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Dofasco Posts Strong 1st Quarter Results

April 29, 2004 — Dofasco Inc. reported consolidated net income of $54.6 million on consolidated sales of $961.2 million for the first quarter of 2004. Dofasco attributes its earnings to record shipments, higher spot market selling prices and excellent operating performance.

Consolidated net income of $54.6 million ($0.71 per share) compare to $46.9 million ($0.62 per share) earned in the same quarter last year. Excluding Quebec Cartier Mining (QCM) results, pro forma net income was $51.3 million ($0.68 per share) in the first quarter of 2003. Dofasco disposed of its common shares in QCM on December 31, 2003, and now accounts for its remaining preferred share investment on a cost basis.

Consolidated sales of $961.2 million compare to $902.9 million in the same period last year. Steel shipments increased to 1.32 million tons, up 12% from 1.18 million tons a year earlier.

"Once again, Dofasco people implemented our strategy with excellence to deliver consistent and impressive results and generate value for shareholders," said Don Pether, President and CEO. "This quarter's performance is proof of the continuing ability of our people and our strategy to succeed in a rapidly changing market environment. Dofasco is well-positioned to benefit from improving market conditions."

Dofasco's Steel Operations segment, which includes the company's Hamilton operations, reported income before income taxes of $74.3 million compared to $73.0 million in the same quarter last year. Reflecting strong steel demand, shipments from Hamilton were 1.13 million tons compared to 1.01 million tons in first quarter of 2003. Average revenue per ton declined by $20 due primarily to the significant appreciation of the Canadian dollar since early last year. The average cost per ton increased by $1 over the high level experienced in the same period in 2003. In the first quarter of 2003, the average cost per ton was significantly impacted by the use of additional higher-cost purchased slabs due to the replacement of a steelmaking facility vessel. In the first quarter of 2004, the average cost per ton was high primarily due to record high scrap prices, and high raw material and energy costs. A significant portion of these higher input costs remained in inventory at the end of the quarter.

Dofasco's 50% share of Gallatin Steel's pre-tax income for the quarter increased to $10.5 million from $3.0 million in the first quarter of 2003. The increase was due to higher U.S. spot market selling prices, increased shipments and continued excellent operating performance, partially offset by record-level scrap costs and a weaker U.S. dollar. Gallatin Steel's first quarter shipments remained strong at 383,000 tons—12% higher than the 341,000 tons shipped in the same period last year.

"Looking forward, Dofasco is well positioned to achieve improving results," said Pether. "In Hamilton, approximately two-thirds of our sales consist of contract business, most of which we will be renewing later in 2004. If market fundamentals remain strong as we renew these contracts, it is reasonable to anticipate significant and sustained revenue growth that will further enhance Dofasco's competitive positioning. Gallatin Steel's strong first-quarter results are expected to improve significantly in the second quarter driven by higher spot market selling prices, a low cost structure and continued strong shipments."

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.

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