Stelco Surprised by Strength of Second Quarter

Stelco is enjoying an unaccustomed perspective, the view from the catbird’s seat in the North American steel market. The once-troubled Canadian steelmaker reported operating income of $161 million on sales of $711 million (Canadian dollars) for the second quarter as steel shipping volumes increased by 49 percent over the prior-year quarter. Sales were up 67 percent and income was up 544 percent year over year. With its sales primarily in Canada, Stelco stands to benefit from tariffs on imports of steel into the U.S. and Canada, which have boosted steel prices in both countries.

“Our second-quarter results substantially exceeded the high-end of our previously issued guidance range, with adjusted EBITDA of $175 million, representing a 25 percent adjusted EBITDA margin despite incurring approximately $11 million of tariff-related costs,” said Alan Kestenbaum, the company’s executive chairman and CEO. “Our second-quarter performance reflects shipping volume at nearly three million tons annually and an average selling price of $898 per net ton, which is still below current market prices. We achieved this as a direct result of the successful implementation of enhanced shipping logistics including our newly repurposed dock and newly leased railcars that have reduced our dependency on trucks. The sharp improvement in our financial results year-over-year and sequentially reflects the improved efficiency of our operations, continuous efforts to drive down costs, strong demand throughout North America, and higher steel prices.”