September 14, 2018 / 11:36 AM / 4 days ago

British Steel blames falling pound as it axes 400 jobs

LONDON (Reuters) - British Steel, Britain’s second largest steelmaker, said on Friday it would cut 400 jobs, blaming factors such as the falling pound, which has lost nearly 13 percent of its value since Britain voted to leave the European Union two years ago.

The news comes as a blow to steel market bulls betting the sector has put the dark days of a crisis that saw 7,000 jobs or a quarter of the workforce axed between September 2015 and March 2017, well and truly behind it.

“We have a robust order book and continue to secure significant contracts with customers, old and new, around the world,” Gerald Reichmann, British Steel’s chief financial officer, said in a statement.

He added, however: “Our external environment is constantly changing. For example, raw materials are all traded in US dollars, so the weakening of the pound and euro have implications for us.”

The steelmaker, owned by investment firm Greybull Capital, employs around 5,000 people, mostly in Scunthorpe, in the north of England.

Greybull, which specialises in turning around distressed businesses, paid former owners Tata Steel a nominal one pound in 2016 for the loss-making company which they renamed British Steel.

The firm made a profit of 47 million pounds in 2017, its first full year of trading since the takeover, and said it expects to report a 68 million pound profit this year, excluding a 47 million pound one off cost.

“It is particularly disappointing (British Steel) has chosen to cut jobs so soon after celebrating a second successful year (of profits),” a spokeswoman for the National Trade Union Steel Coordinating Committee said in a statement.

Reporting by Maytaal Angel; Editing by Keith Weir

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