Essar Steel Algoma Q4 loss widens to $92.M on lower volumes, selling prices

SAULT STE MARIE, Ont. – Privately held Essar Steel Algoma Inc. has reported a net loss of $92.7 million in its fiscal 2013 fourth quarter ended March 31, up from a net loss of $18 million in the same year-earlier period.

Sales for the quarter totalled $447.7 million, with shipments of 638,652 tons, down 1.5 per cent from the corresponding quarter the previous year.

The company said the increased loss was primarily a result of lower volumes, lower selling prices and higher costs, and unrecognized tax losses for which no deferred tax assets were recognized, partially offset by a reduction in depreciation expense.

For the full year, the company reported a net loss of $203.3 million, compared with a fiscal 2012 profit of $38.1 million.

Essar said EBITDA, or earnings before interest, taxes, depreciation and amortization was $8.1 million for the quarter and, excluding exceptional items, was $57.3 million for the year, down from $321 million in fiscal 2012.

The company described EBITDA, a non-standard accounting term, as a meaningful indicator of company profitability.

“Despite continued cost reduction measures, operating efficiencies and an improving product market mix, lacklustre market conditions and contracted raw material input costs combined to negatively impact our F2013 performance,” CEO Kalyan Ghosh said in the company’s earnings release.

“Recently announced improvements to our iron ore contract and credit agreements position the company more favourably for F2014 and beyond, ” he added.

A member of the Essar Group, Essar Steel Algoma Inc. is a fully integrated steel producer that derives its revenues primarily from the manufacture and sale of hot and cold rolled steel products, including sheet and plate.