Stelco Holdings Inc. (TSX:STLC) stock was holding even in early afternoon trading on February 22. Shares have climbed 9.2% in 2018 so far. The Hamilton-based company released its 2017 fourth quarter and full-year results on February 21.
Fourth quarter revenue surged 45% year over year to $452 million and operating income rose to $54 million. Adjusted EBITDA soared 245% to $69 million and the board of directors declared a quarterly cash dividend of $0.10 per share. However, the Hamilton-based steel company, which has come back from bankruptcy in 2007, received some worrying news along with the rest of the Canadian steel industry last week.
On February 16 U.S. Commerce Secretary Wilbur Ross unveiled his proposal to President Trump which recommended stiff tariffs on steel and aluminum imports. In one of the harsher proposal items, the U.S. would raise tariffs on steel imports by 24%. The bulk of Canada’s steel exports are shipped to the U.S., and Hamilton, Ontario produces over 50% of the steel in the country.
However, Canadian steel producers should not be overly concerned. The Commerce Department has included several options, including one that will exclude some of the closest U.S. partners and levy a higher tariff on countries like China, Russia, and others. Canada was mentioned specifically by Ross, and by Ross associate and USW president Leo Gerard, as a country that is sure to be the exception in this case.
Stelco has performed extremely well since its initial public offering in November, 2017. Now boasting a solid quarterly dividend, investors should monitor the company and await the decision of the U.S. President that is due in April.
