Corus moves to profit on cloudier outlook

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Corus, the Anglo-Dutch steelmaker, announced its first full year profits since it was created by the merger of British Steel and Hoogovens five years ago.

However, the shares were lower in London and Amsterdam on Thursday morning after the company said it was cautious about prospects for the second half of this year, partly because of heavy stockbuilding in Europe and North America.

Analysts said the company had also failed to give any update on the sale of its aluminium business. They added that steel prices were near their peak after doubling in 2004 on strong demand from China in particular, and could start to retrench later this year.

Philippe Varin, chief executive, said: “Global growth remains relatively strong and the demand/supply balance is tight by historical standards, generally supportive of a positive outlook for 2005.

“Overall, we expect the first half trading environment to be broadly in line with the second half of last year. As the year progresses we see conditions as more uncertain.”

Turnover for the year to January 1 rose from £7.95bn ($15.33bn) to £9.33bn and the company recorded a pre-tax profit of £559m compared with a loss of £255m last year. Earnings per share were 10.05p against a 9.25p loss last year. Operating profit before exceptional items was £582m ($1.1bn) in the year to end-December, against a £208m loss in 2003.

There was no dividend but Mr Varin said payments would recommence this year.

On top of surging steel prices, Corus has benefited from its sweeping restructuring programme that helped it to swing into profit in the first half of 2004 for the first time since its creation in 1999.

The company, which produces 19m tonnes of steel a year, said it had cut net debt to £854m from £1.01bn at the start of 2004. Corus has shed about 13,000 jobs and shut UK plants since 1999 as it battled cheap imports and sluggish economic growth.

Its shares were trading 2.2 per cent lower in midday trading at 56¼p from a close of 57½p on Wednesday.

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