Novamerican Steel Inc. announced net income of $10.1 million* on sales of $206.3 million for the first quarter ended February 26, 2005. This was the 29th consecutive profitable quarter for the company.

Net income of $10.1 million ($1.03 per share or $0.98 diluted) reflects an increase of $3.1 million (43.5%) compared to $7.0 million ($0.73 per share) for the first quarter of 2004. Sales, $206.3 million, reflect an increase of $58.9 million (40.0%) over $147.4 million for the first quarter of 2004.

Tons sold and processed increased by 12,177 tons (2.8%) to 448,688 tons from 436,511 in the first quarter of 2004. The gross margin, 21.0%, compares to 25.6% for the first quarter of 2004.

Operations—The first quarter, historically the company's weakest quarter, was successful despite lower steel prices that occurred due to seasonally weak demand combined with a surge of imports that arrived in the fourth quarter of 2004. In spite of these conditions, management believes that the quarterly results indicate the company's ability to generate profit when margins are under pressure.

Outlook—Management remains optimistic that the high levels of steel industry inventories, mostly created by a surge in fourth quarter imports, should abate sometime in the second quarter. The company’s business in manufacturing sectors, such as automotive, construction, transportation and heavy equipment, is continuing to show good demand heading into the second quarter.

*NOTE: All amounts are in U.S. dollars.

Based in Montreal, Canada, Novamerican Steel Inc. has twelve operating locations in Canada and eleven operating locations in the United States. The company processes and distributes carbon steel, stainless steel and aluminum products, including carbon steel tubing for structural and automotive markets.