IPSCO Reports Record Second Quarter Results

Results Are Reported In U.S. Dollars

Lisle, Illinois, July 27, 2005 - IPSCO Inc. (NYSE/TSX: IPS) announced today second quarter sales of $667 million, an increase of $119 million over the second quarter of 2004. Net income of $126 million was nearly double the $66 million in last year’s second quarter. Basic and diluted earnings per share in the quarter were $2.59 and $2.56, respectively, compared to $1.38 and $1.22 per share in the second quarter last year. Operating income per ton shipped was $263 compared to $134 in the second quarter of 2004. Net income was $281 million for the first six months of 2005, or $5.62 per share. This compares to $98 million or $1.78 for the first six months of 2004. 

IPSCO’s enhanced sales performance versus the comparable period last year was driven by higher pricing levels in all product lines and strong energy tubular shipments partially offset by volume reductions in the steel mill product and large diameter pipe product lines. IPSCO’s second quarter average pricing was $830 per ton, inclusive of surcharge, compared to $620 per ton a year ago. Second quarter shipments were 803,000 tons, down 9% or 81,000 tons from the second quarter of 2004. Large diameter shipments of 13,000 tons declined 82% or 59,000 tons from last year’s level reflecting the low level of contract activity in the first half of 2005. Steel mill product shipments declined 38,000 tons as a result of the previously reported six-day Montpelier outage and reduced service center orders for steel products. Energy tubular shipments were 38,000 tons or 32% higher than the second quarter of 2004, reflecting continued strong demand and drill rate activity despite unusually wet weather, which impacted shipments in Canada.

“End user demand for steel plate remained strong in the first half of 2005 and OEM shipments in the second quarter were stable,” said David Sutherland, President and Chief Executive Officer. “However, market uncertainty over recent declines in steel pricing levels resulted in delayed service center inventory replenishment and order patterns exhibiting very short lead times. In part because of this market uncertainty, we have moved a planned 17-day reheat furnace maintenance project for Montpelier into the third quarter. In addition, a precautionary outage in Mobile early in July, necessitated by Hurricane Dennis, was extended to seven days to allow reheat furnace maintenance.”

“It is anticipated that with these maintenance efforts behind us, IPSCO will be well positioned in the fourth quarter to take advantage of the continued strength in IPSCO’s steel markets, as well as a continued strong second half energy tubular market which now includes second half orders for well over 100,000 tons of large diameter pipe.” 

Second quarter 2005 diluted earnings per share increased $0.07 per share due to the share buyback program announced and initiated in March of 2005. Second quarter 2004 earnings per share were diluted by $0.08 per share due to the junior subordinated notes (retired in November 2004) and $0.06 due to the preferred shares (redeemed in May of 2004). The junior subordinated notes and the preferred shares did not impact the 2005 diluted earnings per share calculations. 

During the quarter, the Company redeemed all $71 million of its 7.32% Series B Senior Notes and purchased for cancellation on the open market, $41 million of the 8.75% Unsecured Notes due June 1, 2013 and CDN $2 million of the 7.80% Canadian Debentures due December 1, 2006. Total debt repaid during the quarter was $114 million excluding pre-payment premiums. The debt redemptions resulted in debt extinguishment expense for the quarter of $10 million, or $0.13 per diluted share. 

Outlook

The Company believes that end user demand for steel mill products will remain strong throughout the second half. Surcharge related pricing declines will be largely offset by scrap cost declines, however, there will be timing differences between revenue changes and the cost of scrap consumed. In addition there will be some slide in steel prices due to both market pressure from buyers and due to the influence of hot-rolled coil price declines, particularly on IPSCO’s coil and cut-to-length product sales.

The market for large diameter pipe has improved significantly in the second half, as has IPSCO’s participation in this market. IPSCO has booked in excess of 100,000 tons for delivery in the remainder of the year. North American OCTG shipments in general and small diameter line pipe shipments in Canada are expected to be at historically high levels, as strong as weather will allow, through the balance of 2005. 

Foreign exchange fluctuations and their impact on inter-company obligations raised by debt retirement and the Share Repurchase Program may or may not impact third quarter net income and earnings per share.

We expect increased large diameter pipe shipments, increased energy tubular shipments, and the flow through of second quarter scrap purchase price reductions to help offset price declines on our steel mill products and the steel product volume reductions related to the third quarter’s planned maintenance. With the combination of these factors we expect third quarter earnings to be in the range of $2.35 to $2.55 per diluted share. 

IPSCO has scheduled the live webcast of its second quarter 2005 results conference call at 10:00 AM EDT on Wednesday, July 27, 2005. During the call IPSCO President and CEO, David Sutherland, Senior Vice President and CFO, Vicki Avril and Executive Vice President - Steel and Chief Commercial Officer, John Tulloch will discuss IPSCO Inc.’s second quarter results. 

Persons wishing to listen to the webcast may access it in the Investor Information, Presentations section. The conference call, including the question and answer portion, will also be archived on IPSCO’s web site for three months. 

IPSCO, traded as “IPS” on both the New York Stock Exchange and Toronto Stock Exchange, operates steel mills at three locations and pipe mills at six locations in the United States and Canada. As a low cost North American steel producer, IPSCO has a combined annual steel making capacity of 3,500,000 tons. The Company's tubular facilities produce a wide range of tubular products including line pipe, oil and gas well casing and tubing, standard pipe and hollow structurals. Steel can also be further processed at IPSCO's five temper leveling and coil processing facilities. 

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, but not limited to: weather conditions affecting the oil patch; drilling rig availability; demand for oil and gas; supply, demand and price for scrap metal and other raw materials; supply, demand and price for electricity and natural gas; demand and prices for products produced by the Company; general economic conditions; and changes in financial markets. These and other factors are outlined in IPSCO's regulatory filings with the Securities and Exchange Commission and Canadian securities regulators, including those in IPSCO's Annual Report for 2004, its MD&A, particularly as discussed under the heading "Business Risks and Uncertainties", its Annual Information Form, and its Form 40-F.

Company Contact:
Vicki Avril
Senior Vice President and Chief Financial Officer
Tel. 630-810-4769
Release 05-29

2005 Second Quarter Financial Statements
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Tons Shipped by Quarter
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Sales Information By Product Group
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