WARREN WCI racks up sixth loss in a row

There's one bright spot: Orders were up 85 percent.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
WARREN -- WCI Steel lost an additional $25.5 million in the quarter ending Jan. 31, the sixth consecutive quarter in the red for the Mahoning Valley's only remaining integrated steelmaker and third-largest industrial employer.
In a quarterly report issued Thursday, the flat-rolled steel producer said its managers believe WCI has enough cash resources left to continue operations "at least through fiscal 2002."
But unless the company sees substantial increases in sales volume and prices for its product in the second and third quarters of this year, the report warned, it will have to seek additional sources of financing.
"WCI cannot assure that it has the ability to obtain such additional financing, or what the terms of any additional financing might be," the report states.
With steelmakers like Cleveland-based LTV Steel and Warren's former CSC Ltd. crumbling all around it, WCI has also been struggling.
Figures: The Warren company finished its fiscal 2001 with a $100.8 million loss, its first losing year since it started operations in 1988.
WCI ends its fiscal year Oct. 31, so its first quarter of 2002 began Nov. 1 and its second quarter began Feb. 1.
There was one bright spot in WCI's report to the federal Security Exchange Commission: Its order backlog was up to 250,000 tons for the quarter, an 85 percent increase over the 135,000-ton backlog three months before.
The company said the increase in orders was partially due to customers' anticipation that steel imports would decrease if President Bush approved tariffs proposed by the U.S. International Trade Commission.
The President enacted those tariffs this week, including a 30 percent tariff on imported flat-rolled steel like that produced by WCI.
Approval of the tariff protection "doesn't mean happy days are here again" for WCI, said spokesman Tim Roberts.
"We have a long road ahead and we have to control our costs. We have to make some changes internally," Roberts said. "We should be able to survive."
Here's a concern: Roberts said officials are closely watching the reopening of LTV Steel. If the new owners of the Cleveland steelmaker negotiate a lower-cost agreement with the United Steelworkers of America, "it could be very averse for us," he said.
WCI is not ready to disclose what internal changes its managers are contemplating.
WCI had a contingency fund of about $80 million and a $100 million line of credit when its financial problems began around the end of 2000.
The cash is gone. Roberts said WCI went through $40 million last quarter and borrowed $10.2 million on its line of credit.
The company had sales of $89.6 million in the first quarter on 244,828 tons of steel, an 8.7 percent decrease in net sales and a 3.3 percent increase in tons shipped compared to the previous quarter.
Prices for its products have been driven down, the company explained, because of increased imports and a lower demand for steel products in 2001 due to a slumping economy.
vinarsky@vindy.com