Corus explains details of review in annual general meeting

Corus explains details of review in annual general meeting

The Corus board is determined to take measures against the difficulties the company is experiencing, with the hope of finding a solution to constant loss making situation as well as medium term refinancing. The strong sterling exchange rates and the progressive decline of UK manufacturing leaded to significant losses. Corus aims to adjust its production to market conditions and to eliminate the losses by becoming internationally competitive. With this restructuring program anticipated to cost £250 million, the main objective of the company will be to review the UK production to make it cash positive. Under the scope of the review, it is decided to concentrate the production in the UK on three sites with the purpose of providing feedstock to the group's UK mills and downstream businesses. In line with this decision flats production will be handled at Port Talbot in South Wales, long products at Scunthorpe in Lincolnshire and engineering steels at Rotherham in South Yorkshire. Teesside operation will not be required for the Group's internal demand once the necessary investment is made. However not to close down Teesside, the group will try focus on slab and bloom production at this site to supply international markets and thus to generate cash. The Llanwern mills and coating line will be supplied by the flats produced at Port Talbot. As a result of the plans, Roundwood coiled bar mill, steelmaking and hot rolling mill at Stockbridge and finishing facilities at Tipton will be closed. These measures are assumed to effect 1'150 jobs and threatening a further 2'200 in Teesside. The group's total flat production will reduce to 10.5 million tons per year, focusing on meeting only the UK demand. More job losses could be expected as the group intends to look for ways of cost reduction in order to obtain cost and competitive advantage. The restructuring programme will be completed in 2004. Furthermore, in order to fund the medium term working capital a new three year banking facility agreement is currently discussed by the Corus board.