Birmingham Steel Corporation Announces First Quarter Results; Declares Quarterly Dividend.

BIRMINGHAM, Ala.--(BUSINESS WIRE)--Oct. 13, 1998--Birmingham Steel Corporation (NYSE:BIR) today announced net income of $1,024,000, or $.03 per share for the first quarter ended September 30, 1998. Results for the quarter include pre-operating start-up expenses of $10,865,000, or $.22 per share, related to the Company's new melt shop in Memphis, Tennessee, and rolling mill project under construction in Cartersville, Georgia. First quarter results also include pre-tax gains of $5.1 million, or $.10 per share, from the sale of property and income from settlements with electrode suppliers. For the same period in the previous fiscal year, the Company reported net income of $7,245,000, or $.24 per share.

Shipments for the quarter were 799,000 tons, down from 837,000 in the same period of the previous fiscal year, reflecting the impact of increased imports of steel products. Net sales in the current quarter were $270,957,000, compared with $287,547,000 in the first quarter last year.

Robert A. Garvey, Chairman and Chief Executive Officer, commented, "The Company's first quarter earnings reflect the challenging business conditions currently facing U.S. steel producers. Although domestic steel consumption remains relatively strong, the availability of cheap imported steel has resulted in downward pressure on steel selling prices and decreased domestic production. Also, because of growing uncertainty about global economic conditions, customers are very conscious of preserving working capital and are reducing their inventories of steel products."

Garvey continued, "Start-up losses at the Memphis melt shop in the first quarter were $9.5 million, or $.19 per share. However, the Memphis operation recently achieved significant progress in productivity and product quality. Memphis has produced essentially all the steel grades the SBQ division intends to sell and can now replace billets currently purchased from foreign suppliers. As a result, the Memphis facility is now in a position to serve as the primary billet supplier for the SBQ division. Based upon recent performance trends, we are optimistic that Memphis will attain a production rate of 75% of capacity in January 1999, as previously indicated.

"The SBQ division is currently carrying a large inventory of third party billets which, because of FIFO accounting, will continue to impact the Company's near-term financial results. However, we anticipate most of the third party billet inventories will be depleted by the end of the third fiscal quarter. The Company's contractual obligations to purchase from outside billet sources have or will soon expire. As a result, Memphis will soon provide all of the SBQ division's billet requirements except for leaded steel grades."

The Company also announced that its Board of Directors has declared a quarterly cash dividend of $.025 per share, which represents a temporary reduction in its previous quarterly dividend rate of $.10 per share. The dividend will be paid on November 3, 1998, to stockholders of record at the close of business on October 23, 1998.

Garvey stated, "As a result of present market conditions in the steel industry and the start-up delays at Memphis, the Board has determined a temporary reduction in the dividend rate is prudent at this time. The market prices for most public steel company stocks are significantly reduced from previous levels, reflecting continued pessimism in the investment community regarding the near-term earnings prospects for the steel industry. We anticipate a return to the previous dividend policy level once start-up losses no longer impact the Company's earnings and industry market conditions improve."

Garvey concluded, "We expect a challenging business environment for the remainder of fiscal 1999. However, market conditions may improve if the U.S. government supports trade actions filed recently by a number of other steel companies."

Birmingham Steel operates in the mini-mill sector of the steel industry and conducts operations at facilities located across the United States. The Company produces steel reinforcing bar, merchant products and SBQ (special bar quality) bar, rod and wire. The common stock of Birmingham Steel Corporation is traded on the New York Stock Exchange under the symbol "BIR."

Notice: Except for historical information, the matters described in this document are forward-looking statements with the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including economic conditions, market demand factors, unanticipated start-up and operating expenses, equipment breakdowns or failures, financing considerations, and the performance of the various joint ventures in which the Company is involved, as well as other risks described from time to time in the Corporations' periodic and special filings with Securities and Exchange Commission. Any forward-looking statements contained in this document speak only as of the date hereof, and the Corporation disclaims any intent or obligation to update such forward-looking statements. Comparisons of results for current and prior periods are not necessarily indicative of future performance and should not be relied upon for any purpose other than as historical data. -0-

                     Birmingham Steel Corporation
                         Financial Highlights
               (in thousands, except per share amounts)

                                     Three Months Ended
                                        September 30,
                                 ---------------------------
                                    1998             1997
                                 ----------       ----------
Revenues                         $  270,957       $  287,547
Net income                       $    1,024       $    7,245
Earnings per share               $      .03       $      .24
Average shares outstanding           29,488           29,685