British Steel profits hit by destocking and weak demand

BRITISH Steel yesterday said its pre tax profit fell more than 50 per cent in the first hall, hit by destocking and weak underlying demand in Europe.

The company's pre tax profit of £262 million sterling for the half year to September 28th fell within analysts' expected range of £250 to £280 million but was sharply lower than the £550 million it reported for the year ago period.

As expected, the company maintained its interim dividend at 3.0p per share.

"Demand for our steel products in the UK was satisfactory but remained weak in mainland Europe due to continued destocking through the supply chain and weak underlying demand," the chairman, Mr Brian Moffat, said in a statement.

However, he told a news conference later that the company was cautiously optimistic about the mainland European steel market through the first half of 1997.

"The destocking phase in mainland Europe is ending," Mr Moffat said, noting price increases in structural, flat and stainless steel products.

Mr Moffat said one note of caution was the strengthening of the British pound and its impact on prices and the competitiveness of British Steel's British customers in their export markets.