 A pick up in global growth has stoked demand for steel |
Anglo-Dutch steelmaker Corus has reported a profit for the first time since it was formed in 1999. Surging steel prices have helped the company lift earnings, and it has cut jobs and sold a number of businesses.
Pre-tax profit for the six months to the end of June was �163m ($288m) from a loss of �89m a year earlier. Sales rose 11% to �4.48bn, up from �4.02bn.
The BBC's business editor Jeff Randall called the turnaround extraordinary, but warned it depended on steel prices.
Should steel prices come down, then earnings will once again be under pressure, he told BBC Radio 4's Today programme.
'Significant change'
For its part, Corus is optimistic about the future, saying it expects profit will continue to improve during the second half of 2004.
Underpinning prices is a rebound in global economic growth, especially in China.
 |  Steel producers have been able to recover the increased costs (of raw materials) in the form of higher steel prices  |
"The world steel market has experienced significant change over the last year," Corus said in its statement.
It estimated that Chinese demand jumped by 15% in the first half of 2004 from a year earlier, accounting for about a quarter of total consumption worldwide.
"The impact of this performance was to affect the supply/demand position of both steelmaking raw materials and the world steel market," the company said.
It went on to explain that China's hunger for commodities gobbled up the world's surplus steel production and led to more expensive raw materials.
World steel demand, meanwhile, increased by 5%, with growth strong in the US and steady in the EU and Japan.
 More changes are in the pipeline |
"The combination of raw material shortages, growing demand and a much reduced capacity surplus has meant that steel producers have been able to recover the increased costs in the form of higher steel prices," Corus said.
Eye on costs
A significant part of profit in the first half of the year came from cost cutting measures that are part of the company's "Restoring Success" programme.
By the end of June 2004, Corus estimated it had trimmed outgoings by �220m a year. The plan is for total annual savings of �680m by 2007.
The company is still looking at how to squeeze more from its operation and uncertainty still hangs over its Teesside plant.
Corus also has operations in Port Talbot, Scunthorpe and Rotherham.
It was formed by merging British Steel with Dutch producer Koninklijke Hoogovens.
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