Strong demand for steel has brightened Corus' fortunes

The company made a pre-tax profit of �559m ($1.07bn) in 2004, after reporting a loss of �255m in 2003.

Corus has restructured its operations in the UK in recent years, reducing its workforce and boosting its productivity.

But Corus warned that conditions for the second half of 2005 were uncertain.

Strong demand

We are building a firmer foundation for growth Philippe Varin, Corus chief executive Check Corus' share price

The results represent the first yearly profit since Corus was created in 1999 by the merger of British Steel and Dutch firm Koninklijke Hoogovens.

The company, which produces 19 million tonnes of steel a year, also saw its sales rise to �9.3bn from �7.9bn.

The return to profit represents a significant turnaround for Corus, which has had to compete against cheap imports and contend with sluggish economic growth in its core European markets.

"We are building a firmer foundation for future growth," said Philippe Varin, Corus' chief executive.

"Our 2004 performance is a clear indication that we are delivering on our commitment to close the competitive gap with our European peers by the end of 2005."

Price peak?

Steel prices doubled in 2004, as China's continuing economic boom fuelled demand.

This allowed Corus to offset the considerable rise in the cost of raw materials, such as iron ore and coking coal, seen over the past year.

Corus plants such as Port Talbot have improved productivity

Industry experts believe that steel prices are unlikely to remain at their current levels throughout 2005.

"Prices have probably peaked," Patrick Flockhart, managing director at Steel Business Briefing, told Reuters.

"[This] suggests the cash-flow situation might not be quite as good in the foreseeable future."

Uncertain future

Mr Varin said the outlook for 2005 was generally positive but warned that prospects for the second half of the year were less certain.

His remarks prompted a fall in the company's shares, which closed down 3% at 56 pence on Thursday.

Corus' renaissance has come at a price, with 13,000 jobs being lost across its operations - which include plants in Port Talbot, Scunthorpe and Rotherham - since 1999.

The future of the company's Teesside plant, which has been refocused as a exporter of slab or semi-finished steel, was in doubt for much of last year.