WARREN WCI Steel reports latest loss in quarter
One official said the company faces a 'shallow, slow and quite lengthy' recovery.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
WARREN -- WCI Steel reported its third consecutive losing quarter, and a spokesman said the company will likely continue operating in the red for at least one more quarter.
The steelmaker ended its second quarter with a $22.2 million loss, compared with a profit of $8 million in the same period a year ago. Reports filed with the federal Securities and Exchange Commission show a loss of $54.7 million in the six months ending April 30, compared with a profit of $15.6 million in the first two quarters a year ago.
WCI lost $32.5 million in its quarter ending Jan. 31, its worst since the Renco Group Inc. of New York bought the company in 1988.
Cash reserves: Company officials have said WCI's healthy cash reserves and its $100 million line of credit have allowed the company to weather problems like a slowing economy, the steel industry import crisis and another import crisis in 1999.
Spokesman Tim Roberts said WCI managed to get through its second quarter without touching those cash reserves. In fact, he said the reserves grew in the quarter ending April 30, from $65 million to $67.59 million.
Roberts said company officials believe WCI will likely face another loss this quarter, despite a projected 10-percent increase in shipping volume. WCI expects to see its cash balances decrease in the third quarter, too, because a $15 million payment on its secured notes is due then.
"We expect to see a recovery, but that recovery will be shallow, slow and quite lengthy," he said.
Net sales: The company's net sales for the quarter were $99.3 million on 241,131 tons, a 36.4-percent decrease in sales and a 31-percent decrease in tons shipped compared with the same period a year ago. Officials attributed the decreases to low customer demand and a general slowing of the economy.
Selling prices for WCI's steel were down 11.7 percent, but that drop was offset some by changes in its product mix and higher sales of the company's more expensive steel products. Sales to steel service centers were down about 5 percent in the quarter, but construction sales were up about 4 percent.
With 2,000 employees, WCI is Trumbull County's third-largest employer and the area's only remaining integrated steelmaker, producing steel from scratch by melting iron ore.