British Steel back in profit after spin-off from Tata

03 October 2016

British Steel has returned to profit in its first 100 days of trading after being spun off as a loss-making division in April by India’s Tata Steel after it decided to exit the troubled British steel sector.

Investment firm Greybull Capital LLP bought the steelworks, based in Scunthorpe, northern England for 1 pound, reviving the historic British Steel brand, saving some 4,000 UK steel jobs and up to four times that amount in sectors dependent on steel making.

British Steel plans to inject 50 million pounds ($65 million) of capital in the current financial year, and Junck said it would need to do this several times over in the coming years.About 5,000 jobs have been axed in the British steel sector since last October, equal to about a fifth of the workforce, as it struggles to compete with cheap Chinese imports and some of the highest energy costs and green taxes in the world.

British Steel’s announcement that it has turned a profit making steel in Britain and expects to continue doing so in the year to end-March 2017 offers some hope for the sector, and for the community around Scunthorpe.

Tata Steel, which wants to reduce its exposure to the European steel sector by merging its EU assets with Germany’s Thyssenkrupp, said this month its net loss widened to $477 million in the quarter to end-June due to the sale of its Scunthorpe based business to Greybull.

Source – Reuters