Printer Friendly

BRITISH STEEL PLC REPORTS RESULTS FOR 1992/93

    LONDON, June 21 /PRNewswire/ -- British Steel plc (NYSE: BST) today reported the following results:
    Chairman and Chief Executive's Comment
    Commenting on the results and outlook, Mr. Brian Moffat said:
    "The past year was difficult for the steel industry.  Falling demand both in the EC and elsewhere and excess production capacity resulted in significant price reductions across most product areas with the result that few major steel producers in the world have been trading profitably, and most are experiencing considerable financial pressures.
    Last November, the board decided not to pay an interim dividend but indicated that in the absence of unforeseen circumstances a final dividend of 1p per share would be paid.  Subsequently, steel prices throughout Europe fell even further, although I am pleased to say that this situation has recently started to be reversed.  Prices for steel products are beginning to move towards more realistic levels, although they still remain some 10-25 percent below mid-1989.
    The apparent recovery in the UK economy coupled with a more competitive exchange rate is very welcome, especially as the major economies in mainland Europe continue to be in decline.  Overall, we believe the short term prospects have improved but the situation remains fragile.  Sustained recovery is heavily dependent on reaching a solution to the structural problems of the EC steel industry and, in particular, effective controls by the European Commission over the continued availability of state aid for some producers.  These issues still have to be resolved and in line with its previous views the board has recommended a final dividend of 1p per share.
    The commission has identified surplus hot rolling capacity in the community of around 30mt, which it judges will need to be eliminated before the industry as a whole can return to viability.  Furthermore, it has indicated that it is prepared to work with the industry to facilitate restructuring.  British Steel supports this initiative and agrees that further rationalization is necessary together with the complete elimination of state aid.  Unless subsidies are eliminated by the commission and member states, there is a danger that efficient private sector companies such as British Steel will be forced to reduce capacity further, while weaker but state supported enterprises are sustained.
    Looking to the future, the business scene, while improving, is far from clear.  Certainly British Steel has many advantages over its competitors.  It has little debt, has strong financial resources and is determined to continue the relentless drive to reduce costs still further.  Steel prices however, remain inadequate and the political decisions regarding restructuring which are to be made later this year by the commission and member states, including the UK government, are key to the future of the industry.  Furthermore, privatization's should be encouraged so that the EC steel industry can restructure and organize itself in the future with the minimum of political interference.
    The general uncertainty in the major economies and currently markets throughout the world is unsettling.  The performance of UK manufacturing industry will continue to be very important to the company's future.  On balance the future prospects now appear brighter than they were a year ago but still depend on the government's success in maintaining low inflation with a competitive and stable exchange rate."
    Review of 1992/93
    The difficult trading conditions experienced during the past year have adversely affected the company's performance and a trading loss of 113 million pounds sterling (1992 - 98 million pounds) was incurred. After taking account of the company's share of results of associated undertakings and net interest, the loss before tax amounted to 149 million pounds (1992 - 55 million pounds).
    UK demand for British Steel's main finished products was 8.2mt, a reduction of 4 percent from the previous year's level, and the company's market share was 56.2 percent.  Total sales volume of 11.9mt reflected an 8 percent fall in UK deliveries and an increase in export sales volume of 4 percent.
    World steel demand, with the major exception of the People's Republic of China, continued to be weak for most of the year with an accelerating rate of decline in mainland European markets, particularly in Germany.  Weak demand in mainland Europe was exacerbated by increased supplies of steel from the former Eastern bloc and the impact of trade actions by the North American steel industry against imports of steel. In the last quarter of the financial year, there were signs of some recovery in UK and US steel demand, but the company's major Western European markets moved further into recession.  Consequently, EC steel demand in 1992/93 was 5 percent lower than the previous year.
    Lower selling prices were the main cause of the increase in the trading loss, offset in part by efficiency improvements and lower rationalization and related costs.  The closure of Ravenscraig and a further significant reduction in the workforce contributed to the efficiency gains.
    Despite the difficult trading conditions the increase in net borrowings was limited to 71 million pounds, as a result of firm cash control, with particularly strong cash flow towards the end of the year.
    Dividend
    The board is recommending a final dividend of 1p net per share (1992 - 1.5p), making 1 pence for the year (1992 - 4.5p).  The reinstatement of dividend payments to more normal levels will require a sustained recovery in the profitability of the company as well as the continued maintenance of a sound financial position.  Sustained recovery in profitability is heavily dependent on a continued improvement in steel prices, which in turn will be dependent on a solution being found to the structural problems of the EC steel industry and, in particular, on effective controls over continuing state aid for some national producers.  The company continues to press vigorously for the upholding of the existing State Aid Code.
    Economic and Business Environment
    The main external factors influencing the group's financial performance are the economic climate in UK and continental Europe, exchange rate relativities, particularly with the Deutschmark and US dollar, and the structural and capacity problems of the European steel industry.
    Economic activity in continental European economies, in particular Germany, has declined in the past year and many countries are now in recession.  While recovery in the UK appears to be underway, it is likely to be slow with the advantages of devaluation being restricted by the weak state of most export markets.  The steel using sectors in the UK are likely to recover at different rates.  Output in the automotive sector is expected to recover due to a combination of growing UK demand and the export potential of new UK producers.  On the other hand construction output is expected to decline further in 1993.  Overall, UK steel consumption is likely to lag behind a general recovery in the UK economy.
    Exchange rates have an important influence on British Steel's competitiveness and results.  Some 80 percent of turnover is influenced by the Deutschmark, reflecting the fact that Germany is both the EC's largest national market for steel and its largest steel producing nation, with the balance being influenced by the US dollar. Approximately one-quarter of British Steel's costs are influenced by the US dollar as most raw materials are purchased in markets where prices are set by reference to that currency.
    Accounting Standards.
    The adoption of Financial Reporting Standard No. 3 has not materially affected the presentation of the consolidated profit and loss account.  In particular, the group has not previously utilized the extraordinary items classification and, therefore, the calculation of earnings per share is unaffected.
                         BRITISH STEEL PLC
                Consolidated Profit and Loss Account
             for the financial year ended April 3, 1993
                      (in millions of pounds)
                                            1993       1992
    Group turnover                          5,083      5,280
    Deduct share of turnover of
     associated undertakings                 (780)      (682)
    Turnover                                4,303      4,598
    Operating costs                        (4,416)    (4,696)
     Trading loss                             (113)       (98)
    Share of results of associated
     undertakings                             (19)         6
    Operating loss                           (132)        (92)
    Profit on disposal of fixed assets         ---         15
    Loss before interest                     (132)        (77)
    Net interest                              (17)         22
    Loss before taxation                     (149)        (55)
    Taxation                                   19          20
    Loss after taxation                      (130)        (35)
    Minority interests                         ---          1
    Loss attributable to shareholders        (130)        (34)
    Dividends                                 (20)        (90)
    Retained loss for the year               (150)       (124)
    Loss per share                           (6.5)p      (1.7)p
    There were no material acquisitions and no operations were discontinued.
    During the year, British Steel merged virtually the whole of its stainless steel manufacturing and distribution interests with Avesta AB (see note 12).
                     BRITISH STEEL PLC
                  Consolidate Balance Sheet
                       at April 3, 1993
                    (in million of pounds)
                                        1993      1992
    Fixed assets
    Tangible assets                     2,741     2,900
    Investments                           725       549
    Total                               3,446     3,449
    Current Assets
    Stocks                                710       981
    Debtors                             1,002     1,141
    Short term deposits                   494       504
    Cash at bank and in hand               58        27
    Total                               2,264     2,653
    Creditors:  amounts falling due
     within one year                   (1,084)   (1,155)
    Net current assets                  1,180     1,498
    Total assets less current
     liabilities                        4,646     4,947
    Creditors:  amounts falling due
     after more than one year            (537)     (498)
    Provisions for liabilities and
     charges                             (265)     (391)
    Accruals and deferred income
    Regional development and other grants (114)    (131)
    Total                                3,730    3,927
    Capital and Reserves
    Called up share capital              1,000    1,000
    Statutory reserve                    2,338    2,338
    Profit and loss account                382      573
    Total                                3,720    3,911
    Minority interests                      10       16
    Total                               3,730     3,927
                     BRITISH STEEL PLC
          Statement of Total Recognized Gains and Losses
           for the financial year ended April 3, 1993
                    (in millions of pounds)
                                           1993        1992
    Loss for financial year               (130)         (34)
    Exchange translation differences on
     foreign currency net investments      (24)          ---
    Total recognized gains and losses
     relating to the year                 (154)         (34)
        Reconciliation of Movements in Shareholders' Funds
           for the financial year ended April 3, 1993
                     (in millions of pounds)
                                           1993          1992
    Loss for financial year                (130)         (34)
    Dividends                               (20)         (90)
    Total                                  (150)        (124)
    Exchange translation differences on
     foreign currency net investments       (24)           --
    Goodwill arising on consolidation       (17)         (15)
    Net reduction in shareholders' funds   (191)        (139)
    Shareholders' funds at beginning
     of year                              3,911         4,050
    Shareholders' funds at end of year    3,720         3,911
                          BRITISH STEEL PLC
                   Consolidated Cash Flow Statement
                For the Financial Year ended April 3, 1992
                        (In millions of pounds)
                                                       1993   1992
     Net cash flow from operating activities            202    146
     Returns on investments and servicing of finance
     Interest received                                   39     79
     Interest paid                                      (48)   (32)
     Interest element of finance lease rental payments   (9)    (2)
     Dividends received from associated undertakings     12      9
     Dividends paid                                     (30)  (175)
     Net cash outflow from returns on investments and
      servicing of finance                              (36)  (121)
     Taxation
     UK Corporation tax paid                             (3)   (65)
     Overseas tax paid                                   (2)    (9)
     Tax paid                                            (5)   (74)
     Investing activities
     Sale of tangible fixed assets                       12     41
     Sale of subsidiary undertakings                     --      4
     Sale of fixed asset investments                     --     21
     Merger of stainless business                        45     --
     Repayment of loans                                   3     19
     Purchase of tangible fixed assets                 (225)  (294)
     Purchase of subsidiaries and businesses
      (net of cash acquired)                             (3)   (10)
     Purchase of fixed asset investments                (22)   (17)
     Loans to associated undertakings                    --    (13)
     Net movements on deposits with original
      maturity greater than 3 months                    208    179
     Net cash inflow/(outflow) from investing activities 18    (70)
     Net cash inflow/(outflow) before financing         179   (119)
     Financing
     New long term loans                                108    200
     New short term loans                                --      1
     Principal payments under capital leases             (7)   (13)
     Repayment of borrowings                           (107)   (31)
     Net cash outflow from financing activities          (6)   157
     Increase in cash and cash equivalents              173     38
     This statements has been prepared in accordance with Financial
     Reporting Standard No. 1 which requires utilization of bank
     deposits with original maturity greater than 3 months to be treated
     as an investing activity.  The total cash outflow is summarized in
     note 9.
                      Supplementary information
                    (In millions of pounds sterling)
                                                     1993     1992
     1.  Turnover
      A. Geographical analysis by destination
          United Kingdom                            2,197    2,558
          European Community (excluding UK)         1,235    1,202
          Europe (excluding EC)                       230      169
          USA                                         218      192
          Rest of North America                        83       86
          South America                                25       33
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Jun 21, 1993
Words:1998
Previous Article:JOSTENS CRAFTS YEARBOOK COMMEMORATING 11 YEARS OF 'CHEERS'
Next Article:A.M. BEST ISSUES 318 BEST'S RATINGS IN 12TH WEEKLY RELEASE
Topics:


Related Articles
BRITISH STEEL REPORTS RESULTS FOR THE HALF YEAR TO SEPT. 28, 1991
BRITISH STEEL REPORTS RESULTS FOR 1991/92
USX-U.S. STEEL GROUP ANNOUNCES FOURTH QUARTER AND FULL YEAR RESULTS
BETHLEHEM STEEL REPORTS RESULTS FOR FOURTH QUARTER AND YEAR 1992
LTV REPORTS IMPROVED FIRST QUARTER RESULTS FROM CONTINUING OPERATIONS
ARMCO REPORTS SECOND QUARTER NET INCOME OF $8.7 MILLION
ARMCO REPORTS THIRD QUARTER RESULTS
ARMCO REPORTS THIRD QUARTER RESULTS
SHILOH INDUSTRIES EXPECTS IMPROVED RESULTS FOR QUARTER AND YEAR ENDED OCTOBER 31
BRITISH STEEL PLC RESULTS FOR THE HALF YEAR TO 2 OCT. 1993

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters