ASW goes 10.8m pounds into red after provision

ASW HOLDINGS, the Cardiff steel maker, has made its contribution to capacity cuts in the European steel industry by way of a pounds 4.6m provision to cover restructuring costs in its downstream activities, writes Terence Wilkinson.

The provision helped to push ASW deeper into the red in 1992 with losses before tax of pounds 10.8m compared with a profit of pounds 2.3m. But the company has seen a 'gradual change to a more favourable outlook' in European markets and despite the loss is paying a final dividend of 3p. The shares rose 20p to 153p.

'Margins have shown some restoration in Europe, scrap prices are rising and we have held down our cost base. That is what gives us the confidence in the outlook,' said Paul Rich, managing director. British Steel, which owns 20 per cent of ASW, rose 2.25p to 82.75p.

ASW's final dividend has been cut from 4.5p to 3p, matching the cut in the interim payment and making a total of 6p against 9p.

Total operating profits were pounds 5.9m lower than in 1991 and pounds 43.7m less than in 1990 because of lower prices and margins in Europe, ASW's main market. Mr Rich said that prices, adjusted for raw material costs, had been below those in 1982 and were uneconomic even for the most efficient producers.

Capital spending of pounds 13m remained high, exceeding depreciation by pounds 4.4m, but borrowings were pounds 17m, compared with shareholders' funds of about pounds 120m.