Dofasco Inc. reported consolidated net income of $110.5 million on consolidated sales of $1,061.6 million for the second quarter of 2004. The company credits the strong pricing environment, robust demand and excellent operating performance for its record quarterly results.

Second Quarter Results—Consolidated net income of $110.5 million ($1.45 per share after deducting preferred share dividends) compares to $38.7 million ($0.51 per share) earned in the same quarter last year. Excluding Quebec Cartier Mining (QCM) results, pro forma net income was $33.9 million ($0.45 per share) in the second quarter of 2003. Dofasco disposed of its common shares in QCM on December 31, 2003, and accounts for the remaining preferred share investment on a cost basis.

Results included an $11.6 million reduction of income tax expense due to a favorable adjustment to future U.S. income tax assets, resulting from excellent performance at Gallatin in the first half of the year and expected performance for the remainder of 2004.

"Employees at both our Steel Operations and Gallatin Steel operating segments executed with excellence this quarter to capitalize on favorable steel market conditions, deliver record earnings and to generate value for customers and shareholders," said Don Pether, President and CEO. "Dofasco is very well-positioned for improved results in the third quarter."

Consolidated sales in the second quarter were $1,061.6 million compared to $923.2 million in the same period last year. Steel shipments increased to 1.28 million tons, up 6% from 1.21 million tons a year earlier.

Dofasco's Steel Operations segment, which includes the company's Hamilton operations, reported income before income taxes of $105.1 million compared to $52.9 million in the same quarter last year, reflecting strong pricing and robust steel demand. Shipments from Hamilton were 1.1 million tons compared to 1.02 million tons in second quarter of 2003. Average realized revenue per ton increased by $65 relative to the second quarter of 2003, due to the significant strengthening of the North American steel market. The average cost per ton increased by $42 over the high level experienced in the same quarter of 2003, due primarily to record high scrap prices combined with high raw material and energy costs.

Gallatin Steel posted superb operating results in a record quarter. Dofasco's 50% share of Gallatin Steel's pre-tax income for the quarter increased to $46.5 million from a loss of $0.7 million in the second quarter of 2003. Record U.S. spot market selling prices, continued strong shipments and continued excellent operating performance contributed to this significant improvement. These factors were partially offset by the record high scrap costs and higher prices for energy and alloys. Gallatin Steel's second quarter shipments were 376,000 tons, slightly less than the 385,000 tons shipped in the same period last year.

The company has also welcomed a new member to its Board of Directors. Mr. Brian Robbins, President and CEO of Exco Technologies Limited, joined the Board effective July 1. Mr. Robbins brings experience and knowledge of the automotive products and services industry. Exco is listed on the TSX and is a global supplier of innovative technologies serving the die-cast, extrusion and automotive industries, with operations in Canada, the United States, Mexico and Morocco.

Outlook—Steel Operations' results are expected to continue to improve in the third quarter, driven largely by Hamilton operations. Shipments from Hamilton are expected to remain at strong levels, although lower than the levels shipped in the first two quarters, which were enabled by a drawdown of inventory. Revenue per ton is expected to continue to increase in the third quarter due to previously announced price increases and the raw material surcharge. Partially offsetting the increase in revenue per ton, cost per ton is expected to increase to higher levels in the third quarter, driven by the current record high scrap prices and the high costs of other raw materials.

Gallatin's operating results are expected to continue to improve significantly in the third quarter, reflecting the current robust market demand and higher average spot market selling prices relative to the second quarter. Third quarter shipments are expected to remain at strong levels, similar to those of the first and second quarters.

"Dofasco is very well-positioned for the next quarter and beyond," said Pether. "In Hamilton, we will be renewing the majority of our contract business later this year in what is anticipated to be a strong, sustained pricing environment which will solidify and enhance Dofasco's longer-term performance. Gallatin will continue to benefit from its spot market exposure in this pricing environment, further contributing to Dofasco's financial performance."

Dofasco is a leading North American steel solutions provider. Product lines include hot rolled, cold rolled, galvanized, Extragal^(TM), Galvalume^(TM) and tinplate flat rolled steels, as well as tubular products, laser welded blanks and Zyplex^(TM), a proprietary laminate. Dofasco's wide range of steel products is sold to customers in the automotive, construction, energy, manufacturing, pipe and tube, appliance, packaging and steel distribution industries.