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Essar Steel Algoma Reports 2nd Quarter Results

11/11/2010 - Essar Steel Algoma reported a net loss of $39.6 million on sales of $469.9 million for the quarter ended September 30, 2010.

Essar Steel Algoma reported a net loss of $39.6 million on sales of $469.9 million for the quarter ended September 30, 2010.

In an unrelated release, Essar Steel Algoma also announced the retirement of Chief Executive Officer Armando Plastino, effective this November 30.
 
The company’s Board has appointed a Management Committee to assume accountability for day-to-day operations until Plastino’s replacement is announced.
The $39.6 million loss represents an improvement from the net loss of $120.8 million for the comparable quarter ended September 30, 2009. The company also reported EBITDA earnings of $51.5 million (excluding exceptional items), which compares to EBITDA earnings of $27.2 million for year-ago second quarter. The company said the improved results were due primarily to higher selling prices partially offset by higher cost of sales. 

Shipments were 617,911 tons, representing a 5.8% decrease from the year-ago second quarter. Sales for the quarter were $469.9 million.  
 
The company noted that the parties in its ongoing pricing dispute with iron ore supplier Cleveland Cliffs are proceeding to an arbitration hearing. The company said it expects the arbitration will determine a pricing formula that when calculable will render a price for iron ore for the 2010 calendar year. The company also expects the calculation to have an adverse effect on the reported cost of sales, EBITDA, income from operations, net income and liquidity. 
 
The company said that it had made no provisions in respect of these matters in the financial statements, as neither the possible outcome of the arbitration nor the amount of any possible settlement can be reasonably estimated at this time.
 
Based in Sault Ste. Marie, Ont., Essar Steel Algoma Inc. is a member of the Essar Group. As a fully integrated steel producer, the company derives its revenues primarily from the manufacture and sale of hot and cold rolled steel products including sheet and plate.