A sharp drop in British Steel’s interim profits provided further evidence this week of the strong pound’s impact on manufacturing. Further acceleration in the firm’s jobs and cost cutting programme looks sure to follow.
British Steel reported £143m pre-tax profits for the six months to 27 September compared with £262m for the same period last year. The fall was primarily blamed on exchange rates – particularly the strength of the pound against the Deutschmark – causing average revenue per tonne to fall 11% and turnover to drop 7% to £2.94bn.
Sir Brian Moffat, chairman and chief executive, said `accelerated’ cost cutting had already led to `over 2,000 job reductions being identified since April’, and that more rapid savings still will be sought during the 1998-99 financial year.
Analysts had already factored exchange rates into their valuations, although the company’s performance exceeded predictions, which ranged between £75m and £110m.