Stelco Starts Co-Gen Plant, Posts Q2 Profits, Despite Business Headwinds
In releasing the company’s second-quarter earnings, Stelco executive chairman Alan Kestenbaum said the plant would allow the
Canadian steelmaker to “continue to improve our industry-leading, low-cost structure, avoid to a large extent significant increases in energy costs others are experiencing and reducing our overall carbon footprint.”
For the quarter ending 30 June, Stelco posted net income of CA$554 million, or CA$7.67 per diluted share, on sales of CA$1.04 billion. For comparison, the company reported net income of CA$363 million on sales of CA$918 million in the same quarter last year.
Executives said the company succeeded in the face declining demand and prices, headwinds that are expected to persist.
“On top of deteriorating pricing and demand, our business is being challenged with strong headwinds, including inflationary pressures in some of our key inputs such as natural gas, coal and alloys. We are concerned about this double hit of higher costs and lower prices and are looking at how we can address these challenges,” Kestenbaum said.
Company executives reiterated Stelco’s previous guidance for the second half of the year, saying conditions are expected to bring weaker results, barring any changes in business conditions.
“It is expected that adjusted EBITDA in Q3 will be materially below the Q2 level, and further weakening is expected in our Q4 results. This assumes that the lower prices and shorter lead times being experienced currently fully impact results and prevail through the remainder of 2022.”