Ipsco Inc. announced net income was $190 million on record sales of $780 million for the fourth quarter and net income of $439 million on record sales of $2.5 billion for the full year 2004.

Fourth Quarter Results—Net income of $190 million and net income attributable to common shareholders of $189 million ($3.85 per basic share and $3.71 per diluted share) compare to $9.7 million ($0.20 per both basic and diluted share, respectively) reported last year. Operating income per ton was $299.

Sales, a record $780 million, represent $398 million increase compared to $382 million in the fourth quarter of 2003. Sales volume was 895,600 tons. Quarterly sales of steel mill products were 624,200 tons, 3% less than in the fourth quarter of 2003. Tubular product sales of 271,400 tons reflect a 7% increase over the year-earlier period. Total tons shipped were flat compared to the same quarter last year.

Results for the fourth quarter were very strong. Several factors enhanced the already positive operating performance during the quarter, including an unusually low tax rate of 27.6% primarily related to the reversal of the tax valuation allowance that had been established in periods prior to 2004, large diameter pipe revenue recognition, and favorable flow-through timing of scrap consumption and surcharge receipts. The company has previously noted that its scrap and surcharge is profit neutral, but the flow of revenue and cost varies as scrap prices fluctuate within periods.

Full Year Results—Net income of $439 million compares to $17 million last year, while net income attributable to common shareholders of $431 million compares to $5 million in 2003. Basic and diluted earnings per share were $8.92 and $8.24, respectively, compared to $0.09 per share for both basic and diluted earnings per share in 2003. Record sales of $2.5 billion represent an increase of $1.2 billion over 2003. Operating income per ton shipped was $184, compared to $18 per ton in 2003.

Ipsco's record revenue for 2004 resulted from significantly higher year-over-year base prices in all product lines, higher volumes of steel mill and tubular product shipments, and raw material surcharges. Higher sales of energy tubular products resulted from increased drilling activity in Canada and the United States and the completion of two major large-diameter projects, Cheyenne Plains and the East Texas Expansion. The stronger Canadian dollar also increased reported sales by $57.5 million over 2003.

For the eighth consecutive year Ipsco shipped record tonnage, amounting to 3,561,000 tons (13.5%) more than a year earlier. Shipments of 2,432,700 tons of discrete plate, cut plate and hot rolled coil (steel mill products) were 11% higher than a year earlier. About 32% (1,128,300 tons) of Ipsco's total 2004 shipments were tubular products, up from 30% in 2003, and 20% higher than last year's tubular shipments.

Management Comments—"We are pleased to report Ipsco's third consecutive year of record sales and production levels. We were able to take advantage of favorable market conditions including strong pricing and demand for steel," said David Sutherland, President and CEO. "Our balanced product mix combined with good operating results from our low cost structure continues to produce operating margins per ton that are among the best in class. We have made significant reductions in our debt levels and dilution to our common shareholders, while at the same time making value added growth investments and increasing dividends. Clearly this was a superb year and the Ipsco team responded very well to the opportunity that the market provided. While Ipsco employees were faced with dramatically changing raw material and operating demands, adverse weather including the hurricane in Alabama and new product offerings, these challenges were met while also setting new safety records for the company. 2004 will stand as a milestone year for the company, with new financial strength going forward. We will continue looking for opportunities to create and deliver additional shareholder value."

In October the company doubled its quarterly cash dividend on common shares from Canadian $0.05 to $0.10 per share. Additionally, Ipsco redeemed the $100 million subordinated notes in November.

"We enter 2005 well positioned to capitalize on the continued steady demand that exists for our products," continued Sutherland. "The fundamentals of our business, pricing and demand all remain strong. We remain on track with our performance expectations."

Outlook—Demand for Ipsco's key product groups of plate and energy tubular products, with the exception of large diameter pipe, continue to exhibit steady demand and pricing levels. Ipsco is exiting 2004 with prices at a stable level and this momentum bodes well going into 2005. The company expects first quarter earnings to meet or exceed $2.75 per share.

The fourth quarter of 2004 included several favorable factors as compared to expectations for the first quarter of 2005, the most significant of which was the tax rate. Ipsco’s estimate for the first quarter of 2005 includes several factors, which will impact earnings, the primary factor being a higher estimated effective tax rate of 37%. In addition, the timing of surcharge realization of the fourth quarter will be reversed if steady scrap price reductions continue as expected. Besides the scrap and surcharge flow though, other factors include differences in product mix related to large-diameter shipments in the fourth quarter and increased expenses for the completed Mobile outage in the first quarter estimate.

"While these factors will cause the estimated first quarter's performance to be less than our fourth quarter results, the fundamentals of our business remain steady. With the January steel price increases fully implemented and continued strength in first quarter bookings, IPSCO is off to a good start in 2005," concluded Sutherland.

Ipsco continues to expect it will generate substantial cash flow during 2005. In addition to making necessary capital investments to grow and improve the business and evaluating potential acquisitions, the company is committed to delivering additional value to shareholders through its quarterly dividend. In this respect, the Board of Directors has authorized an increase in the quarterly dividend from Canadian $0.10 to $0.12. This increase is on top of a doubling of the dividend from $0.05 announced in October of 2004.

Ipsco operates steel mills at three locations and pipe mills at six locations in the United States and Canada. As a low cost North American steel producer, Ipsco has a combined annual steelmaking capacity of 3,500,000 tons. The company's tubular facilities produce a wide range of tubular products including line pipe, oil and gas well casing and tubing, standard pipe and hollow structurals. Steel can also be further processed at Ipsco's five temper leveling and coil processing facilities.