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Brighter outlook as steel firm moves into the black
7:10pm Thursday 10th July 2014 in Business
THE future of a North-East industrial icon and 1,800 steel jobs have been boosted with confirmation that SSI UK is in the black for the first time since production restarted two years ago.
After reporting sustained heavy losses confirmation last night that the Redcar iron and steelmaker had recorded a debut operating profit was hailed by plant bosses as a major milestone.
But Cornelius Louwrens, SSI UK business director and chief operating officer, warned that there was still a long road ahead.
“I am very pleased that we have managed to achieve a positive EBITDA (earnings before interest, tax, depreciation and amortisation) result in June, and everyone associated with SSI UK deserves credit for us reaching this important milestone,” said Mr Louwrens.
“Of course we realise that we still have a long way to go to achieving our goal of making this a sustainable business, but this is a major boost for us and one which I believe will be the start of an improving trend towards full profitability.
"We are extremely grateful for the continued support we receive from our parent company, suppliers and all of our stakeholders,” he added.
The firm declined to reveal details of the results but a source said they were better than expected.
Thai-based SSI reopened the plant in April 2012 after it had been mothballed by previous owner Tata Steel in 2010.
The owners have spent more than $1bn to revive the operation and offset losses incurred by falling steel prices, as well as the rising cost of raw materials and energy.
At the end of the first quarter of 2014 it had yet to turn a profit despite producing its five millionth tonne of steel.
The company has also suffered severe cashflow problems which has seen it renegotiate payment terms with its suppliers and the local authority.
Production records have been set, and costs reduced in recent months, as new plant boss Mr Louwrens and his team focussed their efforts on improving the firm’s bottom line.
The first set of upbeat results have been hailed as a testament to workers, management and the plant’s Thai owners led by Win Viriyaprapaikit, SSI group chief executive and president.
James Ramsbotham, North East Chamber of Commerce chief executive, said: “SSI arrived in our region at an incredibly difficult time. The fight to keep the plant open had been long and incredibly painful for many who relied on the plant for their income. It is therefore fantastic to see SSI’s commitment to the North-East being rewarded.
“They deserve a huge amount of credit. SSI began from effectively a standing start with a huge investment in new equipment and some turnover in the workforce in the teeth of the worst recession we've had in years.
“In a little over two years, they're turning a profit. There's real optimism for the future.”
Roy Rickhuss, the general secretary of the Community trade union, which represents the majority of the SSI UK workforce, said: “This is welcome news and testament to the hard work, dedication and commitment of the SSI workforce. It’s good to see that SSI is making progress towards its goal of fully profitable steel making. It’s also further confirmation that Community’s members and the local community were right never to give up on steel making in Redcar.
“Clearly there are still challenges to overcome not least the fact that SSI and other energy intensive industries need to wait two years before they’ll get support to offset the cost of the government’s environmental and energy policies.
“Community will continue to work in partnership with SSI UK to ensure a sustainable future for Teesside steel.”
See The Northern Echo tomorrow as Business Editor Andy Richardson hears from SSI bosses about the next phase of their plans.