Schnitzer Steel Reports First Quarter 2009 Results

PORTLAND, Ore. January 8, 2009: Schnitzer Steel Industries, Inc. today reported a net loss of $34 million, or $1.21 per diluted share, for the fiscal 2009 first quarter ended November 30, 2008. The pre-tax operating loss of $50 million included non-cash inventory write downs of $52 million for the quarter. During the quarter the Company used cash from operations to reduce debt, net of cash, by $48 million, further strengthening its balance sheet. “During the first quarter we faced difficult market conditions, including an unprecedented drop in demand for recycled metals and finished steel products,” said Tamara Lundgren, President and Chief Executive Officer. “The weak economic environment and the worldwide financial crisis resulted in a rapid and precipitous drop in both sales volumes and sales prices from those experienced in the previous quarter in all of our businesses.

“In the face of this environment, we undertook a series of actions to adjust our costs and production levels to meet the lower demand. We have implemented a cost containment program which includes reducing full time headcount by more than 10%, reducing production output, on average, by approximately 40%, and lowering our SG&A costs, all compared to levels at the end of the last fiscal year. These initiatives were put in place mid-quarter, and we expect to realize the full benefit going forward. We also reacted quickly to reduce our purchase costs for raw materials, allowing us to maintain positive cash metal spreads. Our lower production output will allow us to match our inventory with levels appropriate for the current market conditions.

“As a result of these actions, we believe we have appropriately adjusted the Company’s cost base to reflect the current market environment, while preserving our ability to take advantage of stronger and sustainable future demand. In addition, through our continuous improvement program and other initiatives, we expect to achieve further cost reductions and efficiencies. During the quarter, we generated $70 million in cash from operations and further reduced our leverage. We continue to believe our strong balance sheet will allow us to pursue future opportunities which may arise,” added Lundgren.