Corus results set to break loss-making mould

Former British Steel group Corus is to finally break its loss-making mould with much-improved half-year results later this week, analysts said today.

Corus will announce pre-tax profits for the first time as the company created from the British Steel and Hoogovens merger of 1999 benefits from rising steel prices and a turnaround plan by new chief executive Philippe Varin.

The City has pencilled in profits of £90m (€132m) for the six month period, compared with losses of £90m a year earlier. At an operating level, Corus has already said profits will be at least £125m (€183.4m).

Corus is now on the verge of joining the FTSE 100 Index after overcoming a traumatic start to life following losses totalling almost £1bn (€1.5bn) and the axing of thousands of jobs in order to survive.

The mood of the company, which has plants in Port Talbot, Scunthorpe and Rotherham, has brightened as steel prices soar and previous problems with overcapacity disappear on the back of surging demand from China.

Mr Varin, who joined the company last year, has also received praise for his restructuring plan – known as Restoring Success. It has sought to sharpen strategic focus and foster a “can-do” culture at the Anglo-Dutch group, which has reduced debts down to around £1bn (€1.5bn).

Despite the progress, uncertainty still surrounds the future of the company’s Teesside plant, which employs 2,000 people but has been earmarked to operate as a stand-alone slab-exporter – possibly through a joint venture.

The Independent on Sunday said Corus was in discussions with a number of parties over the sale of up to 75% of the facility, which analysts believe could fetch £70m (€102.7m) to £90m (€132m).

However, the Sunday Times said Corus was in no rush to sell the site as it was required to feed the company’s South Wales operation until the end of next year.

Charles Stanley analyst Jeremy Batstone said he expected pre-tax profits on Thursday to approach the £90m (€132m) mark for the six months to June 30.

He added: “Although a shadow of its former self, Corus still dominates the domestic steel industry.”