Profitable Quarter for IPSCO Despite Falling Prices

Please Note That IPSCO Financial Results Are Reported in U.S.$



Apr 17, 2001, 01:00 ET from IPSCO Inc.

    LISLE, Ill., April 17 /PRNewswire/ -- IPSCO Inc. (NYSE:   IPS; TSE)
 announced today that its first quarter net income was $8.5 million, down
 33 percent from the fourth quarter of 2000 and down 51 percent from the same
 quarter a year ago.  Net income available to common shareholders was
 $5.7 million or 14 cents per share, down 63 percent from the same quarter last
 year.
     "The first quarter for IPSCO was a good news, bad news story.  The bad
 news was a drop in profits from the previous quarter and the same quarter a
 year ago as the result of lower selling prices as the import surges in the
 last half of 2000 made their full impact on domestic steel prices.  The good
 news is that prices for hot rolled coil and plate appear to have bottomed and
 in fact some modest strengthening seems to be taking place as we start the
 second quarter," said Roger Phillips, the company's President and Chief
 Executive Officer.
     Average unit selling prices fell 4.6 percent from the fourth quarter and
 8.8 percent from the first quarter of 2000.  In contrast costs were flat as
 compared to the previous quarter and decreased 3.5 percent from the year
 before.
     Sales revenue at $232.5 million was down ten percent from the first
 quarter of last year.
     Steel mill product shipments at 226,400 tons were seven percent lower than
 a year earlier.  "Severe price depression on hot rolled coil caused lower
 volumes of this product to be offered for sale while discrete plate sales,
 suffering somewhat less price erosion were up substantially from the prior
 year," Phillips added.
     Further fabricated products at 357,200 tons were three percent higher than
 in the first quarter of 2000.
     Capital spending of $35.5 million during the quarter was predominantly
 dedicated to the Mobile Steelworks which is about to commence an expected six
 month startup and hot commissioning period.
     IPSCO is anticipating that it will be one of the few hot rolled steel
 producers in North America that will report a profit for the first quarter of
 2001.  Looking further into the year Phillips notes that from a volume
 perspective the year 2001 is shaping up well.  IPSCO discrete plate and hot
 rolled coil, cut-to-length plate and sheet from its coil processing
 facilities, and non-energy tubulars all more or less vary in demand with the
 overall economy but very little of this tonnage is directly impacted by
 automobile production which appears to be the industrial sector which has been
 affected most adversely.  Despite talk of a recession IPSCO's order book
 remains strong, but prices for steel, depressed by an overhang of dumped steel
 inventories, remain weak.  Some very modest improvements will impact slightly
 on the second quarter but there has been no sign of a material upswing.  If
 inventory on hand at distributors is any indication, further demand will
 result in the last half seeing further upward price moves.  "Demand for energy
 tubulars will weaken in the second quarter in Canada because of seasonal
 factors and is then expected to rebound strongly for the balance of the year.
 Prices for these items should remain steady," Phillips added.
     "Because of the seasonal drop in energy products, resulting in a lower
 percentage of value-added products, the second quarter will be weaker in terms
 of profits than the first, albeit the company is expected to remain in the
 black," Phillips reminded shareholders.  While profitability should
 undoubtedly improve in the last half as oil country tubular sales rebound and
 a modest improvement in large diameter pipe sales occurs, uncertainties as to
 the direction of the overall economy and potential government actions with
 respect to imports make numerical predictions difficult this early in the
 year.
     For further information on IPSCO, please visit the company's Web site at
 http://www.ipsco.com .
 
     This news release contains forward looking information with respect to
 IPSCO's operations and beliefs.  Actual results may differ from these forward
 looking statements due to numerous factors, including estimated time of
 startup of the Mobile Steelworks, dramatic pricing developments or overall
 economic fluctuations, government actions, and potential markets for the
 materials produced.  These and other factors are outlined in IPSCO's
 regulatory filings with the Securities and Exchange Commission, including
 those on IPSCO's Annual Report for 2000, its MD&A and Form 40-F.
 
                         CONSOLIDATED STATEMENTS OF INCOME
 
      (thousands of United States Dollars except for share, per share, ton and
                                   per ton data)
 
                                                For the Three Months Ended
                                              31 March    31 March    31 Dec.
                                                 2001        2000       2000
 
     Coil and Plate Tons Produced
      (thousands)                                465.6       494.7       485.1
     Finished Tons Shipped (thousands)           583.6       590.4       559.5
     Revenue
             Sales                            $232,522    $257,726    $231,918
             Interest income                       411       1,241         837
                                               232,933     258,967     232,755
     Expenses
             Cost of sales, exclusive of
              the following items              199,109     208,057     190,256
                 Selling, research and
                  administration                12,791      14,398      15,618
                 Interest on long-term
                  debt                              77       4,137          82
                 Amortization of capital
                  assets                         7,923       8,791       7,818
                 Foreign exchange loss
                  (gain)                          (320)        (95)        202
                                               219,580     235,288     213,976
     Income Before Income Taxes                 13,353      23,679      18,779
     Income Taxes                                4,808       6,340       6,009
     Net Income                                  8,545      17,339      12,770
     Dividends on Preferred Shares               1,448       1,522       1,445
     Interest on Subordinated Notes              1,443         578       1,442
     Net Income Available to Common
      Shareholders                              $5,654     $15,239      $9,883
     Summary of Net Income Available to
      Common Shareholders
             Steel business                     $8,126     $19,390     $12,394
             Net interest income (expense)         214      (2,121)        513
             Foreign exchange gain (loss)          205          70        (137)
             Dividends on preferred shares      (1,448)     (1,522)     (1,445)
             Interest on subordinated
              notes                             (1,443)       (578)     (1,442)
                                                $5,654     $15,239      $9,883
     Earnings Per Common Share - Basic           $0.14       $0.37       $0.24
                               - Diluted         $0.14       $0.33       $0.20
     Number of Common Shares Outstanding
      (thousands)                               40,813      40,796      40,813
     Annualized Return on Common
      Shareholders' Equity                          3%          8%          5%
     Operating Profit Per Ton                      $22         $45         $32
 
 
                    CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
 
                        (thousands of United States Dollars)
 
                                                For the Three Months Ended
                                              31 March    31 March    31 Dec.
                                                 2001        2000       2000
     Retained Earnings at Beginning of
      Period, as previously reported          $475,551    $451,548    $469,029
             Cumulative Effect of Change
              in Accounting Policy                   -      (8,977)          -
     Retained Earnings at Beginning of
      Period, as adjusted                      475,551     442,571     469,029
             Net Income                          8,545      17,339      12,770
             Dividends on Preferred Shares
              including part VI.I tax           (1,448)     (1,522)     (1,445)
             Interest on Subordinated
              Notes net of income tax           (1,443)       (578)     (1,442)
             Dividends on Common Shares         (3,278)     (3,503)     (3,361)
             Issue Costs net of income tax           -        (120)          -
     Retained Earnings at End of Period       $477,927    $454,187    $475,551
 
                 NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
 
     1.     The consolidated interim financial statements are unaudited and are
            based on accounting principles and practices consistent with those
            used in the preparation of the annual financial statements, except
            as noted below.
 
     2.     Effective 01 January 2001, the company adopted the new
            recommendation of the Canadian Institute of Chartered Accountants
            with respect to the calculation of earnings per share.  All per
            share amounts for periods prior to 2001 have been calculated in
            compliance with the new standard.
 
 
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                        (thousands of United States Dollars)
 
                                                       For the Three Months
                                                          Ended 31 March
                                                       2001              2000
     Cash Derived From (Applied To)
          Operating Activities
               Working capital provided by
                operations                           $11,603           $26,015
               Change in non-cash operating
                working capital                       (1,573)          (72,239)
                                                      10,030           (46,224)
          Financing Activities
               Common share dividends                 (3,278)           (3,503)
               Issue of subordinated notes
                (net of issue costs)                       -            89,824
               Preferred share dividends              (1,361)           (1,426)
               Subordinated notes interest            (4,250)             (199)
               Issue of long-term debt                20,000                 -
                                                      11,111            84,696
          Investing Activities
               Expenditures for capital assets       (35,452)          (47,044)
               Investment                             (1,993)           (2,075)
                                                     (37,445)          (49,119)
          Effect of exchange rate changes
           on cash and cash equivalents               (4,285)             (456)
     Decrease in Cash and Cash Equivalents
      less Bank Indebtedness                         (20,589)          (11,103)
     Cash and Cash Equivalents less Bank
      Indebtedness at Beginning of Period             18,151            94,831
     Cash and Cash Equivalents less Bank
      Indebtedness at End of Period                  $(2,438)          $83,728
 
 
                   CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 
                        (thousands of United States Dollars)
 
                                              31 March    31 March    31 Dec.
                                                 2001        2000       2000
     Current Assets
          Cash and cash equivalents            $17,562     $92,828     $18,151
          Accounts receivable less
           allowances                          181,303     168,181     166,449
          Inventories                          206,297     234,061     225,958
          Other                                  2,766       2,332       2,631
          Income taxes allocated to future
           years                                38,631      40,097      34,409
                                               446,559     537,499     447,598
     Current Liabilities
          Bank indebtedness                     20,000       9,100           -
          Accounts payable and accrued
           charges                             152,082     160,754     161,145
          Current portion of long-term debt     21,100      21,100      21,100
                                               193,182     190,954     182,245
     Working Capital                           253,377     346,545     265,353
     Non-Current Assets
          Capital and other                  1,103,255     946,685   1,087,099
          Income taxes allocated to future
           years                                91,915      92,374      88,066
                                             1,195,170   1,039,059   1,175,165
     Total Investment                        1,448,547   1,385,604   1,440,518
     Long-Term Debt                            360,554     297,238     343,822
     Deferred Gain on Sale-Leaseback             2,807           -       2,855
     Deferred Pension Liability                  3,745       9,456       4,365
     Income Taxes Allocated to Future Years    112,383     107,345     104,842
                                               479,489     414,039     455,884
     Shareholders' Equity                     $969,058    $971,565    $984,634
          Derived from
     Preferred Shares                          $98,567     $98,612     $98,572
     Common Shares                             255,772     255,657     255,772
     Subordinated Notes                        102,125     100,850     104,250
     Retained Earnings                         477,927     454,187     475,551
     Cumulative Translation Adjustment          34,667      62,259      50,489
                                              $969,058    $971,565    $984,634
     Ratio of Current Assets to Current
      Liabilities                              2.3 : 1     2.8 : 1     2.5 : 1
 
 

SOURCE IPSCO Inc.
    LISLE, Ill., April 17 /PRNewswire/ -- IPSCO Inc. (NYSE:   IPS; TSE)
 announced today that its first quarter net income was $8.5 million, down
 33 percent from the fourth quarter of 2000 and down 51 percent from the same
 quarter a year ago.  Net income available to common shareholders was
 $5.7 million or 14 cents per share, down 63 percent from the same quarter last
 year.
     "The first quarter for IPSCO was a good news, bad news story.  The bad
 news was a drop in profits from the previous quarter and the same quarter a
 year ago as the result of lower selling prices as the import surges in the
 last half of 2000 made their full impact on domestic steel prices.  The good
 news is that prices for hot rolled coil and plate appear to have bottomed and
 in fact some modest strengthening seems to be taking place as we start the
 second quarter," said Roger Phillips, the company's President and Chief
 Executive Officer.
     Average unit selling prices fell 4.6 percent from the fourth quarter and
 8.8 percent from the first quarter of 2000.  In contrast costs were flat as
 compared to the previous quarter and decreased 3.5 percent from the year
 before.
     Sales revenue at $232.5 million was down ten percent from the first
 quarter of last year.
     Steel mill product shipments at 226,400 tons were seven percent lower than
 a year earlier.  "Severe price depression on hot rolled coil caused lower
 volumes of this product to be offered for sale while discrete plate sales,
 suffering somewhat less price erosion were up substantially from the prior
 year," Phillips added.
     Further fabricated products at 357,200 tons were three percent higher than
 in the first quarter of 2000.
     Capital spending of $35.5 million during the quarter was predominantly
 dedicated to the Mobile Steelworks which is about to commence an expected six
 month startup and hot commissioning period.
     IPSCO is anticipating that it will be one of the few hot rolled steel
 producers in North America that will report a profit for the first quarter of
 2001.  Looking further into the year Phillips notes that from a volume
 perspective the year 2001 is shaping up well.  IPSCO discrete plate and hot
 rolled coil, cut-to-length plate and sheet from its coil processing
 facilities, and non-energy tubulars all more or less vary in demand with the
 overall economy but very little of this tonnage is directly impacted by
 automobile production which appears to be the industrial sector which has been
 affected most adversely.  Despite talk of a recession IPSCO's order book
 remains strong, but prices for steel, depressed by an overhang of dumped steel
 inventories, remain weak.  Some very modest improvements will impact slightly
 on the second quarter but there has been no sign of a material upswing.  If
 inventory on hand at distributors is any indication, further demand will
 result in the last half seeing further upward price moves.  "Demand for energy
 tubulars will weaken in the second quarter in Canada because of seasonal
 factors and is then expected to rebound strongly for the balance of the year.
 Prices for these items should remain steady," Phillips added.
     "Because of the seasonal drop in energy products, resulting in a lower
 percentage of value-added products, the second quarter will be weaker in terms
 of profits than the first, albeit the company is expected to remain in the
 black," Phillips reminded shareholders.  While profitability should
 undoubtedly improve in the last half as oil country tubular sales rebound and
 a modest improvement in large diameter pipe sales occurs, uncertainties as to
 the direction of the overall economy and potential government actions with
 respect to imports make numerical predictions difficult this early in the
 year.
     For further information on IPSCO, please visit the company's Web site at
 http://www.ipsco.com .
 
     This news release contains forward looking information with respect to
 IPSCO's operations and beliefs.  Actual results may differ from these forward
 looking statements due to numerous factors, including estimated time of
 startup of the Mobile Steelworks, dramatic pricing developments or overall
 economic fluctuations, government actions, and potential markets for the
 materials produced.  These and other factors are outlined in IPSCO's
 regulatory filings with the Securities and Exchange Commission, including
 those on IPSCO's Annual Report for 2000, its MD&A and Form 40-F.
 
                         CONSOLIDATED STATEMENTS OF INCOME
 
      (thousands of United States Dollars except for share, per share, ton and
                                   per ton data)
 
                                                For the Three Months Ended
                                              31 March    31 March    31 Dec.
                                                 2001        2000       2000
 
     Coil and Plate Tons Produced
      (thousands)                                465.6       494.7       485.1
     Finished Tons Shipped (thousands)           583.6       590.4       559.5
     Revenue
             Sales                            $232,522    $257,726    $231,918
             Interest income                       411       1,241         837
                                               232,933     258,967     232,755
     Expenses
             Cost of sales, exclusive of
              the following items              199,109     208,057     190,256
                 Selling, research and
                  administration                12,791      14,398      15,618
                 Interest on long-term
                  debt                              77       4,137          82
                 Amortization of capital
                  assets                         7,923       8,791       7,818
                 Foreign exchange loss
                  (gain)                          (320)        (95)        202
                                               219,580     235,288     213,976
     Income Before Income Taxes                 13,353      23,679      18,779
     Income Taxes                                4,808       6,340       6,009
     Net Income                                  8,545      17,339      12,770
     Dividends on Preferred Shares               1,448       1,522       1,445
     Interest on Subordinated Notes              1,443         578       1,442
     Net Income Available to Common
      Shareholders                              $5,654     $15,239      $9,883
     Summary of Net Income Available to
      Common Shareholders
             Steel business                     $8,126     $19,390     $12,394
             Net interest income (expense)         214      (2,121)        513
             Foreign exchange gain (loss)          205          70        (137)
             Dividends on preferred shares      (1,448)     (1,522)     (1,445)
             Interest on subordinated
              notes                             (1,443)       (578)     (1,442)
                                                $5,654     $15,239      $9,883
     Earnings Per Common Share - Basic           $0.14       $0.37       $0.24
                               - Diluted         $0.14       $0.33       $0.20
     Number of Common Shares Outstanding
      (thousands)                               40,813      40,796      40,813
     Annualized Return on Common
      Shareholders' Equity                          3%          8%          5%
     Operating Profit Per Ton                      $22         $45         $32
 
 
                    CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
 
                        (thousands of United States Dollars)
 
                                                For the Three Months Ended
                                              31 March    31 March    31 Dec.
                                                 2001        2000       2000
     Retained Earnings at Beginning of
      Period, as previously reported          $475,551    $451,548    $469,029
             Cumulative Effect of Change
              in Accounting Policy                   -      (8,977)          -
     Retained Earnings at Beginning of
      Period, as adjusted                      475,551     442,571     469,029
             Net Income                          8,545      17,339      12,770
             Dividends on Preferred Shares
              including part VI.I tax           (1,448)     (1,522)     (1,445)
             Interest on Subordinated
              Notes net of income tax           (1,443)       (578)     (1,442)
             Dividends on Common Shares         (3,278)     (3,503)     (3,361)
             Issue Costs net of income tax           -        (120)          -
     Retained Earnings at End of Period       $477,927    $454,187    $475,551
 
                 NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
 
     1.     The consolidated interim financial statements are unaudited and are
            based on accounting principles and practices consistent with those
            used in the preparation of the annual financial statements, except
            as noted below.
 
     2.     Effective 01 January 2001, the company adopted the new
            recommendation of the Canadian Institute of Chartered Accountants
            with respect to the calculation of earnings per share.  All per
            share amounts for periods prior to 2001 have been calculated in
            compliance with the new standard.
 
 
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                        (thousands of United States Dollars)
 
                                                       For the Three Months
                                                          Ended 31 March
                                                       2001              2000
     Cash Derived From (Applied To)
          Operating Activities
               Working capital provided by
                operations                           $11,603           $26,015
               Change in non-cash operating
                working capital                       (1,573)          (72,239)
                                                      10,030           (46,224)
          Financing Activities
               Common share dividends                 (3,278)           (3,503)
               Issue of subordinated notes
                (net of issue costs)                       -            89,824
               Preferred share dividends              (1,361)           (1,426)
               Subordinated notes interest            (4,250)             (199)
               Issue of long-term debt                20,000                 -
                                                      11,111            84,696
          Investing Activities
               Expenditures for capital assets       (35,452)          (47,044)
               Investment                             (1,993)           (2,075)
                                                     (37,445)          (49,119)
          Effect of exchange rate changes
           on cash and cash equivalents               (4,285)             (456)
     Decrease in Cash and Cash Equivalents
      less Bank Indebtedness                         (20,589)          (11,103)
     Cash and Cash Equivalents less Bank
      Indebtedness at Beginning of Period             18,151            94,831
     Cash and Cash Equivalents less Bank
      Indebtedness at End of Period                  $(2,438)          $83,728
 
 
                   CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
 
                        (thousands of United States Dollars)
 
                                              31 March    31 March    31 Dec.
                                                 2001        2000       2000
     Current Assets
          Cash and cash equivalents            $17,562     $92,828     $18,151
          Accounts receivable less
           allowances                          181,303     168,181     166,449
          Inventories                          206,297     234,061     225,958
          Other                                  2,766       2,332       2,631
          Income taxes allocated to future
           years                                38,631      40,097      34,409
                                               446,559     537,499     447,598
     Current Liabilities
          Bank indebtedness                     20,000       9,100           -
          Accounts payable and accrued
           charges                             152,082     160,754     161,145
          Current portion of long-term debt     21,100      21,100      21,100
                                               193,182     190,954     182,245
     Working Capital                           253,377     346,545     265,353
     Non-Current Assets
          Capital and other                  1,103,255     946,685   1,087,099
          Income taxes allocated to future
           years                                91,915      92,374      88,066
                                             1,195,170   1,039,059   1,175,165
     Total Investment                        1,448,547   1,385,604   1,440,518
     Long-Term Debt                            360,554     297,238     343,822
     Deferred Gain on Sale-Leaseback             2,807           -       2,855
     Deferred Pension Liability                  3,745       9,456       4,365
     Income Taxes Allocated to Future Years    112,383     107,345     104,842
                                               479,489     414,039     455,884
     Shareholders' Equity                     $969,058    $971,565    $984,634
          Derived from
     Preferred Shares                          $98,567     $98,612     $98,572
     Common Shares                             255,772     255,657     255,772
     Subordinated Notes                        102,125     100,850     104,250
     Retained Earnings                         477,927     454,187     475,551
     Cumulative Translation Adjustment          34,667      62,259      50,489
                                              $969,058    $971,565    $984,634
     Ratio of Current Assets to Current
      Liabilities                              2.3 : 1     2.8 : 1     2.5 : 1
 
 SOURCE  IPSCO Inc.