Peter Bernscher CEO of British Steel
British Steel has today (1 June) reported a £126m turnaround in its first year as an independent business, providing a solid foundation for further growth.
On the first anniversary of its launch, since being acquired by family investment office Greybull Capital LLP, British Steel has reported a profit of £47m (EBITDA) for the 12 months ending 31 March 2017.
The Long Products Europe business - formerly owned by Tata Steel and purchased on 1 June 2016 – had recorded a £79m loss in the previous financial year.
The company has significantly improved profitability despite a 44% increase in the cost of raw materials. Annual turnover was £1.2bn. The volume of steel produced was 2.7 million tonnes versus 2.9 million tonnes in 2015-16. Sales were 2.5 million tonnes versus 2.6 million tonnes for the previous year.
British Steel’s plan to build a sustainable future is firmly on track after cost-saving initiatives, product development and market growth secured consistent profit in each quarter. This turnaround has enabled the company to deliver planned capital investment, and it today announces plans to invest a further £40m in 2017-18.
British Steel executive chairman Roland Junck said: “The transformation in this business is remarkable and that is down to our remarkable people who have embraced, engineered and led change.
"They are the reason we can today reveal the best financial performance in the long products business since 2007 and they are the reason I have great optimism for the future of British Steel. I’m delighted to be able to confirm that our employees will return to full pay today having sacrificed 3% of their salary to make last year’s sale and the turnaround plan possible.
“In 12 months we have started transforming from an inward-looking production hub into a profitable, more agile business by controlling costs, improving our product range and quality, and through strategic investments. After significant capital investment, we have made a small net profit and although it hasn’t been easy an entrepreneurial spirit is starting to flow through British Steel – it means we are fast becoming the efficient, customer-focused business we need to be.
“As we look to further grow the business it is important our employees, who have played such a vital role in the successful implementation of the turnaround plan, should share in our future success. I’m therefore delighted to set out the employee share scheme, an almost unique initiative in our industry to recognise their contribution.
“We’ve worked closely with our shareholders, customers, suppliers and government and I’d like to thank everyone for their support as we look to build a sustainable future.”
CEO Peter Bernscher added: “British Steel has achieved a remarkable turnaround but this is just the beginning.
“To guarantee our future as a sustainable business for decades to come we must now seize and capitalise on the opportunities that have been created.
“Maximising and growing our steelmaking capability will be key, but success will also depend upon increasing our footprint in new and current markets and products, continuing to improve on quality and optimising manufacturing routes, while developing our people, the power of our brand, and the strength of our supply chain.
“While the challenges the UK steel industry has faced over the last decade have not gone away, we continually respond to the market and stay flexible in an effort to overcome them. Therefore it is vital we continue to work with governments, our customers and suppliers to build our businesses and support the regions in which we operate as we look to become the global supplier of choice.”
Acquisition of 50% of Redcar Bulk Terminal
British Steel has also announced that it has recently completed the transfer of a 50% stake in Redcar Bulk Terminal from Tata Steel, agreed as part of the original purchase of the Long Products Europe business.
Junck said: “We are delighted to announce today that we’ve recently completed the transfer of a 50% stake in Redcar Bulk Terminal from Tata Steel.
“As we look to grow our business and increase our footprint, the terminal is the perfect strategic fit for British Steel. Not only does it sit next to our Teesside Beam Mill, it enjoys a coveted position in the North East which offers a superb gateway into the industrial heartland of the UK and opens up additional new routes across the globe – not only for ourselves but businesses throughout the region.
“I would like to thank Tata Steel for their support during the transfer and praise the management and employees at Redcar Bulk Terminal who, during the last 12 months, have not only helped secure the future of the terminal but started laying firm foundations for its future success. They have led a major restructuring exercise, secured significant new contracts and increased the number of new products being handled.
“Redcar Bulk Terminal is very much open for business and we have every confidence it will not only complement British Steel, but be the perfect partner for businesses throughout the north of England.”
Sue Jeffrey, leader of Redcar & Cleveland Borough Council and chair of the Shadow South Tees Development Corporation, said: “The Redcar Bulk Terminal is of strategic importance to the South Tees Site offering huge potential for businesses with international markets. Since the devastating closure of SSI, we have been working to secure a long term future of this key asset and this helps stabilise the position. I look forward to working with British Steel to ensure the terminal plays a major role in the future of the whole South Tees Site.”
Ben Houchen, Tees Valley Mayor, said: “This commitment is good news for Tees Valley, it helps secure the future of the Terminal which is one of the deepest on the East Coast offering huge potential for international trade for the region.
“The Tees Valley has a healthy pipeline of interested parties looking to invest and this is one of many examples of the confidence in the area. I look forward to working closely with British Steel and other key partners to attract inward investment and bring new jobs to the Tees Valley.”
British Steel now owns a 50% stake in Redcar Bulk Terminal. The remainder of the shares are controlled by the Official Receiver following the collapse of SSI in October 2015.