Ipsco Inc. has revised its outlook for the second quarter. Although the company had originally estimated that second quarter earnings per share would meet or exceed $2.75 per diluted share, Ipsco now expects that earnings will be closer to $2.45 per diluted share.

A number of factors have contributed to the revised outlook, including increased pricing pressure in the market for steel products. While the plate market remains strong with end-user demand holding stable, market concerns over flat roll price decreases have resulted in service center customers reducing inventories and delaying purchases of all products. Although pricing declines will largely be offset by scrap price declines, there will be timing differences between the revenue changes and the pass-through of expense declines.

Ipsco's second quarter traditionally is the weakest quarter of the year due to spring break-up in Canada, which significantly affects Canadian tubular sales. Break-up commenced earlier than normal this year and abnormally wet weather has prolonged the break-up period. Strong demand will result in improved sales as field conditions allow.

A six-day unscheduled maintenance shutdown at the Montpelier rolling mill will also negatively impact the quarter. The shutdown resulted in reduced output and an unfavorable mix change as some slab sales replaced higher-value product.

Implementation of a stock buy-back program combined with debt redemptions has produced significant Canadian dollar expenditures resulting in greater exposure to exchange rate fluctuations. Strengthening of the U.S. dollar has resulted in an expectation that the quarter will experience a foreign exchange loss, which for purposes of the revised guidance assumes a $0.10 per diluted share reduction in profit, based on current exchange rates.

"We felt it was important that stockholders understand changes occurring in the quarter. However, the fundamentals of the market remain strong for both our plate and tubular business and Ipsco continues to be very well positioned going forward," said David Sutherland, President and CEO of Ipsco Inc.

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.