In what is likely to be its last earnings release as a corporation, International Steel Group reported Thursday a net income of $1.03 billion for 2004, a significant turnaround from a $23.5 million loss in 2003.
ISG, which formed in the spring of 2002, will be merged into Mittal Steel Company N.V. by the end of March, according to officials from both companies.
Ohio-based ISG operates mills in Burns Harbor and East Chicago locally. Mittal operates Ispat Inland in East Chicago locally.
Both ISG and Mittal announced strong steel earnings in 2004 and in the fourth quarter in separate reports.
“We all share the common commitment to create a U.S. steel organization that is truly the best of the best,” said ISG CEO Rodney Mott. “We all have much to learn from each other’s companies, but until it’s completed, we’re still acting as independent companies.”
But on the same token, Mott said he’s already been working with Ispat Inland’s Lou Schorsch and said the pair has formed a number of committees to craft synergies, including a labor relations committee and information technology committee.
Mott said he is pleased that ISG wrapped up steel contracts with customers that are 20 to 30 percent higher than the past and represent about 70 percent of the company’s business.
The company took down production locally last year for capital improvement projects.
The Burns Harbor plant had an outage at the production caster for 52 days and 13 days at the hot mill for improvement projects.
For the fourth quarter of 2004, ISG earned $606 million, or $5.87 per share, compared with a loss of $48.7 million, or 57 cents per share, in the same quarter a year ago.
The company’s fourth quarter earnings include a tax benefit of about $390 million, or $3.78 per share, reflecting ISG’s Bethlehem Steel acquisition and a valuation allowance.
ISG anticipates the high steel prices which have boosted the industry in the last year will continue in the foreseeable future.
Company representatives said the demand for the first quarter is good in most markets and have increased from the slow fourth quarter. Customer inventories at service centers are relatively high, the company said, but are being consumed. The company’s first quarter shipments are expected to be about 4 million tons.
Steel analyst Charles Bradford said he was glad to hear market growth is still strong. “I do know that some of the service centers had too much inventory and cut back their orders in the fourth quarter,’’ Bradford said. “Companies like ISG took advantage of that to do extra maintenance.”
The company had also announced plans to re-start the 110-inch plate mill at the Burns Harbor plant in the second quarter, Mott said.
“It is one of the most modern in the U.S.,” Mott said.
Mott said the company’s customers are eagerly anticipating the merger with Mittal.
“I think there are a lot of strengths to the merger,” Mott said.
