Novamerican Steel Inc. announced net income of $4.3 million* on net sales of $191.2 million for the third quarter ended August 27, 2005.

Third Quarter Results—Despite difficult market conditions, the company achieved its 31st consecutive profitable quarter. Net income of $4.3 million ($0.42 per share or $0.41 per share after dilution) reflects a decrease of $17.4 million (80.3%) compared to $21.6 million ($2.23 per share or $2.17 after dilution) for the same period in 2004. Sales of $191.2 million reflect a decrease of $10.6 million (5.2%) compared to $201.7 million for the same period in 2004.

Tons sold and processed increased by 27,113 tons (6.4%) to 454,000 tons from 426,887 in the third quarter of 2004. While tons sold decreased by 2,426 tons (1.1%), tons processed increased by 29,539 tons (14.4%) compared with the third quarter of 2004. The gross margin decreased to 17.8% from 30.1% in 2004.

Nine Month Results—Net income of $23.0 million ($2.32 per share or $2.24 per share after dilution) reflects a decrease of $26.2 million (53.2%) compared to $49.2 million ($5.07 per share or $4.97 per share after dilution) for the first nine months of 2004. Sales of $615.5 million reflect an increase of $62.0 million (11.2%) compared to $553.5 million in 2004.

Tons sold and processed increased by 43,514 tons (3.2%) to 1,392,058 tons from 1,348,544 tons in 2004. While tons sold decreased by 46,986 tons (6.7%), tons processed increased by 90,500 tons (14.0%) compared with the same period in 2004. The gross margin decreased to 19.5% from 28.8% in 2004.

Operations—The decline in steel prices, which commenced prior to the end of 2004, continued through most of the company's third quarter resulting in depressed margins and reduced profits, relative to the second quarter of 2005. However, while demand was weak in the month of June, the company's business activity improved in July and strengthened in August.

Outlook—Management believes that the bottom of the current cycle, with respect to steel prices, was reached in July when industry wide inventories were finally reduced to unsustainably low levels relative to end user demand. Management expects strong market conditions in the fourth quarter as the combination of inventory replenishment, rising steel prices and steady demand should lead to substantially improved business conditions.

*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 that process and distribute carbon steel, stainless steel and aluminum products, including carbon steel tubing for structural and automotive markets.