British Steel blames outages and costs for losses after owner rejects deal

British Steel has blamed outages at its blast furnaces and higher energy costs for financial losses, days after announcing plans to end steelmaking at its Scunthorpe plant.

The company said challenging trading conditions impacted its profitability in 2023, in its latest annual results published on Monday.

It generated revenues of £1.26 billion in 2023, down from £1.73 billion the year before, reflecting the lower volume of production.

Trading conditions in 2023 were challenging, with falling commodity and steel prices impacting margins

Pre-tax losses hit £231.2 million for the year, although this was nearly half the £408.5 million in 2022.

“Trading conditions in 2023 were challenging, with falling commodity and steel prices impacting margins,” the company said.

“Energy prices remained above historic levels, albeit softening from the highs in 2022.

“Operational performance in 2023 was significantly impacted by poor stability of the company’s blast furnaces, with extended outages resulting in low production and sales volumes.”

These outages, along with the firm not being able to reduce fixed costs, drove a “significant deterioration” of profitability in the year, it said.

Losses continued into 2024, British Steel warned, as tougher trading conditions prevailed.

British Steel’s Chinese owner Jingye announced on Thursday it was launching a consultation on the proposed closure of blast furnaces at the Scunthorpe plant, raising fears of thousands of job losses.

It reportedly rejected a £500 million Government offer to help its transition to a greener form of steel production with a new electric arc furnace.

In the latest financial results, the firm said discussions continue with the UK Government to seek support for the transition which it sees as a “vital part of securing a long-term sustainable future for the business”.

It invested about £100 million including on upgrades and new projects in 2023.