Group Inc. shipped 435,202 tons of steel in the second quarter of 2023, down 25.9 percent from 587,340 tons in the same period last year.
“The year-over-year decline in shipments was largely due to previously announced delays in the rollout of plate mill modernization and production shortfalls at our direct tape production complex (DSPC) related to temporary labor availability,” the company said in its release. market close on Monday.
This and other less-than-stellar numbers did not come as a surprise.
Like SooToday In late August, it was reported that a $120 million modernization upgrade at the Algoma board plant has been months behind schedule, hampered by technological gremlins.
The delay was one reason for August’s 11.9 percent drop in first-quarter deliveries: 537,524 tons compared to 610,057 tons in the same period last year.
Rajat Marwah, Algoma’s chief financial officer, warned at the time that future deliveries in the second quarter of the financial year would be similarly affected.
On Monday night, the company reported second-quarter revenue of $599.2 million, down 40.7 percent from $1.01 billion a year earlier.
Steel turnover was 551.5 million dollars, a decrease of 41.1 percent.
Revenue per ton of steel sold was $1,377, which is 19.9 percent less than $1,720.
The Algoma plate mill is the only Canadian manufacturer of discrete plate steel – the product is used for the manufacture of Royal Canadian Navy warships (HMCS Toronto and HMCS Halifax), bridges (Champlain Bridge, Bluewater Bridge), buildings (Pearson International Airport, Rogers Center). , GFL Memorial Gardens) and wind turbines across the province.
Our local sheet mill is actually a combination mill that produces both strip steel and sheet.
Other takeaways from Algoma’s Monday night announcement:
- The group’s turnover in the last quarter was 599.2 million dollars, compared to 1.01 billion dollars in the previous year’s quarter
- consolidated operating profit was $5.6 million compared to $402.1 million in the prior year quarter
- net income was $87.2 million, or $0.36 per diluted share, compared to $288.2 million, or $4.02 per diluted share, in the prior-year quarter.
- adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, which is considered an important indicator of operating results and profitability) was $82.7 million and the adjusted EBITDA margin was 13.8 percent, compared to $430.6 million and 42.6 percent in the year-ago quarter.
- The average realized steel price excluding freight and non-steel income was $1,266 per ton, down 20.6 percent from $1,594 per ton in the year-ago quarter
- price per ton of steel products sold was $1,033, which is 20.7 percent higher than $857 in the prior year quarter. This was primarily due to higher production costs associated with the procurement of third-party metallurgical coke, natural gas, alloys and scrap.
“As previously reported, the second quarter of the fiscal year included a number of operational challenges that negatively impacted our results while we worked through the uncertainty of steel pricing,” said Michael Garcia, CEO of Algoma.
“We are focused on getting through those transitions to return our facilities to full operational capability. We estimate the operational challenges to have a $130 million financial impact on adjusted EBITDA, approximately 60 percent of which was incurred in the second fiscal year and the balance will impact the third fiscal year,” Garcia said.
“We continue to advance our transformative electric arc furnace project, which remains on time and on budget, and are nearing completion of the final stages of Phase 1 of the plate mill modernization.”
“Despite near-term pricing challenges, we remain focused on improving operational efficiency and disciplined execution to drive long-term value creation for all our stakeholders,” Garcia said.
The year-over-year decline in operating income was primarily due to lower selling prices for steel and higher costs, Garcia added, including replacing internally produced coke with purchased coke following a conveyor fire and higher purchase prices for key inputs such as metallurgical coke, natural gas, alloys and scrap.
Net profit for the second quarter was 87.2 million dollars, compared to 288.2 million dollars in the corresponding period of the previous year.
Algoma said its $700 million electric arc furnace project is “progressing as planned” and will take two years.
Algoma’s board of directors declared a regular quarterly dividend of US$0.05 for each outstanding share of common stock, payable on December 30, 2022 to holders of the company’s common stock as of the business ended on November 30, 2022.
“Today, Algoma is on a journey of transformation by investing in people and processes, optimizing and modernizing to ensure a sustainable future,” the company said in a Monday evening release.
“Our customer focus, our growing ability and our courage to meet the industry’s challenges make us a strong partner in the steel industry.”
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