IPSCO Posts Profitable Quarter

Please Note That IPSCO Results are Reported in U.S. Dollars

Lisle, Illinois - 5 February 2002 - IPSCO Inc. (NYSE/TSE:IPS) announced today that its full-year net income was $38.9 million compared to $57.7 million last year and net income available to common shareholders was $27.4 million. This can be compared to 2000 when net income available to common shareholders was $46.8 million. On a per share basis, basic earnings in 2001 were $0.67 per common share compared to $1.15 in the year earlier period. The results for the year include two one-time items: a fourth quarter charge of $0.16 per share for a non-cash asset writedown as well as $0.61 per share of income resulting from the settlement of litigation relating to the Montpelier Steelworks. The 2001 annual results also included a $4 million pre-tax charge for additional allowances for bad debt. Operating profit per ton shipped for the year was $19. 

"IPSCO is pleased to have had a profitable year in 2001. The year was marked by tremendous adversity and by continuing price erosion caused by the lingering effects of imports. At the same time, the economy entered a recession, demand dropped, as did consumer confidence. These factors were exacerbated by energy pricing which tumbled during the year leading to a reduction in demand for energy related tubulars," said David Sutherland, President and Chief Executive Officer. "Few other North American steelmakers will be profitable for 2001," he added.

Annual shipments at 2,435,100 tons exceeded 2000 shipments by nine percent. "IPSCO believes this achievement is especially significant as it took place in a year when a manufacturing recession saw apparent North American steel demand fall by 13 percent," Sutherland commented. Shipments to United States based customers continued to grow with shipments to U.S. based customers at almost 65 percent of the total and with Canadian based customers accounting for the remaining 35 percent. 

Sales revenues of $903.7 million were lower than the $949.3 million reported in 2000 mainly as a result of depressed pricing attributable to the overhang from prior year's import surges. Liquid steel production for the year 2001, with the combined output of its Montpelier, Mobile and Regina facilities, reached 2,414,500 tons, and was 19 percent higher than in the previous year, attributable to the Mobile Steelworks coming on-stream.

Tonnage of steel mill products shipped, which comprises hot rolled coil and discrete plate, was 14 percent higher than 2000 with the increased volume coming from the U.S. market which more than made up for a drop in the Canadian market. Further fabricated products which include cut-to-length steel, standard pipe, hollow structurals, and energy related tubular products grew by six percent. Again increased shipments in the U.S. more than offset a decrease in Canadian shipments.

In the fourth quarter of 2001 the Company incurred a loss of $15.5 million, down considerably from third quarter earnings of $8.5 million and the $9.9 million net income available to common shareholders recorded for the year earlier fourth quarter. The start-up period for the Mobile Steelworks ended 30 September 2001. Results of operations for the Mobile Steelworks have been included since 1 October 2001.

For the quarter, the basic loss per common share was $0.38 as compared to basic earnings of $0.24 in the same period a year earlier, and $0.21 per share earned in the third quarter. For the quarter the operating loss per ton shipped was $6. Included in the quarterly results is $0.16 per share charge to writedown certain idle assets to market value and almost $0.03 per share to reserve for increased bad debt exposure.

Shipments for the quarter were 604,800 tons, up eight percent over the fourth quarter 2000. Sales revenues of $222.5 million were lower than in the year earlier period, even with increased volumes, reflecting the poor pricing environment. 

Quarterly shipments of hot rolled coil and plate at 288,200 tons were 28 percent higher than in the fourth quarter of 2000 largely as a result of the Mobile Steelworks coming on stream. Shipments of further fabricated products at 316,600 tons in the fourth quarter were down about five percent from the year earlier period. Within the group large diameter pipe shipments were down 23 percent due to lower demand in the energy transmission pipe business. Other tubular products sold to the energy industry, such as oil country tubular goods and small diameter line pipe, were down nine percent reflecting lower drilling rates. Tubulars for equipment manufacture and construction increased by seven percent, while sales from IPSCO's coil processing facilities were unchanged. 

IPSCO said that major capital spending for the year totaled $157 million, down from the $377 million spent in 2000 with the bulk of the funds continuing to be spent on the completion of IPSCO's Alabama Steelworks. 

"With respect to the forward picture, the momentum in the general economy and the posture that the U.S. President will take regarding the steel industry continue to be unclear," Sutherland said. " A remedy announcement from President Bush in the 201 case is expected in the first quarter. IPSCO reiterates that only a strong remedy with high tariffs against countries where the ITC made a positive injury finding will have the effect of allowing the industry to adjust appropriately."

"Starting late in the fourth quarter of 2001 a series of price increases were announced by U.S. and Canadian producers of steel plate and hot rolled coil which seem to be holding up in the marketplace," Sutherland added. "The outlook for these products is for continued restoration of pricing." 

Sutherland said the outlook for the rest of 2002 was for the year to start off slowly with continued poor results to be experienced by the industry as a whole, and likewise for IPSCO. Resolution of issues relating to the 201 case and consolidation in the industry, coupled with more sustainable pricing, will set the stage for improvements in industry performance. An upturn in the economy into the year together with such improvements should bode well for the company."

This news release contains forward-looking information with respect to IPSCO's operations and beliefs. Actual results may differ from these forward looking statements due to numerous factors, including an unfavorable 201 remedy, weather conditions, drilling rig availability, demand for oil and gas, energy costs, demand for and prices for products produced by the company, and general economic trends. These and other factors are outlined in IPSCO's regulatory filings with the Securities and Exchange Commission, including those on IPSCO's Annual Report for 2000, its MD&A, particularly as discussed under the heading "Business Risks and Uncertainties", and Form 40-F.

Company Contact:
Bob Ratliff
Vice President and Chief Financial Officer
IPSCO
Tel: 630-810-4769
Release 02-05

Fourth Quarter 2001 Financial Statements
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