Stelco Inc. reported a net loss of $42 million on net sales revenue of $725 million for the quarter and net earnings of $47 million on sales revenue of $2.462 billion for the nine months ended September 30, 2005.

Third Quarter Results—The $42 million net loss ($0.41 per common share) compares to net earnings of $58 million ($0.57 per common share) for the third quarter of 2004 and net earnings of $40 million ($.39 per share) for the previous quarter. Net sales revenue, $725 million, compares to $897 million for the same period last year.

Results, when compared to third quarter 2004, reflect lower spot market selling prices, decreased shipments, reduced production levels, higher reorganization costs and higher energy costs, partly offset by higher income tax recoveries and lower scrap and coke costs. Also included is a loss resulting from the sale of substantially all of the assets of Stelpipe Ltd., more than offset by income tax recoveries recognized, related to Stelpipe net operating loss carry forwards.

Stelco produced 1,107,000 net tons of semi-finished steel, which compares to 1,385,000 net tons produced in the third quarter of 2004. Shipments totaled 1,067,000 net tons compared to 1,143,000 net tons shipped during the third quarter of last year.

Nine-Month Results—The $47 million net earnings ($0.46 per common share) compare to net earnings of $63 million ($0.62 per common share) for the same period in 2004. Sales revenue, $2.462 billion, compares to $2.446 billion recorded during the first nine months of 2004.

Production totaled 3,660,000 net tons, which compares to 4,078,000 net tons produced during the same period in 2004. Shipments totaled 3,306,000 net tons compared to 3,564,000 net tons shipped during the first nine months of 2004.

At September 30, 2005, Stelco's consolidated net liquidity position was $307 million, consisting of $36 million of cash, cash equivalents and restricted cash as well as $469 million in available lines of credit, less $198 million of drawings on lines of credit. At June 30, 2005, net liquidity was $407 million, consisting of $26 million of cash, cash equivalents and restricted cash as well as $472 million in available lines of credit, less $91 million of drawings on lines of credit. At December 31, 2004, net liquidity was $284 million, consisting of $43 million of cash, cash equivalents and restricted cash as well as $456 million in available lines of credit, less $215 million of drawings on lines of credit.

Outlook—Spot market prices and shipments are expected to improve in the fourth quarter. However, the company expects this to be offset by higher energy costs, the planned shutdown of the Stelco Lake Erie hot strip mill to install components related to the Phase II upgrade, and the associated effect of lowering the value-added mix of sales due to slab sales in the fourth quarter. The strength of the Canadian dollar and the threat of increased import levels remain a concern to the corporation.

In addition, the remaining estimated non-cash loss of $31 million related to the sale of substantially all of the assets of Stelpipe will be recorded in the fourth quarter. Should the criteria of assets held for sale be met with respect to other non-core asset sales that are being pursued, additional non-cash losses to be recorded will be material.

Comments—Courtney Pratt, Stelco President and CEO, said, "The third quarter results demonstrate the continuing competitive challenge we face and the vital importance of securing a consensual restructuring which will enable us to move forward with our strategic capital program. As we have said throughout this process, this capital program is essential to making Stelco competitive through all stages of the market cycle and ensuring a positive long-term future."

Stelco Inc. is a large, diversified steel producer involved in major segments of the steel industry through its integrated steel business, minimills and manufactured products businesses.