Imexsa strike hindered Ispat's Q3 results

Rotterdam-based steel group Ispat International (NYSE: IST) reported a US$10.0mn net loss in the third quarter this year compared to a net income of US$26mn in same-quarter 2002, partially due to an 11-day strike at Mexican subsidiary Imexsa, the company announced. Ispat's consolidated third quarter sales and operating loss totaled US$1.3bn and US$4.0mn, compared to US$1.3bn and US$92mn operating income respectively in same-period 2002. Steel shipments dropped 8% to 3.6Mt, and company debt totaled US$2.3bn. Imexsa net sales totaled US$181mn in Q3, down 12% from last year, while it lost 155,000t in slab production during the strike. But the company kept up with orders during the strike, and fourth quarter shipments and prices are expected to grow, company CEO Lakshmi Mittal said in a conference call. Cost of sales dropped 4% for the Mexican subsidiary due to lower shipments, while cost per short ton increased 13% due to a 12% rise in electricity prices, 7% growth in natural gas prices, and lower production from the strike. Imexsa's long-term debt totaled US$397mn by end-September. Caribbean Ispat posted US$61mn in steel sales in Q3, up 27% from 2Q02, while direct reduced iron (DRI) sales dropped 5% to US$35mn. The cost of goods sold increased 19% for the Trinidad and Tobago-based subsidiary. Specifically, cost per short ton of DRI jumped 13% due to higher iron ore prices, and cost per short ton steel grew 5% due to energy prices. The subsidiary's shipments this quarter are expected "to be around" third quarter levels, while debt totaled US$89mn end-September, Ispat announced.