WCI STEEL A strong showing for ailing company
High material and energy costs are the down side in a strong steel market.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
WARREN -- WCI Steel resumed its profit-making performance in August with earnings of $12.3 million, its highest since the Warren steelmaker filed for Chapter 11 bankruptcy protection a year ago.
"It was the best month we've had in recent memory," said Tim Roberts, the company's spokesman, "and our order book is still strong. The pricing environment is very encouraging."
Reports WCI filed with the U.S. Bankruptcy Court in Akron show the company had sales of $56.1 million last month, while its steel products cost $39.1 million to produce.
Fees for attorneys, financial advisers and other professionals hired to help the company through its bankruptcy totaled $1.8 million in August.
Cash and cash equivalents were at $2.8 million by the end of August, down from $4 million in July. Accounts receivable and inventories both increased considerably, however, leaving the company with assets of $299 million, up from $266 million the month before.
High raw material and energy costs are the main drawbacks WCI faces. "Everything we need has gone up in price or is harder to find," Roberts said.
The rising price of coke, a raw material used in steel production, is one expense WCI can pass on to its customers. The company started adding a coke surcharge of $40 per ton in January and the fee has increased to $120, proportionate to the higher price it must pay suppliers. WCI's surcharge will decrease to $110 per ton starting with Oct. 3 shipments.,
The company has reported profits in six of the past seven months. Its bottom line dipped into red just once in that time, when the company reported a July loss of $9.9 million.
Officials said the drop was related to a 42-day relining of the mill blast furnace during which much of the plant was shut down and customer shipments declined by 44 percent.
Overall, WCI has reported a loss of $69.7 million on sales of $545 million since it filed its Chapter 11 case Sept. 16, 2003.
Roberts said it's hard to predict whether the company's strong sales will continue. August is typically WCI's strongest, and November and December have been slow in the past, he said, but those patterns may not follow this year because of the cyclical nature of the steel industry.
WCI's yearlong battle to emerge from bankruptcy will continue to at least Oct. 7. Judge Marilyn Shea-Stonum has scheduled final arguments that day in Akron for attorneys representing WCI and a rival group of bondholders vying for ownership of the mill.
"Obviously we're looking for the quickest resolution in our favor, but the timing is not in our control," Roberts said. "The judge is obviously taking a deliberate approach."