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Algoma Steel posts $85-million loss in third quarter

Fourth quarter is expected to be better, thanks to improved steel prices
File photo: Algoma Steel CEO Michael Garcia

Algoma Steel Group Inc. announced a net loss of $84.8 million during its fiscal third quarter ended Dec. 31.

That compares to a $69.8 million loss in the same quarter last year.

Consolidated revenue was $615.4 million, up from $567.8 million in the prior-year quarter.

The increased net loss was "primarily due to the change in fair value of warrant liabilities, share-based compensation liabilities, and earnout liabilities, a decrease in income tax recovery, an increase in foreign exchange losses, and an increase in financing charges, which more than offset the improvements in loss from operations," said Michael Garcia, the steelmaker's chief executive officer, on Feb. 6.

"We delivered results in the fiscal third quarter that were consistent with our previously disclosed outlook, accomplished against a challenging backdrop that included the remaining impact of the UAW strike and a heavy seasonal maintenance quarter," Garcia said.

"Improved market fundamentals coupled with the settlement of the strike in October led to a rebound in pricing which based on the lagging nature of our order book is expected to positively impact pricing realizations beginning in our fiscal fourth quarter," he added.

However, Algoma's fourth quarter will be adversely affected by a blast furnace outage and reduced coke production resulting from the Jan. 20 piping collapse.

The #7 blast furnace was restarted on Feb. 6 but is expected to take another two weeks to get back to full production levels.

Meanwhile, Garcia also provided an update on Algoma's transition to electric arc furnace (EAF) steelmaking:

"Our transformative EAF project continues to advance in line with our expectations with commissioning expected to start by late 2024.

"As of Dec. 31, 2023, we had invested a total of $509.9 million in its development, which represents approximately 60 per cent of the anticipated total project cost.

"Importantly, project commitments to date total approximately $750 million with approximately seven per cent to time and material contracts, while the balance is fixed price in nature.

"We expect to contract the majority of the remaining costs by the end of the current quarter. We look forward to what promises to be an important and exciting year in the story of Algoma," Garcia said.

The company declared a regular quarterly dividend of US$0.05 on each common share outstanding, payable on March 29, 2024.

— SooToday