Ispat makes net profits of $110m

ISPAT International, the global steel company which bought the Irish Steel plant in Cork two years ago, has made post-tax profits of $110 million (€103 million) in the second quarter of this year. It compares to $153 million for the same period last year.

The results, although down on last year, show an improvement over the first quarter of 1999, where the company's net income was $6 million on its worldwide operations.

The second quarter also saw Ispat ship more steel - 3.8 million tonnes, compared to 3.6 million tonnes during the first three months of 1999.

Ispat's chairman and chief executive, Mr Lakshmi Mittal, said the performance was in line with expectations. "We believe that we shall be able to improve our performance in every successive quarter this year, as we continue to reduce costs and increase shipments."

An Ispat spokeswoman said there had been a "difficult pricing environment" for steel over the past year. But Ispat believed it had bottomed out in the first half of this year, she said. "We believe demand and price will improve in the second half of 1999," she said.

Ispat does not detail the Irish performance separately. The group bought Irish Steel in May 1996 from the Government for £1. The company is bound by production quota restrictions, which will not be eased for another two years.

The spokeswoman welcomed the recent EU Commission decision, dismissing a complaint by British Steel about subsidies which the Exchequer had provided to Irish Steel when it was in financial difficulties. She said if the decision had gone the other way, Ispat would have been liable for the money.

According to Commission estimates, the total value of the State aid considered in connection with the sale of the Cork plant was £38 million. The figure included writing off a £17 million interest-free Government loan and a cash contribution of £2.8 million, to cover a balance sheet deficit, as well as a cash contribution of £4.6 million towards the cost of servicing debts. There was also a cash contribution of up to £7.2 million, to take account of revisions to the restructuring plan. Much of the restructuring work was done before the Ispat buyout.

Before restructuring, the Cork plant - Ireland's only steel-making and rolling facility - lost vast amounts of money.