Corus profits soar to ?435m

The steelmaker Corus today saw its first half profits more than double as it continued to make strides in its recovery programme.

Pre-tax profits at the Anglo-Dutch firm surged to ?435m for the first six months of the year, compared to ?156m last year.

As expected, the company declared its first dividend since October 2000 - an interim payment of 0.5p per share - which it said reflected its long-term recovery.

Corus attributed its improving fortunes to its restructuring programme, which was introduced by Philippe Varin after he was appointed as the chief executive in 2003.

The company said the restructuring had delivered 35% of the improvement in profits, and it was on track to reach its target of saving ?680m by the end of 2006.

Corus only managed to move back into the black a year ago. As part of its recovery programme, the group has cut more than 13,000 jobs at its plants in Port Talbot, Scunthorpe and Rotherham since 1999.

The steel industry as a whole has also benefited from the high demand for commodities because of China's booming economy and strong growth elsewhere, including the US.

However, Corus warned that, in the third quarter, it would be hit by lower steel prices, higher iron ore and coal costs and a 500,000 tonne cut in output as it attempted to bring supply into line with demand.

After three years of surging steel prices and low raw material costs, European and US steel makers have had to contend with a surge in raw material costs - the price of iron ore jumped 71.5% in April - and a rise in Chinese production. That has created a glut of steel, driving down prices for some products by as much as 30%.

Mr Varin said the situation for European producers was starting to improve after they had taken joint action to scale back production in June and July.

"We have, in Europe, a situation where the stock has peaked, and we expect to follow the same pattern in the US, which has decreased," he added.