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Wheeling-Pittsburgh Steel Updates Fourth Quarter Earnings
WHEELING, W.Va. -- Fourth quarter operating income at Wheeling-Pittsburgh Corp. is expected to be approximately $8 million to $9 million on shipments of approximately 503,000 tons, officials announced yesterday. The update was made in light of recently quantified effects of the previously announced Basic Oxygen Furnace ductwork collapse in December 2004.The company intends to issue full fourth quarter and annual 2004 results on March 14 as previously scheduled.Approximately 10,000 tons of shipments were lost as a result of the BOF ductwork collapse, which interrupted operations for 12 days. As expected, fourth quarter average selling prices per ton decreased slightly from the third quarter to about $740 per ton. Costs charged to operations in the fourth quarter are expected to be approximately $18 million more than in the third quarter, according to James G. Bradley, chairman, president and chief executive officer.Higher costs principally were related to maintenance spending in connection with the planned outages that were taken at the company's hot strip and finishing mills, as well as costs incurred during the 12-day period following the BOF ductwork collapse, during which there was minimal production. Raw material costs increased slightly above third quarter levels despite significantly less purchased coke in the fourth quarter as the company achieved its targeted coke production levels in December.The company is pursuing insurance recoveries for property damage related to the BOF ductwork collapse, for which the $2 million deductible was recorded in the fourth quarter, Bradley said. The estimated impact of the collapse on fourth quarter earnings was approximately $23 million. In addition, a further loss of 85,000 tons of shipments is expected in the first quarter of 2005. A business interruption claim is being prepared which, after the deductible, is expected to be significant, Bradley said. No recognition will be made in the fourth quarter for the anticipated recovery under the business interruption claim."We wanted to give the investment community a sense of the financial consequences of the BOF ductwork collapse and continuing raw material issues to the Company," Bradley said. "BOF operations have resumed, and the start-up of our new electric arc furnace is progressing very well, with production in December and January totaling 338 heats for 92,400 tons, versus the manufacturer's guaranteed performance of 186 heats and 46,500 tons, nearly double the expected production. We expect first quarter shipments to be in the 500,000 to 515,000 ton range."Wheeling-Pittsburgh Steel has approximately 3,100 employees and facilities in Steubenville, Mingo Junction, Yorkville and Martins Ferry, Ohio; Beech Bottom and Follansbee, W.Va.; and Allenport, Pa.Visit Wheeling-Pittsburgh Steel Corp.: www.wpsc.com"