Corus reports first annual profits

UK steel group Corus reported annual profits for the first time today, before warning that trading conditions were set to become more uncertain.

UK steel group Corus reported annual profits for the first time today, before warning that trading conditions were set to become more uncertain.

The company – formed from the merger of British Steel and Dutch firm Hoogovens in 1999 – brought a halt to five years of losses with a surplus of £559m (€804m).

The improvement from losses of £255m (€367m) in 2003 comes after Corus benefited from a sharp pick-up in steel prices and a major restructuring.

Chief executive Philippe Varin said the company was closing the gap on its European rivals, although he added a note of caution to the results.

He said: “Overall, we expect the first half trading environment to be broadly in line with the second half of last year. As the year progresses we see conditions as more uncertain.”

Mr Varin pointed out that stock building in European and North American markets had softened demand in the first half of 2005, although strong demand from China was expected to make up for this shortfall.

The company also faces significant rises in raw material costs, which it expects to recover through higher selling prices and further benefits from its Restoring Success programme.

Since the merger Corus has racked up bottom-line losses totalling more than £2bn (€2.9bn) and axed thousands of jobs. It has major plants at Port Talbot, Scunthorpe and Rotherham.

Corus said Restoring Success accounted for 30% of the year-on-year improvement in the company’s operating result and that by the end of 2004 it had achieved half the expected benefit to earnings of £680m (€978m) a year.

With fortunes improving, Corus told shareholders it intended to recommence dividend payments in respect of the 2005 financial results.

The higher steel price allowed turnover to rise 17% to £9.33bn (€13bn) in 2004, despite volumes remaining little changed.

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