Ispat International N.V., (NYSE: IST US; AEX: IST NA), today reported a record net income of $325 million or $2.75 per share for the second quarter of 2004 as compared to a net income of $14 million or $0.11 per share for the second quarter of 2003. In the first quarter of 2004, the net income was $102 million or $0.85 per share. The results for this quarter, in fact, exceeded the best ever annual results achieved so far.

Ispat International N.V., (NYSE: IST US; AEX: IST NA), today reported a record net income of $325 million or $2.75 per share for the second quarter of 2004 as compared to a net income of $14 million or $0.11 per share for the second quarter of 2003. In the first quarter of 2004, the net income was $102 million or $0.85 per share. The results for this quarter, in fact, exceeded the best ever annual results achieved so far.
Consolidated sales and operating income for the second quarter were $2.1 billion and $426 million, respectively, as compared to $1.4 billion and $58 million, respectively, for the second quarter of 2003; and $1.8 billion and $158 million respectively for the first quarter of 2004.
Total steel shipments were approximately 4.1 million tons1, which represented an increase of approximately 2% over the second quarter of 2003 and a decrease of approximately 4% over the first quarter of 2004.
For the six-month period January-June 2004, Ispat International N.V.’s net income was $427 million or $3.60 per share as compared to net income of $65 million or $0.52 per share for the six-month period January-June 2003.
Consolidated sales and operating income for the six month period January-June 2004 were $3.9 billion and $584 million respectively, compared to $2.7 billion and $133 million respectively for the six-month period January-June 2003.
Total steel shipments for the six-month period January-June 2004 were 8.3 million tons, an increase of 6% compared to the six-month period January-June 2003.
The improved earnings were primarily due to strong demand for our products across all markets. Our average price realization in the second quarter 2004 improved by 43% compared to the second quarter of 2003 and by 25% compared to the first quarter of 2004, driven by higher base selling prices, raw material surcharges and improved product mix.
For the six-month period January-June 2004, average price realization was 30% higher than the corresponding period of 2003.
The situation with respect to availability and procurement prices of key raw materials such as iron ore, scrap, coke and natural gas continued to remain challenging. However, Ispat International was able to manage the situation successfully, thereby maintaining shipments 1 The term “ton” means a short ton (ST). One short ton is equal to 2,000 pounds.
and customer service levels. Overall, cost per ton during the quarter was higher by 23% as compared to the second quarter of 2003 and by 9% compared to the first quarter of 2004. Cost per ton during the six-month period January-June 2004 was higher by 18% compared to the corresponding period of 2003.
There were no material unusual or one-time items during the quarter. Selling, general and administrative expenses were marginally higher due to higher levels of sales activity, as well as higher costs of logistics. Other income included a gain from the sale of environmental credits at Ispat Inland. Net interest expense was higher mainly due to the costs related to the issue of bonds by Ispat Inland to refinance the previous term loan.

Outlook for third quarter 2004
The Company expects continued strong demand in all its principal markets. However, third quarter shipments are traditionally lower due to seasonal factors. The Company expects improved selling prices across all product segments and flat to somewhat reduced shipments compared to second quarter. On the other hand, there is likely to be continued pressure on availability and cost of all major inputs.
Working capital is expected to increase due to increases in input prices and sales. Capital expenditure is expected to be slightly higher in the third quarter than in the second. A key milestone during the third quarter will be the pre-commissioning trials at the new degasser facility in Mexico.
Ispat Inland’s labor contract has been extended until August 15, 2004 by mutual
agreement between Ispat Inland and the United Steelworkers of America (USWA). The contract was originally scheduled to expire on July 31, 2004. The Company is hopeful that Ispat Inland will be able to finalize a new agreement with the USWA. However, if such agreement does not take place, the existing agreement contains provisions for recourse to binding interest arbitration, without any disruption to operations.
Overall, the Company expects to benefit from strong market conditions for its products.
The third quarter is expected to be a better quarter than the second.

Goede resultaten en dat kan wel eens het begin zijn van een positiever kijk van de pensioenfondsen op de staal fondsen.