WCI losses surpass $100M

Company officials say sales might start to pick up in the second quarter.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
WARREN -- With major steelmakers crumbling on all sides, WCI Steel also suffered severe financial problems in 2001, ending its fiscal year with a $100.8 million loss.
It was the first year-end loss ever for the Warren-based integrated steel company, which has been reporting earnings every year since it began operations as a subsidiary of Renco Steel Holdings in 1998. The company reported profits of $10.3 million in 2000.
A sluggish national economy coupled with high levels of discount-priced foreign steel imports forced WCI to reduce its shipping volume and drop its prices, the company said.
Sales revenue averaged $397 per ton in 2001, about 10 percent lower than the company's $443-per-ton average the year before.
WCI had sales of $413.1 million and shipped 1.04 million tons of steel products in its fiscal year ending Oct. 31, a 26.3 percent drop in net sales and a 17.7 percent drop in tons shipped compared to 2000.
And officials are projecting more losses in the first quarter of its fiscal 2002, which ends Thursday. First-quarter shipments are expected to be approximately 245,000 tons, or 14 percent lower than the fourth quarter of 2001.
What's changing: The company said it experienced "a significant increase in its order intake rate and backlog" starting in December and continuing through this month, so it believes shipments will rise 24 percent in the second quarter.
Officials said the increases are partially related to the closing of LTV Steel Corp. operations in Cleveland and to the International Trade Commission's recommendations for tighter restriction of foreign steel imports. An improving economy could also be a cause.
The company said it has enough cash resources to continue operations "at least through 2002," but it warned that it might have to go to lenders to seek more financing if its sales and price projections don't hold up.
"WCI cannot assure that it has the ability to obtain such additional financing, or what the terms of any additional financing might be," the company said, adding that price and volume improvements will be necessary for WCI to continue operations after Oct. 31, 2002, the end of its current fiscal year.
What helped: Company officials have said that WCI's healthy cash reserve and line of credit helped the company to stay afloat while other steelmakers, including the former CSC Ltd. in Warren and LTV in Cleveland, were forced to file for Chapter 11 bankruptcy protection.
The company's liquidity as of Oct. 31 consisted of cash and cash equivalents of $32.2 million and available borrowing under its $100 million revolving credit agreement.
vinarsky@vindy.com