Ipsco Inc. announced net income of $154 million on sales of $746 million for the first quarter of 2005.

The $154 million net income compares to $31 million in last year's corresponding quarter. Basic and diluted earnings per share were $3.10 and $3.05, respectively, compared to $0.65 and $0.57 per share in the first quarter of 2004. Net income declined by $34.4 million compared to the company’s record fourth quarter, largely due to the increase in the effective tax rate from 28% to 36%. Operating income per ton shipped was $288, compared to $69 per ton in the first quarter of 2004.

Sales, $746 million, reflect an increase of $263 million over the first quarter of 2004, and a 4% decrease compared to the company’s record fourth quarter. Revenue reflects significantly higher year-over-year prices in all product lines, partially offset by lower volumes of tubular product shipments.

Shipments amounted to 855,800 tons or 9% less than last year's corresponding quarter. Shipments of discrete plate, cut plate and hot rolled coil, steel mill products, were 618,100 tons, slightly higher than the first quarter of 2004, while tubular shipments were 237,700 tons in the quarter, a decline of 95,200 tons from the corresponding quarter of 2004. In spite of strong demand, unusual and difficult weather conditions in Western Canada during the first quarter impeded drilling activity, resulting in a decline in the shipments of energy tubular products. The non-energy tubular market continued to remain weak. No significant large diameter pipe project shipments occurred in the first quarter of 2005 as had benefited each quarter in 2004.

Ipsco's first quarter pricing continued to increase on a majority of its products compared to the prior quarter, but due to a product mix shift and declining scrap surcharges overall pricing remained essentially flat.

"We are benefiting from being well-positioned in great market niches for this phase of the economic cycle. The plate market has distinguished itself as being robust as capital spending remains strong and tubular sales are benefiting from strong energy markets," said David Sutherland, President and CEO. "We continue to make significant reductions in our debt levels, while also making progress in our previously announced share buyback program, value added growth investments and increasing dividends. We remain committed to looking for opportunities to create and deliver additional shareholder value."

Outlook—Ipsco's key product groups of plate and energy tubular products, with the exception of large diameter pipe, continue to exhibit strong demand and pricing levels. The demand and supply conditions in the plate market have reached a more orderly level where buyers are able to obtain what they require from a variety of sources. The April price increase in plate products has been fully implemented. In addition, the scrap surcharge will increase $27 per ton in May, in accordance with our formula. In the case of tubular products, the second quarter is traditionally Ipsco's seasonally weakest quarter as the weather-related spring break up occurs in Canada affecting energy tubular sales.

Ipsco expects second quarter earnings to meet or exceed $2.75 per diluted share, a more than two-fold increase from the second quarter of 2004, primarily due to higher pricing levels. Compared to the first quarter of 2005, a less favorable product mix is anticipated, combined with some modest pressure on margins. Also the second quarter of 2005 will include $6.5 million in costs related to early extinguishment of debt.

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 steel making 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.