Corus reports £1.15bn loss

Higher steel prices expected to help Corus later this year

Steel group Corus has reported a larger than expected loss of £1.15bn, much of it being the cost of a restructuring that will cut 6,000 jobs in the UK.

The newly-merged Anglo-Dutch firm announced in February that it would reduce its workforce across the UK. It will close down plants in Ebbw Vale and Bryngwyn in Wales, and scale back at Llanwern and other factories.

That decision, blamed on the need to cut losses and move the company back into profit, caused a political storm.

Corus history

June 1999
British Steel and Hoogovens announce merger

March 2000
Warns weak euro could cost jobs

June 2000
Cuts 1200 jobs

July 2000
Cuts another 1300 jobs

Sept 2000
Reports £52m 3-month loss

Dec 2000
Chief Executives resign and indicates massive job losses to come

Feb 2001
Announces 6000 job losses

"What we have tried to do is...draw a line in the sand," Chairman Sir Brian Moffat told analysts in a conference call on Thursday.

In its first set of results since then, Corus is reporting an operating loss of £1.152bn ($1.67bn) for the 15 months to December, £100m higher than it forecast.

The loss includes a £1.03bn charge for restructuring, following the completion of the merger between British Steel and Dutch steel group Hoogovens in October 1999.

Most of its remaining £115m losses were incurred at its UK carbon steel business, but these should be offset later this year when the company expects that steel prices will rise again.

Forging a future

Sir Brian said the overall operating loss hid the good results in its aluminium and stainless steel divisions which made operating profits of £109m and £150m respectively.

The merger announcement in February between Usinor of France, Arbed of Luxembourg and Aceralia of Spain to create the world's biggest steel maker should cut oversupply in the market and help lift prices.

Moffat: "What we have tried to do is draw a line in the sand"

The company does not expect to make any further merger-related exceptional charges, and predicts costs savings to the tune of £150m by the end of 2001 and £250m by 2003.

During 2000, the company was losing £1m a day.

As a result of this, Corus will not be paying shareholders a dividend.

Corus's shares rebounded 6.7% to 64p in London but the rise only partially reversed falls seen earlier this week.

Government critical

On Wednesday, a committee of MPs criticised Corus for poor management and its failure to involve the government in key talks over job cuts.

In their report on the steel crisis, the MPs concluded that little could have been done by the government to prevent thousands of job losses in Wales and the UK.

However, the weak euro was described by MPs as only a "short term" problem for Corus and they said "a large well-managed company could have been expected to weather" the fluctuations.