British Steel, manufacturer of a large percentage of the UK’s rail, has ended the third quarter of 2016 in profit.
While any company intends to make a profit, this announcement is significant for several reasons.
Firstly, it is only seven months since owner Tata sold its long products operation, with plants in Scunthorpe and Hayange (France), to Graybull in June 2016.
Secondly, one reason that Tata sold the business was that it was running at a loss.
And thirdly, the new owners have had to make a significant additional investment, with £39 million ploughed into the business and 350 new employees taken on.
This positive financial result will generate the cash to finance further stages of the company’s turnaround plan, which was introduced by the previous owners 18 months ago. The focus will now be to grow the British Steel brand.
Customers both at home and abroad are continuing to buy the company’s products. Infrarail has recently purchased 16,000 tonnes of rail for the M’Sila line and the North South Phosphate Mine line in Algeria, while a long-term contract has been placed by Rete Ferroviaria Italiana (RFI), Italy’s national rail track company, for track renewals.
Roland Junck, former chief executive of ArcelorMittal, is now British Steel’s executive chairman. “A vital part of maintaining our momentum and building on our success to date is our investment for the future – in our people and our plant,” he said in a statement.
“We are totally committed to becoming more energy efficient and further improving the quality of our products to ensure they meet the exacting and changing demands of our customers.
“We continue to enjoy incredible support from our employees and I’d like to thank them as without their skill, dedication and personal sacrifices we would not be where we stand today. The unions have remained steadfast, while the supportive handover from Tata Steel also helped us to hit the ground running on day one.”
Paul McBean, British Steel’s multi-union chairman, was equally upbeat: “Our industry continues to face many challenges – we still have a competitive disadvantage to many of our European and global competitors and we will continue to lobby the Government to ensure this changes.
“However, we need to focus on what we can do from within, and to do that we need to use the positivity that has built up in the business since becoming British Steel to help us on our journey.
“We’ve shown we’re fighters, we’ve shown we’re survivors and now we’ve got to show that we can become industry and national champions.”
Report by Nigel Wordsworth