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BRITISH STEEL REPORTS RESULTS FOR 1991/92

 BRITISH STEEL REPORTS RESULTS FOR 1991/92
 LONDON, June 29 /PRNewswire/ -- British Steel, plc (ADS - NYSE: BST)


said today that the year 1991/92 has been a testing one for the company with lower demand for steel in its main markets and continuing excess production capacity worldwide resulting in significant reductions in selling prices in most product areas. In the United Kingdom, the economy was particularly weak so that demand for British Steel's main products at 9.0mt was 11 percent below last year's level and represented a fall of 22 percent from the peak year of 1988/89.
 The management's response to these conditions has been to continue with the development of markets and the customer base as well as to accelerate the program of cost reduction and further plant rationalization, including the complete closure of Ravenscraig works at the end of June 1992.
 Turnover at 4,598 million pounds sterling was 9 percent down on the previous year, mainly a reflection of lower selling prices. Deliveries of steel products were 12.2mt (1991 - 12.2mt) with exports at 5.6mt (1991 - 4.9mt). U.K. market share was 56 percent (1991 - 57 percent). While the overall effect on costs of inflation and exchange rates was virtually neutral, severe price competition cut deeply into margins and more than offset the significant benefits derived from cost reduction and improved operating efficiency.
 Trading profit amounted to 17 million pounds (1991 - 323 million pounds) but, after taking account of exceptional and other items, there was a loss before tax of 55 million pounds (1991 - profit before tax 254 million pounds). Exceptional items of 100 million pounds (1991 - 192 million pounds) related largely to closure costs of Ravenscraig, but also included provision for identified future cost reduction measures.
 The results of associated undertakings, all of which operate in the steel industry, also deteriorated sharply. The trading profit of the largest, UES Holdings Limited, fell from 52.5 million pounds in 1990 to 1.9 million pounds in 1991.
 Balance Sheet
 The balance sheet remains strong. Net borrowings at the year end were 11 million pounds as compared with 342 million pounds net funds at the start of the year, the movement of 353 million pounds including capital expenditure of 255 million pounds (1991 - 459 million pounds). During the year the company made a debenture stock issue which raised 150 million pounds further to strengthen its liquid resources.
 The Future
 The present difficult trading conditions are expected to persist throughout 1992/93. While steel demand in the European Community is likely to remain flat, all producers recognize the need to improve selling prices. The company's management will continue to reduce costs, improve product quality, streamline yet further the management procedures and look to develop more effective relationships between the steel mills, distribution outlets and customers.
 Dividend
 Against the uncertainties of the projected economic background and concern about the timing of any recovery, the board considers it prudent to reduce the annual level of dividend to 4.5p (1991 - 8.75p) by recommending a final dividend of 1.5p (1991 - 5.75p).
 Chairman's Comments
 Announcing the results, Sir Robert Scholey said:
 "At the time of my interim statement, I warned that a marked improvement in trading prospects would be needed to keep an appropriate balance between operating cash flows, the investment requirements of the group, the cost of continuing rationalization, the payment of dividends and the need to maintain a robust capital base. As yet, the timing of recovery in the U.K. is uncertain and any such recovery could be overshadowed by the reduction in demand in other major markets, especially mainland Europe, and the prevailing low level of world steel prices. The preservation of cash resources is of great importance given the severity of trading conditions presently being experienced. Accordingly, our capital investment program has been cut back appropriately and a budget of some 200 million pounds during 1992/93 reflects the limiting of expenditure to finishing off major schemes currently in progress together with environmental and essential small schemes focused on cost reduction with quick paybacks.
 "The board has felt it right to continue to pay dividends notwithstanding the losses the company made in 1991/92. This reflects the continuing intention to seek to provide shareholders with a flow of income and to use the financial resources of the company to support dividend payments during this recession. Shareholders should, however, be aware that the company's return to adequate levels of profitability to support a dividend of this reduced level on trading grounds will depend on an increase in steel prices generally, in addition to the benefits the company will secure on further cost reduction. Whilst the company believes that the current level of prices is unsustainably low for all steel producers, the timing of the recovery of prices remains uncertain."
 BRITISH STEEL PLC
 Consolidated Profit and Loss Account
 for the Financial Year Ended March 28, 1992
 (In millions of pounds)
 1992 1991
 Turnover 4,598 5,041
 Operating costs (4,581) (4,718)
 Trading profit 17 323
 Exceptional items (100) (192)
 Operating (loss)/profit (83) 131
 Share of results of associated undertakings 6 42
 Net interest and other income 22 81
 (Loss)/profit before taxation (55) 254
 Taxation 20 (60)
 (Loss)/profit after taxation (35) 194
 Minority interests 1 (1)
 (Loss)/profit attributable to shareholders (34) 193
 Dividends (90) (175)
 (Loss)/profit retained (124) 18
 Earnings per share (1.7)p 9.65p
 Consolidated Balance Sheet
 At March 28, 1992
 (In millions of pounds)
 1992 1991
 Fixed assets:
 Tangible assets 2,900 2,891
 Investments 549 556
 Total 3,449 3,447
 Current assets:
 Stocks 981 1,013
 Debtors 1,141 1,107
 Short term deposits 504 630
 Cash at bank and in hand 27 38
 Total 2,653 2,788
 Creditors: amounts falling due within
 one year (1,155) (1,267)
 Net current assets 1,498 1,521
 Total assets less current liabilities 4,947 4,968
 Creditors: amounts falling due after more
 than one year (498) (279)
 Provisions for liabilities and charges (391) (479)
 Accruals and deferred income
 Regional development and other grants (131) (153)
 Total 3,927 4,057
 Capital and reserves:
 Called-up share capital 1,000 1,000
 Statutory reserve 2,338 2,338
 Profit and loss account 573 712
 Total 3,911 4,050
 Minority Interests 16 7
 Total 3,927 4,057
 Consolidated Cash Flow Statement
 for the Financial Year ended March 28, 1992
 (In millions of pounds)
 1992 1991
 Net cash inflow from trading activities 302 882
 Net cash outflow from exceptional items (156) (96)
 Net cash inflow from operating activities 146 786
 Returns on investments and servicing of finance:
 Interest received 79 108
 Interest paid (32) (21)
 Interest element of finance lease rental payments (2) (2)
 Dividends received from associated undertakings 9 35
 Dividends paid (175) (170)
 Net cash outflow from returns on
 investments and servicing of finance (121) (50)
 Taxation:
 U.K. corporation tax paid (65) (126)
 Overseas tax paid (9) (4)
 Tax paid (74) (130)
 Investing activities:
 Sale of tangible fixed assets 41 13
 Sale of subsidiary undertakings 4 --
 Sale of fixed asset investments 21 2
 Repayment of loans 19 18
 Purchase of tangible fixed assets (294) (401)
 Purchase of subsidiaries and
 businesses (net of cash acquired) (10) (485)
 Purchase of fixed asset investments (17) (21)
 Loans to associated undertakings (13) (1)
 Net movement on deposits with original
 maturity greater than 3 months 179 (25)
 Net cash outflow from investing activities (70) (900)
 Net cash outflow before financing (119) (294)
 Financing:
 New long term loans 200 105
 New short term loans 1 2
 Principal payments under capital leases (13) (7)
 Repayment of borrowings (31) (7)
 Net cash inflow from financing activities 157 93
 Increase/(decrease) in cash and cash equivalents 38 (201)
 Supplementary Information
 1. Turnover
 1992 1991
 a. Geographical analysis by destination (millions of pounds)
 United Kingdom 2,558 3,015
 European Community (excluding U.K.) 1,202 1,210
 Europe (excluding EC) 169 210
 USA 192 176
 Rest of North America 86 86
 South America 33 25
 Africa 43 37
 Asia 288 249
 Australasia 27 33
 Total 4,598 5,041
 Included above:
 Exports from the United Kingdom 1,483 1,474
 Sales to associated undertakings 291 344
 b. Major product groupings (millions of pounds)
 Strip products:
 Uncoated 854 873
 Coated 818 934
 Total 1,672 1,807
 Sections and plates 968 1,089
 Tubular products 469 481
 Stainless products 335 350
 Other steel products 67 --
 Finished products 3,511 3,727
 Semi-finished products 294 388
 Total steel industry products 3,805 4,115
 Distribution 649 786
 Others 144 140
 Total 4,598 5,041
 (NOTE: 1991 restated to reflect analysis of product sales by British Steel's overseas mills, previously included in "Others.")
 c. Sales volume by major product groupings mt mt
 Strip products:
 Uncoated 3.5 3.0
 Coated 2.1 2.1
 Total 5.6 5.1
 Sections and plates 3.2 3.6
 Tubular products 0.9 1.0
 Stainless products 0.3 0.3
 Other steel products 0.3 --
 Finished products 10.3 10.0
 Semi-finished products 1.9 2.2
 Total steel industry products 12.2 12.2
 Home 6.6 7.3
 Export 5.6 4.9
 (NOTE: 1991 restated to reflect inclusion of deliveries by British Steel's overseas mills.)
 2. Operating costs (millions of pounds)
 Raw materials and consumables 2,011 2,111
 Maintenance costs (excluding own labor) 391 418
 Other external charges 693 661
 Employment costs 981 1,000
 Depreciation (net of grants released) 240 220
 Other operating costs 228 253
 Changes in stock of finished goods
 and work in progress 45 67
 Own work capitalized (8) (12)
 Total 4,581 4,718
 3. Exceptional items (millions of pounds)
 Redundancy and other rationalization costs 88 147
 Amounts written off tangible fixed assets 37 57
 Release of regional development and other grants (10) (9)
 Profit on disposal of investments (15) (3)
 Total 100 192
 (NOTE: Exceptional items arising in associated undertakings are included in share of results of associated undertakings. Comparative figures have been restated.)
 4. Taxation (millions of pounds)
 U.K. corporation tax (credit)/charge (50) 39
 Advance corporation tax written off 35 --
 Overseas taxes 4 4
 U.K. deferred tax -- 8
 Overseas deferred tax (10) --
 Associated undertakings 1 9
 (Credit)/charge to P&L account (20) 60
 5. Employees (Number)
 Average weekly numbers employed:
 Within U.K. 47,200 53,000
 Overseas 4,400 3,600
 Total 51,600 56,600
 Numbers employed at year end:
 Within U.K. 44,800 51,600
 Overseas 4,300 4,500
 Total 49,100 56,100
 6. Capital expenditure (millions of pounds)
 Purchase of tangible fixed assets
 (as per cash flow statement) 294 401
 Movement in capital creditors (39) 58
 Capital expenditure during year 255 459
 7. Net borrowings (millions of pounds)
 Short term deposits 504 630
 Cash at bank and in hand 27 38
 Due within one year:
 Bank overdrafts (57) (52)
 Bank and other loans (4) (7)
 Obligations under finance leases (6) (9)
 Due after more than one year:
 Debenture stock (150) --
 Bank and other loans (236) (191)
 Obligations under finance leases (89) (67)
 Net (borrowings)/funds (11) 342
 8. Dividend - ordinary shareholders
 The final dividend recommended for 1991/92, of 1.5p net per share, will be payable on Aug. 17, 1992, to ordinary shareholders on the share register at the close of business on July 23, 1992.
 9. Dividend - ADR holders
 The final dividend recommended for 1991/92 will be payable in dollars on Aug. 27, 1992, to the holders of American Depositary Receipts whose names are registered with the Bank of New York on July 23, 1992. U.S. and Canadian qualifying residents are entitled to a refund of the U.K. tax credit attached to the dividend, less a 15 percent U.K. withholding tax charged on the sum of the dividend and the credit. For such qualifying ADR holders, the dividend of 1.5 pence per ordinary share, which is 15 pence per ADS, becomes 17 pence per ADS.
 10. U.S. and Canadian GAAP
 US GAAP Canadian GAAP
 1992 1992 1992 1992
 Pounds US$(A) Pounds Cdn$(A)
 (In millions)
 Net income - U.K. GAAP (34) (59) (34) (70)
 Adjustments:
 Amortization of goodwill (22) (38) (22) (45)
 Pension costs (24) (42) 1 2
 Interest costs capitalized 33 58 33 68
 Depreciation of capitalized
 interest (9) (16) (9) (19)
 Taxation 19 33 19 39
 U.S. and Canadian GAAP (37) (64) (12) (25)
 Net income per ADS:
 As adjusted - 1992 (0.18) (0.32) (0.06) (0.12)
 - 1991 0.70 1.22 0.79 1.59
 Shareholders' equity - UK GAAP 3,911 6,801 3,911 8,076
 Adjustments:
 Goodwill 252 438 252 520
 Interest costs capitalized
 (net of depreciation) 86 150 86 178
 Pension costs (42) (73) 15 31
 Taxation (274) (476) (274) (566)
 Proposed dividend 30 52 30 62
 U.S. and Canadian GAAP 3,963 6,892 4,020 8,301
 Comparative - 1991 4,174 7,296 4,206 8,458
 (A) -- At year end exchange rates of:
 1 pound equals US$ 1.739 (1991 - 1.748) and
 1 pound equals Cdn.$ 2.065 (1991 - 2.011).
 -0- 6/29/92
 /CONTACT: British Steel public relations, in London, 071-735-7654/ CO: British Steel plc ST: IN: MNG SU: ERN


GK-TO -- NY009 -- 4654 06/29/92 11:07 EDT
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