Corus Group Provides Market Update.

Business/Financial Editors

LONDON--(BUSINESS WIRE)--Nov. 13, 2002

On 17 July 2002, Corus announced that it had reached agreement in principle on a proposed merger with Companhia Siderurgica Nacional (CSN).

As stated, the proposals were subject to a number of conditions and the Corus Board would continue to monitor the situation as the work on the merger progressed. Despite the strong strategic rationale for the merger, ongoing uncertainties in the global business environment and the financial markets have led the Board to conclude that the transaction cannot be completed as envisaged at this time and therefore it has decided to terminate the proposed transaction.

The Corus management will remain strongly focused on the restoration of the performance and competitiveness of its existing carbon steel assets. Although progress continues to be made in this regard, since early-October there has been increasing evidence that the demand for steel products in its core UK and continental European markets is not at the level the Group expected at the time of the announcement of its interim results in September. As a consequence while the second half operating result (before exceptional items) is expected to be around (pound)100m better than the first half ((pound)252m loss), this is not the pace of recovery anticipated particularly due to a squeeze on the profitability of downstream operations.

Although the improving trend of results is expected to continue into the first quarter, the outlook beyond that is uncertain with the pace and timing of economic recovery and demand difficult to predict.