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Ipsco Inc. announced net income of $144.5 million on sales of $641.9 million for the third quarter, and net income of $242.2 million on sales of $1,673.0 million for the nine months ended Sep. 30, 2004.

Third Quarter Results—Quarterly earnings attributable to common shareholders of $144.5 million ($2.76 per diluted share) is a new record for the company. Results include a $20.8 million ($0.39 per diluted share) reduction of a tax valuation allowance. These results compare to a net loss of $0.04 per diluted share in the third quarter of 2003 and net earnings of $1.22 per diluted share in the second quarter of 2004.

Sales set a new record at $641.9 million, up $306.9 million (92%) over the same period last year. Price, volume and mix all contributed to this growth. Year-over-year third quarter cost of production increased markedly due to the cost of scrap, which was up over 70%. The impact of increased scrap costs was effectively neutralized through a scrap surcharge. Steel mill product sales of $411.3 million were 121% higher than the third quarter of 2003 and tubular product sales of $230.6 million were 55% higher. Third quarter sales were up $93.6 million (17%) over the second quarter of 2004.

Nine Month Results—Net income attributable to common shareholders of $242.2 million ($4.49 per diluted share) compares to a net loss of $5.2 million ($0.11 per diluted share) for the first nine months of 2003. Year to date sales totaled $1.7 billion, an increase of 83% over the first nine months of 2003.

Comments—"Ipsco's strong operating results are being driven by demand in North America for plate steel and for oil and gas tubular products," said David Sutherland, the Company's President and CEO. “In recent quarters, demand for steel mill production has exceeded capacity. This appears to be an industry-wide reality. Ipsco has just finalized the allocation of its steel production for the fourth quarter and expects that its operating results in the fourth quarter will exceed those of the third. Additionally, Ipsco has recently increased plate prices and will shortly allocate its capacity for the first quarter of 2005.

"Although it is difficult to project too far into the future, the significant increase in order backlog at many of our major original equipment manufacturer customers, coupled with strength in oil and gas, suggests that these robust market conditions will continue beyond the first quarter of 2005."

Outlook—Given the strong cash flow experienced by the company in its current quarter and the near-term positive outlook, Ipsco expects its cash position to exceed debt by the end of 2005. Ipsco is currently involved in a disciplined process to evaluate cash uses, including capital investment opportunities, debt retirement, share repurchase or dividend increases. The recently announced decisions to increase the common share dividend and to redeem the subordinated debt are initial outcomes of this process.

Ipsco has no plans to build new steel mills in North America given the current relative balance of supply and demand. However, the company will continue to round out the capacity opportunities inherent in the existing mills and also to investigate value-added downstream opportunities and other means of increasing shareholder value including further dividend increases.

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