October 11, 2008

Algoma reports USD 17.5 million profit in 2007

Algoma Steel Inc has declared its fifth consecutive year end profit, but a modest one as compared to the preceding three monster years of profitability. For the October to December 2007 period the company announced a net income of USD 21.3 million, bringing 12 month profit to USD 17.5 million. That's down more than USD 200 million from 2006.

It comes after an unprecedented run of profitability, USD 344 million in 2004, followed by USD 240 million in 2005 and USD 222 million in 2006. Algoma Acquisition Corp, a subsidiary of India's Essar Steel Holdings Ltd acquired Algoma in a USD 1.89 billion cash takeover early last summer.

Officials at ASI stress financial information of the new and old companies may not be comparable as a result of a revaluation of assets and liabilities to fair market value at the date of acquisition.

Official said that the year end numbers were influenced by No 7 blast furnace, the company's lone operational blast furnace, being out of service for nearly two thirds of the third quarter, 52 of 92 days, three weeks longer than expected for a scheduled reline. That meant no liquid iron was available throughout the steelworks.

It says that the company lost USD 30.8 million in Q3, its first red ink in nearly four years. It further added that another contributor to a weaker bottom line was USD 23.6 million in change of ownership transaction costs.

Official said that Q4 numbers include USD 514.8 million worth of sales, the best three month financial performance of 2007 and 759,000 tons of shipments, the highest quarterly shipment tonnage in at least two years.