Ipsco Inc. announced net income of $134 million on sales of $705 million for the third quarter of 2005.

Third Quarter Results—Net income of $134 million compares to 2004 third quarter net income of $144 million. Diluted earnings per share of $2.77 were $0.01 per share more than the third quarter of 2004 and $0.21 higher than the prior quarter.

Several events significantly impacted Algoma’s net income in the quarter, including a 5% strengthening of the Canadian dollar against the U.S. dollar. The subsequent foreign exchange gain on the translation of cumulative inter-company obligations incurred to fund stock buyback and debt redemption efforts contributed $18.1 million to pretax earnings ($0.24 per diluted share) for the quarter. Outage expenses negatively impacted pretax earnings by $10.4 million ($0.13 per diluted share). The change in the effective tax rate from 36% to 38% in the third quarter reduced net income by $4.6 million ($0.10 per diluted share).

Sales of $705 million reflect an increase of 10% over the same quarter last year and 6% over the prior quarter. Ipsco's favorable sales performance was driven by record energy tubular sales volumes partially offset by declines in steel mill product sales related to a planned maintenance outage at the Montpelier Steelworks and unplanned outages at the Mobile Steelworks due to Hurricanes Dennis and Katrina.

Income before tax was $216 million, 9% higher than the third quarter of 2004 and 1% higher than the prior quarter. The tax rate was 38% compared to an unusually low rate of 28% in the prior year.

Total shipments were 848,000 tons, virtually flat compared to last year but 44,000 tons greater than the prior quarter due to record energy tubular shipments of 216,000 tons and large diameter pipe shipments of 45,000 tons. Energy tubular shipments increased 46% and 39% respectively over last year and the prior quarter. Ipsco's average third quarter product price was $832 per ton, inclusive of surcharge, comparable to $760 per ton a year ago and $830 in the second quarter. The impact of higher energy and large diameter pipe shipments offset a decline in steel mill product pricing.

Comments—"Ipsco withstood the impact of planned and unplanned outages at our U.S. steelworks as well as a temporary decline in demand from service centers early in the quarter. Our third quarter operating income of $235 per ton remains among the highest in the industry," said David Sutherland, President and CEO.

"We are well positioned to take advantage of strong end user demand for our steel mill products and anticipated record activity in the energy tubular sector in the fourth quarter. As mentioned last quarter, large diameter pipe shipments in the fourth quarter are expected to increase significantly. We anticipate our shipment volumes for the fourth quarter will increase in all of these product lines."

During the quarter ended September 30, 2005, the company repurchased 258,500 shares at an average cost of U.S. $44.73 (CDN $54.69) for a total cost of U.S. $12 million. On October 4, 2005 the company gave notice to the holders of its 7.8% debentures, due December 1, 2006, that it will redeem the outstanding debentures on November 4, 2005 for a total of CDN $106 million, including accrued interest and redemption premium.

Nine Month Results—Through September, 2005 sales totaled a record $2.1 billion, an increase of 27% over the first nine months of 2004. Gross margin of 34% improved from 26% during the same time period of 2004. Steel mill product sales of $1.3 billion increased $257 million from a year earlier. Steel mill average pricing increased $176 per ton, while tons shipped declined 83,000 or 5%. Tubular product sales, inclusive of energy tubular, large diameter pipe and non-energy tubular product lines, increased $188 million from the first nine months of 2004. The average selling price for these products increased $313 per ton while shipments declined 75,000 tons or 9%.

Net income was $414 million ($8.41 per diluted share), which compares to net income of $242 million ($4.49 per diluted share) in 2004. Common shares and equivalents used in the calculation of diluted earnings per share were 49.3 million and 55.4 million for the nine months ended September 30, 2005 and 2004, respectively. 2005 year-to-date diluted earnings per share are $8.41 compared to $4.49 last year.

Outlook—Ipsco believes that end user demand for its steel mill products will remain strong throughout the year and into 2006. Steel mill product orders increased rapidly in September and October due to continued strength in orders from end users, including several large project orders, and also as service centers returned to buying at higher levels. The company’s order books are fully committed for the remainder of the year. All steelworks have successfully completed required annual maintenance programs and are poised to satisfy the increased demand.

Ipsco's North American energy tubular goods shipments are expected to meet or exceed the record levels reached in the third quarter. In addition, large diameter pipe production has increased and will continue through this year and well into 2006 producing for the larger numbers of orders on hand. Fourth quarter large diameter shipments and recognized revenues are anticipated to exceed levels achieved in the third quarter.

Higher costs due to increases in energy, transportation, alloys, and other input costs will result in margin compression in the fourth quarter compared to third quarter results. Foreign exchange fluctuations and their impact on inter-company obligations resulting from funding the debt retirement and the share repurchase program may or may not impact fourth quarter net income and earnings per share.

Excluding the impact of any foreign exchange gains or losses, Ipsco forecasts fourth quarter diluted earnings per share to be in the range of $2.70 to $2.90.

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.