Published on: 2/14/2014 10:32:32 AM Print | Font Sizes:  Normal Text Large Text

Essar reports Q3 loss

By: Northern Ontario Business staff

Essar Steel Algoma is reporting a loss for the third quarter of its 2014 fiscal year.

The company is reporting an EBITDA (earnings before interest, taxes, depreciation, and amortization) loss of $8 million for the three-month period ended December 31, 2013, compared to positive EBITDA of $19.3 million for the same period a year ago. The loss this quarter reflects a 9.9 per cent decline in shipment volume compared to the same period last year, coupled with increased fuel and utilities costs.

EBITDA is a non-GAAP measure of profitability, used by management as an indicator of the operational health of the business. The net loss for the quarter was $38.6 million compared to a net loss of $25.1 million for the same period a year ago.

According to the company, the early onset of winter and persistent severe weather conditions hampered inbound raw materials and production for the quarter, resulting in steel shipments of 590,837 tons, down substantially as compared to the previous year and the prior two quarters of this fiscal year. Average realized sales prices improved in the quarter by 3.1 per cent over last year’s comparable period, and by 4.3 per cent over last quarter.

“Funding relief for our defined benefit pension plans was an important milestone this quarter, providing greater predictability and more sustainable payment terms,” Essar CEO Kalyan Ghosh said in a release. “We are encouraged by improving macroeconomic indicators for 2014 as demonstrated in recent increases to hot rolled coil pricing and a significant improvement in the pension solvency position.

“In the months ahead we expect reduced costs as benefits from our new iron ore contract materialize,” Gosh added. “When combined with the recent strategic additions to our management team and plans to improve productivity by a further 10 to 15 per cent we are confident in our ability to realize a further $50 per ton cost reduction over the coming quarters.”

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