IPSCO Posts Profitable Quarter

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

Lisle, Illinois - 18 October 2001 - IPSCO Inc. (NYSE/TSE:IPS) announced today that its third quarter net income was $11.4 million, down eight percent from the corresponding period last year. In comparison to the second quarter of this year net income was 72 percent higher before taking into account the impact of the lawsuit settlement in the prior quarter. Net income available to common shareholders was $8.5 million, or 21 cents per share.

Shipments of 659,000 tons were 26 percent higher than the third quarter of 2000 and 12 percent higher than the second quarter of 2001. "The largest increase in tonnage shipped was for steel mill products including plate and coil, showing an increase of 33 percent over the third quarter of 2000 and reflecting the start-up of the company's new Mobile Steelworks in Alabama," stated Roger Phillips, President and Chief Executive Officer. "Other product categories also showed an increase in the tonnage shipped compared to the third quarter of 2000 including small diameter energy related tubular products up ten percent, large diameter pipe products up 75 percent, non-energy tubular products up 15 percent, and product from IPSCO's coil processing lines up 16 percent. The increase in energy related tubular shipments reflects the growth in energy sector markets over the 12 month period," he added. "However the growth in the other IPSCO products indicates an increase in market share in a steel market which was slowing just as the general economy was slowing."

Production of finished coil and plate at 603,400 tons was 36 percent higher than the 442,100 tons produced in the third quarter of 2000 and seven percent above the 563,100 tons produced in the second quarter of 2001. "While the start-up of the Mobile Steelworks in the current quarter contributed significantly to the increased steel production level, production at both the Regina and Montpelier steelworks was higher than in the third quarter of 2000," Phillips noted. At 239,300 tons Montpelier production showed a four percent increase over the prior quarter despite outages related to both power supply and on going equipment maintenance problems. "At the end of the quarter the Montpelier Steelworks entered a planned two-week maintenance shutdown during which the equipment problems at the core of these outages was being repaired," Phillips reminded the shareholders. "Production of 110,800 tons at Mobile was in part restricted by commissioning and development of the logistics of moving larger volumes of material through the facility," he concluded.

"In comparison with the third quarter of 2000, overall unit selling prices declined by four percent however compared to the second quarter of 2001 average unit selling prices increased by five percent, reflecting in part strength in both the volume and price of the energy sector tubular products," Phillips advised. Prices for steel mill products declined by ten percent compared to the prior year however the average price increased by four percent over the second quarter of 2001. 

Sales for the quarter were $229.1 million, up three percent over the third quarter of last year. Sales were up four percent over the second quarter of 2001 primarily because of the seasonal improvement of sales of Canadian oil country tubular goods. Year-to-date sales were $681.3 million, a decrease of five percent from the first nine months of 2000, principally as the result of lower selling prices. 

Capital spending in the quarter was $79 million. Of this total, $72 million was for the new Mobile Steelworks. As previously disclosed, IPSCO has a "guaranteed maximum price" contract for the Mobile Steelworks which has been exceeded. The company is currently pursuing its remedies including litigation. All future project disbursements will be included in capital investment and costs previously classified as recoverable have been reclassified to capital investment until final resolution is determined. Management continues to believe that any overrun will not materially impact the project's profitability.

Phillips further stated that, "The tragic events of 11 September have left an aura of economic uncertainty in North America that will take some time to clear. Questions, to which there are no good answers, include will there be worsening economic conditions driven by the reticence of consumers to spend, coupled by further reductions in industrial output resulting in less energy use as well. One month after the fatal day many companies are still in a "pause for review" status making projections for the fourth quarter and early 2002 difficult for IPSCO to make. Lower natural gas and oil prices have already reduced cash flows for energy companies and consequently we can expect the normal uptick in drilling activity in Canada during the winter season to be somewhat muted. Plate inventories in the hands of industrial distributors are at very low levels. However, economic uncertainties and the fear that further price decreases will devalue their inventories have resulted in weaker than normal purchases from the mills." Phillips concluded that, "To some extent this has caused a phenomenon akin to a self-fulfilling prophecy as the weak demand has resulted in financially weakened producers cutting prices in a fruitless attempt to increase volumes. The third quarter started off with the prospect of modest price improvements for plate products. But as the quarter unfolded this progressively turned into further price erosion, all of which will impact more heavily on the fourth quarter than the third. Tubular products for industrial applications have undergone a similar phenomenon."

"IPSCO's results will also be impacted negatively by events peculiar to it," he noted. "The long awaited shutdown of the Montpelier Steelworks for major repairs in early October will impact sales volume. The completion of the formal commissioning period for the Mobile Steelworks means that previously capitalized interest charges will be recorded against income. While IPSCO had earlier expected to generate a slight profit despite these events, the uncertainty regarding ongoing prices and volumes suggest it would be more prudent to expect a loss for the fourth quarter." 

"Looking into the new year and longer term, IPSCO believes that it is well positioned to report constantly improving results," Phillips noted. "The major repairs at Montpelier will translate into lower ongoing maintenance and operating costs, while increasing volumes at Mobile will add to the bottom line. Given the state of distributor inventories plate shipments should improve disproportionately as soon as there is a slight pickup in the economy. On the energy front decreasing reserves will necessitate increasing oil and gas drilling as soon as the economy has absorbed the current "correction" phase," he concluded.

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 estimated time of completion of maintenance work, start-up at new facilities, inventory levels for, and demand from, distributors and steel service centers, levels of steel imports to North America, trade actions with respect to unfairly traded steel, dramatic pricing developments or overall economic fluctuation, weather conditions affecting use of the company's products, and oil and gas drilling levels. 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
Tel. 630-810-4769
Release 01-41

Third Quarter 2001 Financial Statements
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