Losses narrow at Teesside's SSI but auditors raise concerns over future

Redcar steel producers SSI narrowed losses in 2013 but volatility in steel prices caused auditors concern

SSI's blast furnace
SSI's blast furnace

Losses have narrowed at Teesside steel producers SSI UK, although auditors have raised concerns about the uncertainty facing the business.

Accounts for the firm’s 2013 year, filed at Companies House, showed losses after tax narrowed from $439.2m (£275m) to $309.4m (£193.5m).

Despite the improvements, auditors KPMG said forecast return to profitability is dependent on volatile steel prices.

Declining steel prices in Europe and falling demand in North America were blamed for the results, although SSI remained positive that improved trading so far in 2014 has put the firm on the right trajectory.

A report from KPMG to the members of SSI said: “A return to profitability is forecast but is dependent on volatile steel prices.

“The Company is reliant for its funding on the continued support of its banks and of its parent company, the 2013 financial statements of which referred to various uncertainties.

“These factors (together with other matters laid out in the report) indicate the existence of a material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern.”

SSI reported an increase in steel slab production from 1.8 million tonnes in 2012, to 2.8 million tonners in 2013. The firm’s target was 3.2 million tonnes.

Delays to the the commissioning of SSI’s new Pulverised Coal Injection Project were attributed to the liquidation of a sub-contractor and unforeseen repair work to the plant.

SSI in Redcar
SSI in Redcar
 

A statement from the firm read: “The accounts filed with Companies House and the associated comments, reflect the financial performance in 2013, during which SSI UK encountered extremely difficult business conditions, as did many steel businesses across the world.

“Whilst the 2013 result was a significant loss, it also showed a marked improvement over the previous year .SSI’s long term commitment to the business was again demonstrated with the commissioning of the PCI plant, although the start-up was delayed by two months until July.

“Further capital expenditure is continuing with the objective of reducing costs and increasing revenue through improved operational efficiency.

“As forecast earlier in the year, the financial performance during 2014 has continued to improve and in June a positive monthly EBITDA result was achieved for the first time since the plant was restarted in April 2012.

“This trend of improved financial performance is continuing and with the support of the parent company, key stakeholders and suppliers, we are confident of achieving our goal of SSI UK becoming established as a viable and sustainable business.”

The Redcar facility, which is funded by its Thai owners, was restarted in April 2012 - and has operated at a loss since.

Journalists

David Whetstone
Culture Editor
Graeme Whitfield
Business Editor
Mark Douglas
Newcastle United Editor
Stuart Rayner
Sports Writer