Essar Steel Algoma Inc. (Algoma)is announcing guidance for the second quarter FY2015 ending September 30, 2014. The announcement comes on the heals of the Ontario Superior Court of Justice’s September 15, 2014 approval of Algoma’s Plan of Arrangement, which paves the way for a comprehensive recapitalization and refinancing of the Company’s capital structure.
Building on Q1 FY2015 results of 530,000 tons shipped and CDN 12.4M EBITDA, the Company expects its second quarter results to include shipments equaling approximately 680,000 – 690,000 tons and EBITDA in the range of CDN
$75M – $80M, as compared with 642,000 tons and CDN $0.3M EBITDA for Q2F2014.
The Company attributes the turnaround to marked improvements in productivity and conversion costs, reduced raw material pricing and more manageable pension payments. External factors including strengthening demand in
construction, automotive and energy sectors are combining to provide healthy demand for Algoma’s differentiated product offerings of high strength sheet and heat treated plate, as reflected in its full order book into November.
CEO Kalyan Ghosh remarked on the turnaround, “We have rebounded from the extreme weather conditions that marred our production last winter. We have engaged our banking partners to manage the implementation of our refinancing plan which provides for a comprehensive capital infusion and a substantial deleveraging of our balance sheet, positioning us for further optimization and growth. We will share more details with the market as soon as the transaction structure is finalized. As we begin our seasonal raw material build we are encouraged by our strengthening run rate and higher value-added product mix that we have targeted for the second half of the year. These actions will translate into higher profitability and our employees are to be commended for their continued focused execution.”