International Steel Group Inc., owner of the Sparrows Point steel mill, reported a profit yesterday for the fourth quarter, its first as a public company.
The steelmaker, which obtained Sparrows Point in acquiring Bethlehem Steel Corp. last May, said the rebounding economy would further boost its business during 2004.
ISG reported net income of $24.9 million, or 28 cents per diluted share, for the quarter that ended Dec. 31.
For the year, the Richfield, Ohio-based steelmaker reported a net loss of $23.5 million, or 31 cents per diluted share. The company had incurred charges of $70.3 million from the Bethlehem acquisition - the largest in the domestic steel industry.
Comparisons with 2002 are not meaningful because ISG wasn't in existence for the full year and 2003 included the Bethlehem purchase, the company said. ISG went public in December.
Sales for the fourth quarter were $1.4 billion on shipments of 3.5 million tons, up 20 percent from the third quarter, the company said. For the year, sales totaled $4.1 billion on shipments of 10.4 million tons.
"The fourth quarter was a very successful quarter for ISG; there were strong shipments and strong demand from our customer base, and that's bleeding into 2004," said Brian Kurtz, vice president of finance and treasurer.
ISG has grown into the nation's second-largest integrated steelmaker - after U.S. Steel Corp. - in less than two years by buying plants of steel producers in bankruptcy proceedings, including LTV Corp. in February 2002 and Bethlehem.
Weirton Steel Corp., which is operating under Chapter 11 protection, is weighing a $255 million buyout offer from ISG, which would give the young steelmaker one of the largest tin-plate mills in the country.
ISG's plan is to compete globally by keeping production costs down, which it has done in part by paring corporate staff and management jobs and by reaching collective-bargaining agreements that allow it to cut job classifications.
ISG has cut the Bethlehem work force by approximately 30 percent, but is producing as much steel as Bethlehem did, Kurtz said. On a per employee basis, steel shipments have increased, he said. In 2002, Bethlehem had posted a $739 million loss while operating under Chapter 11 bankruptcy protection.
ISG has been helped by a stronger U.S. economy and higher demand, which has allowed steel producers to raise prices. ISG said its average price per ton shipped was $405 in the fourth quarter and $391 for the full year. The company had announced four price increases throughout the quarter.
Prices also improved over the year and compared with 2002 as the Bethlehem mills were incorporated, enabling the company to produce a richer product mix.
The company said it expects to further increase prices and improve operating profit margins in 2004 as the U.S. economy strengthens.
ISG expects to ship 14 million to 15 million tons this year, an increase of nearly 5 million tons as compared with 2003. Besides purchasing Bethlehem last year, ISG raised $493 million in its initial public offering and used the proceeds to reduce debt.
Shares of ISG closed yesterday at $38.08, up 8 cents.