Share price fall forces Corus to quash talk of profits alert

Corus, the Anglo-Dutch steel producer, was yesterday forced to calm fears of an imminent profits warning after a sharp fall in its share price.

Shares in the company, the world's eighth-biggest steel producer, fell 14 per cent, wiping nearly £400m from its stock market value, amid fears that Corus would be hit by a decline in steel prices.

At one point, the shares were down 17 per cent, making Corus the biggest faller in the FTSE 100 index, as talk of a profit warning gained wide circulation.

Initially, Corus declined to comment but by mid-afternoon it came out with a statement quashing the rumours. "We can categorically state we are not planning any profits warning," a spokesman said.

The spokesman added that Corus price rises announced in April had stuck and Corus – led by the chief executive Tony Pedder – was preparing to push through further increases from July. On some products, it was now planning a third round of price increases this autumn.

The group's average revenues per tonne for the second half of last year were £277 a tonne. Prices dropped in the first quarter of this year but have begun to pick up since then. The price rise to be implemented in July will add about £15 to a tonne of hot-rolled strip, which is widely used in the construction, car and domestic appliance industries.

Analysts' forecasts for the current year vary widely from an operating loss of £200m to a profit of £200m. For 2003, the range goes from a profit of £200m to as much as £800m. In 2001, Corus reported an operating loss of £385m.

Some analysts said that the recent poor economic news from the United States would hit demand and stifle the recovery in steel prices.

But Mike Shillaker of UBS Warburg said he was keeping a "strong buy" rating on Corus shares while Goldman Sachs also said it was not preparing to lower its profit forecasts.