On March 12, 2025, Algoma Steel Group Inc., a leading Canadian producer of hot and cold rolled steel products, announced its financial results for the three and nine months ended December 31, 2024. The company reported a challenging fiscal year with significant losses but remains optimistic about its transition to electric arc furnace (EAF) steelmaking, a transformative project expected to improve its cost structure and environmental footprint.
Business Overview
Algoma Steel operates in a challenging economic environment, with fluctuating steel prices and ongoing tariff-related issues affecting North American steel markets. In its financial report, the company revealed several key figures that reflect its performance:
• Consolidated revenue for the three months ended December 31, 2024, totaled CAD $590.3 million, a decrease from CAD $615.4 million in the same quarter the previous year.
• Consolidated loss from operations for the quarter amounted to CAD $124.8 million, compared to a loss of CAD $36.9 million in Q4 2023.
• Net loss for the fourth quarter was CAD $66.5 million, a slight improvement compared to a net loss of CAD $84.8 million in Q4 2023.
• The company shipped 548,802 tons of steel, a 6.3% increase compared to 516,068 tons in Q4 2023, indicating a slight growth in demand despite market challenges.
Despite the revenue drop and the operational loss, Algoma's performance was somewhat bolstered by a reduction in net loss due to favorable changes in foreign exchange and warrant liability values, as well as a tax recovery.
Full-Year Financial Performance
Looking at the full fiscal year 2024, Algoma faced deeper financial difficulties:
• Annual revenue for the year reached CAD $2.46 billion, down from CAD $2.85 billion in 2023.
• Steel revenue also dropped to CAD $2.24 billion, compared to CAD $2.59 billion in the previous year.
• The company posted a loss from operations of CAD $217.8 million, a significant reversal from the prior year's income of CAD $185.9 million.
• Net loss for the year was CAD $139 million, a stark contrast to the previous year’s net income of CAD $56.8 million.
• The company shipped 2,023,363 tons of steel, which represented an 8.3% decrease compared to 2,206,146 tons in 2023.
The decrease in both revenue and shipments for the year can be attributed to various factors, including lower steel prices, reduced demand, and increased costs. Additionally, Algoma faced rising fuel costs due to its blast furnace operations and continued challenges arising from the global overproduction of steel.
Challenges in the Steel Market
In 2024, the North American steel industry was still grappling with several challenges, including:
• Uncertainty due to evolving tariffs on Canadian steel and aluminum imports into the U.S., which created an unstable trade environment.
• Pressure from lower steel prices, driven by global overproduction and the dumping of cheap steel onto international markets. This has made it difficult for Canadian producers like Algoma to maintain profitability.
Despite these issues, Algoma’s CEO, Michael Garcia, expressed confidence that the company’s transformation to electric arc furnace (EAF) steelmaking would ultimately help it weather the storm. The shift to EAF is expected to reduce operating costs, improve environmental sustainability, and increase production efficiency. This transition, which is currently underway, aims to eliminate the need for traditional blast furnace operations by the end of 2026.
The Transformative EAF Project
A key focus for Algoma going forward is its ambitious Electric Arc Furnace (EAF) project. This transformation is a critical part of the company’s long-term strategy, as it moves away from traditional blast furnace operations toward more sustainable and cost-efficient steel production methods.
In a statement, Garcia highlighted that the company was on track for a milestone achievement, with the first arc in Furnace One expected in April 2025. The completion of this phase is seen as a major step in the company’s journey toward becoming one of the most environmentally friendly steel producers in North America.
The EAF process is expected to:
• Enhance operational efficiency by lowering production costs.
• Improve environmental sustainability by reducing carbon emissions and energy consumption.
• Increase flexibility and adaptability in steel production, allowing Algoma to respond better to market demands and price fluctuations.
As Garcia emphasized, this shift is a critical step for Algoma in strengthening its competitive position and ensuring that it can better manage market uncertainties going forward.
The Road Ahead
Looking into the future, Algoma’s management remains optimistic about the company’s prospects. The EAF project, coupled with the company’s commitment to technological innovation, positions it for success in a rapidly evolving steel industry. However, the company acknowledges that it will continue to face challenges in the form of macroeconomic instability, fluctuating steel prices, and shifting trade policies.
Garcia expressed his excitement about the transition and the broader potential of the company: “2025 marks the beginning of a new chapter where Algoma begins its journey to become one of the greenest producers of steel in North America while creating lasting value for all stakeholders.”
Fourth Quarter and Full-Year Financial Summary
• Q4 Revenue: CAD $590.3 million (down 4.1% from the previous year)
• Full-Year Revenue: CAD $2.46 billion (down 13.6% from the previous year)
• Q4 Loss from Operations: CAD $124.8 million
• Full-Year Loss from Operations: CAD $217.8 million
• Q4 Net Loss: CAD $66.5 million
• Full-Year Net Loss: CAD $139.0 million
• Steel Shipments: 548,802 tons in Q4 (up 6.3% from the prior year)
• Annual Steel Shipments: 2,023,363 tons (down 8.3% from the prior year)
• Adjusted EBITDA: Q4 Adjusted EBITDA loss of CAD $60.3 million; Full-Year Adjusted EBITDA of CAD $22.3 million.
Key Takeaways:
• Revenue Decline: Algoma Steel reported a decrease in both quarterly and annual revenues, driven by lower steel prices and decreased demand.
• Increased Losses: The company faced significant losses in 2024, including a quarterly operating loss of CAD $124.8 million and an annual operating loss of CAD $217.8 million.
• Steel Shipments: Despite the financial challenges, Algoma's steel shipments increased by 6.3% in Q4, but annual shipments decreased by 8.3%.
• Electric Arc Furnace (EAF) Transition: The company is on track to begin EAF steel production in April 2025, a transformative project expected to improve efficiency and reduce costs.
• Market Challenges: Algoma faces ongoing challenges due to tariffs on Canadian steel, fluctuating steel prices, and competition from international steel markets.
• Future Outlook: Algoma remains optimistic about its long-term prospects, with plans to become one of North America's greenest steel producers through its EAF project.
