Stelco Inc. has adjusted its earnings expectations for the second quarter of 2005. The company says that while it continues to expect solid performance from a historical perspective, second quarter operating earnings are now expected to be considerably below the level of the first quarter of 2005. The decrease is attributed primarily to lower spot market prices, higher energy costs and the flow-through of higher-cost inventory produced in the first quarter.

The corporation indicated on May 10, 2005 that it was reviewing its guidance for 2005 previously issued on March 8, 2005. Stelco continues to anticipate strong performance during 2005 from a historical perspective. However, due to the continued uncertainty around spot market pricing, market demand, shipment levels and input costs the corporation does not believe that it can reasonably provide specific guidance on 2005 operating earnings or shipments at this time.

Depending on visibility and other factors, the corporation may choose to re-institute specific operating earnings or other guidance at a later time.

The corporation advises that operating earnings, a non-GAAP financial measure, does not have standardized meaning prescribed by GAAP and therefore may not be comparable to similar measures presented by other companies. However, Stelco's published quarterly and annual financial statements do report operating earnings, separately disclosing key items of net sales, costs and expenses included therein. The corporation's published financial statements also disclose the statement of earnings line items that the corporation does not include in operating earnings. Consistent with Stelco's past practice, a reconciliation of earnings before income taxes (a GAAP financial measure) to operating earnings would include financial expenses, principally interest as well as reorganization expenses, which are mainly expenses arising as a result of the CCAA process. The operating earnings measure is provided to assist users in analyzing operating profitability before non-operating expenses.