British Steel has reported a Q1 profit of £21m and announced the biggest single investment in its manufacturing operations for a decade.
In its second annual trading update, British Steel reported a significant long-term investment plan to support the business for years to come, announcing that £50m will be invested in upgrading the Scunthorpe Rod Mill.
In addition, £40m has been committed to other capital expenditure in FY19 to maintain and improve the existing asset base.
British Steel reported annual turnover of £1.4bn, up from £1.2bn the previous year, and profits rose at the company’s first major acquisition, FN Steel.
British Steel executive chair Roland Junck said: “Our transformation remains firmly on track and continues apace with unprecedented levels of investment going into the business.
“This strength is why a number of leading financial institutions continue to provide us with additional financing to support our investment and growth plans. This is not only enabling us to improve our plant, products and services – as demonstrated with our rod mill investment – it’s allowing us to expand our portfolio by making strategic acquisitions such as FNsteel.
“Increased raw material costs and fluctuating steel prices continue to be a challenge. It’s important safeguarding action is taken to prevent the dumping of cheap steel into Europe following the imposition of steel tariffs by the US. However, we remain in positive talks with the Government, and our other stakeholders, and are confident about our future.
“Our order book is strong and we’ve the capacity and capability to play a significant role in major infrastructure projects such as HS2 and the Heathrow expansion. We continue to invest in our people and products, remain focused on reducing the cost of liquid steel and are growing into new markets across the globe.”
The £50m wire rod investment will see a new modern wire rod line open at the company’s current Scunthorpe Rod Mill. It’s been designed by Primetals which will also oversee its installation. Work is scheduled to start this summer and the new operation is set to be commissioned in autumn 2019.
Paul Martin, British Steel Deputy CEO, said: “This is a major investment in the future of our business, underpinning our commitment to providing customers with higher technical specifications of steel and a diverse, premium product range.
“Not only will this increase our ability to serve the domestic wire rod market, it will allow us to become a more competitive exporter and accelerate the growth of British Steel in line with our company strategy.
“By continuing to make investments like this our aim is to become the steel supplier of choice for more businesses across the world.”
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