Schnitzer Steel Reports 90 Percent Increase in First Quarter Earnings

Portland, OR - Schnitzer Steel Industries, Inc. reported first quarter 2003 net income of $3.9 million or $0.41 per diluted share on revenues of $76.5 million, which compares to net income of $2.0 million or $0.22 per share on revenues of $76.8 million during the first quarter of fiscal 2002.

"We are pleased to report significantly higher operating results in the first quarter of fiscal 2003 as compared to the first quarter of last year despite lower sales volumes for our core metals recycling businesses," said Robert W. Philip, president and chief executive officer. "Margin expansion was primarily driven by the combination of higher selling prices and improved operating performance for both our wholly-owned and joint venture metals recycling businesses, some of which came from the restructuring activity we undertook last year."

Mr. Philip continued, "Sales volumes of ferrous recycled metal were unusually low during the first quarter of fiscal 2003, driven primarily by the timing of export customer orders. The delay in orders was initiated by a sharp rise in the selling prices for ferrous metals that began early in calendar 2002 brought about by a reduction in the supply of ferrous recycled metal from the former Soviet Union.

"Specifically, we saw our average net ferrous export price rise by 21 percent between the second and fourth quarters of our fiscal year that ended August 31, 2002. As a result, during our fiscal 2003 first quarter, foreign buyers delayed placing orders in an attempt to lower prices," he said. "However, by the end of the first quarter we saw customers placing orders to refill their depleted inventories at price levels that were at or above prices realized during the last 90 days. The delay in first quarter orders should result in significantly higher sales volume for the second quarter of fiscal 2003. Further, total fiscal 2003 ferrous sales volumes should approximate last year's levels," Mr. Philip concluded.

Metals Recycling Business

The Metals Recycling Business reported operating income of $3.1 million for the first quarter of fiscal 2003 compared to $1 million last year. The margin improvement was driven primarily by a 17 percent increase in the average ferrous net selling price coupled with efficiency and cost improvements throughout this business segment. These benefits were offset in part by higher buying prices for unprocessed metal and a 15 percent decline in ferrous sales volumes as compared to last year's first quarter.