Canadian flat-rolled steelmaker Algoma Steel Group Inc. guided toward lower earnings in its fiscal 2024 third quarter, citing the United Auto Workers (UAW) strike and lower steel prices last fall.
“Due to the lagging nature of our order book, UAW strike-driven soft demand and pricing in the previous quarter and through October impacted our fiscal third-quarter results,” company CEO Michael Garcia said in a statement released with earnings guidance on Wednesday.
All told, the Sault Ste. Marie, Ontario-based company expects third quarter adjusted Ebitda to be anywhere from breakeven to a loss of CAD $10 million (USD $7.5 million) on shipments of approximately 515,000 tons.
Both figures are significantly lower than the CAD $81 million in adjusted Ebitda that Algoma posted in its fiscal second quarter on shipments of 548,998 tons.
Garcia said he expects results to improve in the company’s fiscal fourth quarter.
“In October, steel pricing began to recover in anticipation of a strike settlement, and since the strike’s end pricing has continued to improve, currently sitting near 12-month highs,” Garcia said.
“We expect this pricing strength, coupled with continued solid market fundamentals, to drive significantly improved realized pricing and overall fiscal results starting with our fiscal fourth quarter,” he added.
On the operations side, Algoma placed a “heavy focus” on seasonal maintenance in the third quarter, including a reline of its basic oxygen furnace. The company also remains on track and within budget in its project to convert from integrated steelmaking to EAF steelmaking, Garcia said.
He told SMU in November that construction of two new EAFs should be completed by the end of 2024. The new furnaces are expected to ramp up in 2025.
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