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Stelco Holdings Inc. is listed on the TSX under the symbol "STLC"

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Stelco reports second quarter results

    HAMILTON, ON, July 25 /CNW/ - Stelco Inc. ("Stelco" or the "Corporation")
(TSX:STE) today reported EBITDA(*) of $53 million for the second quarter ended
June 30, 2007, a substantial improvement over the $13 million EBITDA(*) in the
first quarter of 2007. Net loss before income tax for the second quarter was
$19 million, compared to a net loss before income tax of $35 million for the
first quarter. The net loss before income tax for the second quarter included
asset impairment charges, workforce reduction costs, a write-off of financing
fees and foreign exchange gains. Excluding the impact of these items, the
Corporation would have achieved net income before income tax of $5 million for
the second quarter.Second Quarter Highlights

     -  Hamilton operations achieved record productivity levels in the second
        quarter assisted by the shutdown of older facilities and a workforce
        reduction of approximately 400 employees.

     -  The Lake Erie Steel hot strip mill set a quarterly production record
        of 796,000 tons.

     -  Shipments increased by 18% to 1,089,000 tons from 922,000 in the
        first quarter of 2007, and revenue increased to $717 million from
        $609 million in the first quarter 2007.

     -  As previously disclosed, the Corporation entered into an agreement to
        sell its interest in the Wabush mine.Operations

    Second quarter costs decreased to $610 per ton, an improvement of $36 per
ton over the first quarter. The quarter-over-quarter cost improvement results
from a combination of the continuing impact of cost reduction initiatives
implemented by management along with input cost reductions. During the quarter
hot rolling was consolidated at the Corporation's newly expanded and
modernized Lake Erie Steel mill, which allowed for the closure of the 56"
mill, the No.2 pickle line and other related facilities at the Hamilton Steel
operations. This initiative has reduced the Hamilton workforce by
approximately 400 employees, will reduce production costs and increase
revenues from hot roll steel sales.
    Rodney Mott, President and Chief Executive Officer, commented, "Although
many of the choices we have made were difficult, we have already seen positive
benefits from these actions. These changes will help Stelco continue to
improve financial performance and service to our customers."

    Strategic Initiatives

    On June 1, 2007, the Corporation confirmed that it is reviewing strategic
options for Stelco in light of the ongoing consolidation of the steel
industry. The Corporation has appointed a special committee of directors and
financial advisors to assist in this review, which includes the evaluation of
possible transactions relating to the sale of all or part of the Corporation.
There is no assurance that a transaction will result from these discussions or
as to the timing, structure or terms of any transaction.


    All major customer groups, including automotive, construction and service
centres are continuing to adjust their purchasing and inventory levels as a
result of the uncertainty over both demand and pricing. It is expected that
this will continue until there is increased confidence in the marketplace.
Shipments to the pipe and tube markets and shipments of slab to other steel
producers are strong and are expected to remain strong for the near future.
    Pricing is currently under pressure due to seasonal shutdowns in the
automotive sector and the relative strength of the Canadian dollar versus US
currency. We expect this pressure to continue in the near term. The
Corporation will continue to participate in the market while working
vigorously to lower overall costs.
    Mr. Mott said, "The realization of ongoing cost reduction programs should
allow Stelco to continue to improve future results, even with slowdowns at
some of our key market sectors and pressure on pricing."
    The Corporation will continue to transition the Hamilton Steel operation
into a lower cost producer. The many initiatives undertaken thus far,
including the closure of outdated and inefficient operations and the focus on
semi-finished and value added products, have shown promising results that are
expected to continue moving forward.

    Financial and Operational Summary

    Stelco's financial and operational summary, as well as its consolidated
statements of financial position and cash flow summary, are attached. These
materials should be reviewed in conjunction with the Corporation's unaudited
interim financial statements, including the notes thereto, and the related
management's discussion and analysis, a copy of which can be viewed on the
Corporation's website at or on SEDAR at*)  EBIDTA is a non-Canadian GAAP measure which may not be comparable
          to measures used by other companies. Please refer to the note
          regarding Non-GAAP Financial Measures in the accompanying
          financial and operational summary of the Corporation.Conference call

    The Corporation will conduct a conference call on second quarter results
on Wednesday, July 25 at 11:00 am EDT. The webcast will be available on
Stelco's web site at Please choose "Investor Centre" and select
"Webcasts". Please log in at least 15 minutes prior to the call.

    About Stelco

    Stelco is one of Canada's largest steel companies. It is focused on its
two Ontario-based integrated steel businesses located in Hamilton and in
Nanticoke. These operations produce high quality value-added hot rolled, cold
rolled, coated sheet and bar products. To learn more about Stelco and its
businesses, please refer to our Web site at


    This press release contains "forward-looking information" that is based
on Stelco's expectations, estimates and projections as of the date of this
press release or as of the date which such information is identified to be
given. This forward-looking information includes, among other things, factors
relating to the business, financial position, operations and prospects of
Stelco, including: Stelco's strategies and plans to reduce costs and the
anticipated outcome of such strategies and plans; anticipated productivity
levels and profitability; labour matters related to Stelco's predominantly
unionized workforce; pension matters; consolidation in the steel industry;
Stelco's energy and raw material costs and the availability of such materials;
the volatility of selling prices for steel; international trade matters,
including increases in steel imports into Canada; employee matters, including
staffing levels, the retention of the skills and knowledge of Stelco's
employees and the ability to attract and retain new employees; changes to
environmental laws and regulations concerned with, among other things,
emissions into the air, discharges to water or land, noise control and the
generation, handling, storage, transportation and disposal of toxic
substances; new technological developments and Stelco's ability to make
capital expenditures to maintain and enhance its technological ability;
development of new products; planned capital expenditures; and currency
fluctuations in the US dollar and their impact on the Corporation's US dollar
denominated long-term debt steel pricing, and costs. Often, but not always,
forward-looking information can be identified by the use of words and phrases
such as ''plans'', ''expects'' or ''does not expect'', ''is expected'',
''budget'', ''scheduled'', ''estimates'', ''forecasts'', ''intends'',
''anticipates'' or ''does not anticipate'', or ''believes'', or variations of
such words and phrases or states that certain actions, events or results
''may'', ''could'', ''would'', ''might'' or ''will'' be taken, occur or be
    Forward-looking information involves known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Stelco to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking information. Actual results, performance and achievements are
likely to differ, and may differ materially, from those expressed or implied
by the forward-looking information contained herein. Such forward-looking
information is based on a number of assumptions which may prove to be
incorrect, including, but not limited to: exchange rates, energy and other
anticipated and unanticipated costs; pension contributions and expenses; the
supply and demand for, deliveries of, and the level and volatility of prices
of, steel and raw materials; the continued availability of financing on
appropriate terms; market competition; the impact on Stelco of various
environmental regulations and initiatives; and Stelco's ongoing relations with
its employees and staffing levels. While Stelco anticipates that subsequent
events and developments may cause Stelco's views to change, Stelco
specifically disclaims any obligation to update this forward-looking
information. This forward-looking information should not be relied upon as
representing Stelco's views as of any date subsequent to the date of this
press release.Stelco Inc.
    Financial and Operational Summary

    ($ in millions, except as indicated(*))            Quarter 2,  Quarter 1,
    (unaudited)                                             2007        2007

    Net sales                                            $   717     $   609
    Costs                                                    664         596
    EBITDA(1)                                                 53          13
    Amortization of property, plant, and equipment            28          31
    Amortization of intangible assets                          -           1
    Operating loss before the following:                      25         (19)
    Asset impairment charges                                  38           -
    Employee future benefits - workforce reduction costs       9           -
    Foreign exchange (gain) loss on long-term debt           (30)         (3)
    Interest on long-term debt and revolving term loans       20          19
    Write off of financing fees                                7           -
    Loss before income tax                                   (19)        (35)
    Income tax expense                                        22           4
    Net loss                                             $   (41)    $   (39)
      Average revenue per ton                         (*)$   658  (*)$   661
      Cost per ton                                    (*)$   610  (*)$   646
    Semi-finished steel production (thousands
     of net tons)                                          1,084       1,100
    Shipments (thousands of net tons)                      1,089         922

    (1) Non-GAAP Financial Measures

    The financial information contained in this press release is presented in
    accordance with Canadian GAAP. Reference is also made to "EBITDA", which
    is a non-Canadian GAAP measure. "EBITDA" refers to operating earnings
    (losses) before interest, income taxes, amortization and other non-
    operating income and expenses such as workforce reduction costs, foreign
    exchange gains and losses on long-term debt. Information concerning
    EBITDA has been included in this press release because management
    considers it to be, and uses it as, a meaningful indicator for assessing
    the operating performance of the Corporation. EBITDA does not represent
    cash generated from operations as defined by Canadian GAAP and it is not
    necessarily indicative of cash available to fund cash needs. Non-Canadian
    GAAP earnings measures (such as EBITDA) do not have any standardized
    meaning and therefore the Corporation's use of EBITDA measures may not be
    comparable to measures used by other companies. A reconciliation to net
    loss, which is a Canadian GAAP measure, is presented above in the
    Financial and Operational Summary.

    Stelco Inc.
    Consolidated Statements of Financial Position

                                                             At           At
                                                        June 30  December 31
    (in millions) (unaudited)                              2007         2006

    Current assets
    Cash and cash equivalents                         $      31    $       -
    Accounts receivable                                     379          214
    Inventories                                             553          693
    Prepaid expenses                                         32           28
    Future income taxes                                      18           27
    Assets held for sale                                    130            -
                                                          1,143          962
    Other assets

    Property, plant and equipment                         1,575        1,743
    Intangible assets                                         5            1
    Other                                                    11           32
                                                          1,591        1,776
    Total Assets                                      $   2,734    $   2,738

    Liabilities and Shareholders' Deficit
    Current liabilities
    Accounts payable and accrued                      $     196    $     220
    Income and other taxes                                   11            1
    Employee future benefits                                 57           58
    Pension liability                                        58           65
    Long-term debt due within one year                       13           13
    Liabilities held for sale                                82            -
                                                            417          357
    Other liabilities
    Employee future benefits                              1,236        1,254
    Pension liability                                       295          338
    Long-term debt                                          596          342
    Revolving term loans                                    220          383
    Future income taxes                                      77           88
    Asset retirement obligation                               1           24
                                                          2,425        2,429
    Total Liabilities                                     2,842        2,786
    Shareholders' Deficit
    Capital stock                                           149          149
    Contributed surplus                                      21            1
    Warrants                                                  3            3
    Retained deficit                                       (281)        (201)
    Total Shareholders' Deficit                            (108)         (48)
    Total Liabilities and Shareholders' Deficit       $   2,734    $   2,738

    Stelco Inc.
    Cash Flow Summary

                                                       Quarter 2,  Quarter 1,
    (in millions)                                           2007        2007

    Cash provided by (used for):
    Net loss                                          $     (41)   $     (39)
    Adjustments to net loss for items not affecting
     cash                                                    34            8
    Changes in operating elements of working capital         14          (47)
    Operating activities                                      7          (78)
    Investing activities                                     (8)          (9)
    Financing activities                                     24           95
    Net change in cash position                       $      23    $       8
    -------------------------------------------------------------------------%SEDAR: 00001549E

For further information:
For further information: Rodney B. Mott, President and Chief Executive
Officer, (905) 528-2511, Extension 2020