Steel-maker Corus makes its first profit

The steel group Corus unveiled profits for the first time today after soaring prices and a restructuring boosted the former British Steel business.

The steel group Corus unveiled profits for the first time today after soaring prices and a restructuring boosted the former British Steel business.

The company brought a halt to five years of losses with interim pre-tax profits of £163 million, compared with a deficit of £89 million last time.

The turnaround follows a traumatic start to life for the company - formed from British Steel and Dutch firm Hoogovens in 1999. Since the merger, the company has racked up losses totalling £1 billion and axed thousands of jobs.

But chief executive Philippe Varin, who took the helm last year, said there had been a "substantial improvement" in the performance of the business, which has plants in Port Talbot, Scunthorpe and Rotherham.

He pointed to strong market fundamentals as steel prices soar and previous problems with overcapacity disappear on the back of strong demand from China.

Corus has also secured £220 million of annual cost savings from its "Restoring Success" turnaround programme, an initiative that has also sought to sharpen strategic focus and foster a "can do" culture at the group.

Around 50% of the improvement in group operating profits - to £147 million from losses of £57 million last time - was down to the restructuring.

The company said the pace of improvement had "accelerated sharply" in the second quarter of 2004 and it expected progress to continue in the second half of the financial year.

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

Corus said discussions with a number of interested parties were taking place but did not provide further details in today's results announcement.