Information Regarding IPSCO’s Half Year Result
SSAB’s acquisition of IPSCO Inc. on July 18, 2007 means that IPSCO Inc. will be consolidated in the SSAB Group from that date. IPSCO Inc’s requirement to issue a report on the second quarter 2007 also ceased by this date.
Since Division IPSCO will constitute a substantial part of the consolidated results and assets of SSAB, a summary of IPSCO’s financial information with respect to the first half year 2007 is hereby issued. The summary is made in accordance with the format used by IPSCO Inc. before the acquisition. The financial information is given in USD, in accordance with US GAAP, and has not been reviewed neither by SSAB’s nor IPSCO Inc’s auditors. References to tons in this summary relate to American “short tons”, which equals approximately 907 kilogram.
Comments by John Tulloch, Head of Division IPSCO
IPSCO reports a net income of USD 124.1 million for the second quarter of 2007 compared to USD 156.4 million for the second quarter of 2006 and USD 109.4 million in the first quarter of 2007.
Sales for the quarter were USD 1.06 billion, an increase of 18.2% or USD 162.9 million over the same quarter last year and 2.4% or USD 24.8 million over the prior quarter. Total shipments for the quarter were 1,075,000 tons, an increase of 74,000 tons compared to last year and virtually unchanged from the prior quarter.
Steel mill product shipments of 678,000 tons decreased 3.5% from the second quarter of last year but increased 4.4% over the prior quarter. Tubular shipments of 397,000 tons increased 32.8% over the prior year primarily due to the addition of the tubular volumes from the during 2006 acquired company NSG and a substantial increase in shipments of large diameter pipes. IPSCO’s composite second quarter price of USD 983 per ton was up USD 90 per ton from a year ago and up USD 22 per ton over the prior quarter.
Gross income for the quarter was USD 242.2 million down from USD 261.6 million in the second quarter of last year. The decline in gross income from second quarter last year is due to higher scrap and steel mill production costs, expenses related to a Montpelier reheat furnace maintenance outage, and higher tubular production costs. Selling, general and administrative expenses increased USD 33.5 million primarily due to the amortization of intangibles (USD 14.4 million), higher share based payment expense due to stock price change (USD 6.6 million) and (USD 6.3 million) with respect to transaction costs in connection with the sale of IPSCO.
The second quarter 2007 effective tax rate of 34.0% was lower than the 37.6% in the second quarter of 2006 and higher than the 33.5% in the first quarter this year.
Capital expenditures were USD 57.7 million for the second quarter, up USD 2.4 million from the USD 55.3 million spent in the first quarter.
Cash provided by operating activities was USD 34.4 million in the second quarter and the cash balance at the end of the quarter was USD 209.2 million.
Comments by the President and CEO
- IPSCO’s results for the first half of this year is in line with our expectations, says Olof Faxander, President and CEO of SSAB. Especially, I would like to highlight the increases in sales and the total amount of shipments compared to the same period last year. I am looking forward to working together with the IPSCO division in our new SSAB. IPSCO has modern and effective production facilities and world-class productivity.
A telephone conference with John Tulloch, Head of Division IPSCO, will take place at 10 a.m. Phone no: +46 8 672 8151.