Corus says recovery is distant after £234m loss

Corus, the Anglo-Dutch steel maker, warned yesterday that economic recovery in its main markets remained uncertain although it said that prices were continuing to improve.

The cautious outlook, combined with continued nervousness over the group's planned £2.7bn merger with the Brazilian steel producer CSN, prompted a 7 per cent fall in Corus shares, which ended 4p lower at 51p.

Sir Brian Moffat, the Corus chairman, said that since the end of the first half of the year, prices had strengthened and additional price increases were expected in Europe during the second six months. But he cautioned: "As to the future, the pace and timing of economic recovery across major markets remains uncertain, not least the strength of the manufacturing sector in Europe and particularly in the UK. Further price developments will be dependent on these factors."

He was speaking as Corus announced a £234m pre-tax loss for the first half, mainly due to operating losses in its UK carbon steels business of £228m.

Tony Pedder, Corus's chief executive, said he expected the benefits of its UK restructuring programme, which involves 10,000 job losses and the end of steel making at Llanwern and Ebbw Vale in south Wales, to feed through in the second half. The job losses alone will save the company £200m a year.

Mr Pedder said Corus remained committed to the CSN deal and rejected reports that it was trying either to get out of the merger or renegotiate its terms, which involve the issue of £1.3bn in new shares.

Corus said it expected to complete the sale of its aluminium interests before the end of the year. The group also reassured its 52,000 workforce that it had no intention of closing its final-salary pension scheme.