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Algoma Steel expects third-quarter earnings slip

Soft steel prices, decline in steel shipments will be reflected in upcoming quarterly results, says Sault steelmaker
(Company photo)

Algoma Steel expects to post an earnings loss when the Sault Ste. Marie steelmaker releases its third-quarter results next month.

In a news release on Jan. 9, the steel plate and sheet manufacturer said soft steel prices, lower steel shipments, and winter maintenance work will be reflected in the quarterly balance sheet in February.

A forward-looking statement from Algoma this week said it expects to report an adjusted loss in the range of $34 million to $45 million before interest, taxes, depreciation and amortization, otherwise known as EBITDA.

EBITDA is a widely used performance measurement of a company’s financial health and ability to generate cash.

Algoma ran into a plethora of problems over the summer and fall. 

The Sault manufacturer dodged a strike with its largest union, but endured operational and production setbacks with a coke oven conveyor belt fire, commissioning issues and delays in finishing the first phase of its plate mill upgrades and a COVID outbreak that left them shorthanded at its major rolling mill, the Direct Strip Production Complex. 

It all combined in Algoma shipping 435,000 tons during the second quarter compared to 587,340 tons during the same period the previous year.

In a statement, Algoma CEO Michael Garcia expects things will rebound heading into the latter half of the fiscal year.

“We expect to produce Adjusted EBITDA of $395 million to $405 million for the first nine months of our fiscal 2023. I am pleased that the plate mill has resumed normal production levels. We expect to return to more normalized shipments in calendar 2023, and to apply the lessons learned during phase one of the Plate Mill Modernization to our future capital projects. 

“This will reflect the more robust earning power of Algoma. We remain laser focused on completion of our transformative electric arc furnace project, which remains on budget and on track to be producing steel in calendar 2024, as we transition to being one of the greenest producers of steel in North America.”