Gerdau Ameristeel Corporation, the second-largest minimill steel producer in the US, on Thursday reported a net loss of $25.4 million for the three months ended September 30, 2009, in comparison to net income of $316.9 million for the year-ago quarter.
Included in these results is a $78.5 million pre-tax charge related to actions announced earlier this year to stop production at two of the company's US mills and a pre-tax charge of $11.9 million related to the early extinguishment of certain debt obligations.
During the third quarter of 2009, Gerdau Ameristeel's net sales were $1.1 billion, an increase of $110.2 million in comparison to the three months ended June 30, 2009, but a decrease of 56 percent from the $2.5 billion for the three months ended September 30, 2008. Weighted average mill selling price remained flat in comparison to the three months ended June 30, 2009 but represented a decrease of 41 percent or $437 per net ton in comparison to the third quarter of 2008. Finished steel shipments were 1.5 million nt for the three months ended September 30, 2009, an increase of 12 percent in comparison to the second quarter of 2009 but a decrease of 29 percent from the three months ended September 30, 2008.
For the nine months ended September 30, 2009, the company incurred a net loss of $115.6 million compared to net income of $742.0 million for the nine months ended September 30, 2008.
Net sales for the nine months ended September 30, 2009 were $3.2 billion compared to net sales of $7.1 billion for the same period in 2008. Weighted average mill selling prices for the nine months ended September 30, 2009 decreased 26 percent or $233 per nt compared to the same period in 2008 while finished steel shipments decreased 43 percent to 4.0 million nt for the nine months ended September 30, 2009 compared to 7.0 million nt for the same period in 2008.
During the three and nine months ended September 30, 2009, the company also incurred a foreign exchange loss of $18.8 million and $30.5 million, respectively. This charge arose from the revaluation of US dollar investments held by the company's Canadian entities.
During the second quarter of 2009, as a result of the significant downturn in the economy and declining demand for its products, the company announced its plans to stop production at certain facilities. The company stopped production at its Perth Amboy, New Jersey and Sand Springs, Oklahoma facilities during the third quarter of 2009. The company recorded a $78.5 million and $115.0 million pre-tax charge for the three and nine months ended September 30, 2009, respectively, related to these actions.
On August 31, 2009, the company completed the previously announced redemption of its Senior Notes. For the three and nine months ended September 30, 2009, the company recorded a charge of $11.9 million related to this redemption.
Mario Longhi, president and CEO of Gerdau Ameristeel, commented on the third quarter results: "We have continued to make progress in a number of areas during the past quarter which has resulted in the third successive quarterly growth in EBITDA ... Capacity utilization levels of our mills improved as production increased approximately 24 percent in comparison to the second quarter and manufacturing costs continued their downward trend as our employees continue to seek more efficient ways of producing steel."
Commenting on the company outlook for the duration of the year, Longhi stated: "We expect normal seasonal market softness during the fourth quarter of 2009 and production will be adjusted to meet demand. However, we are confident that the actions we have taken are sustainable and will provide for attractive returns for our shareholders as conditions improve."