British Steel, the Scunthorpe-based European steel manufacturer, recorded underlying losses of £140mln in 2020, according to a report filed at Companies House.
The company, which was saved from liquidation in 2019 by Chinese steelmaker Jingye Group, was bought for only £24mln following months of subsidised operations by the UK Government.
British Steel lost £69mln a tonne on 2.6mln tonnes of steel produced in Jingye’s first full year in charge, despite receiving revenues of £844mln during 2020.
The fall in demand from automotive customers was a predominant factor in the operating loss the company made last year, it said, due to car factory closures at the start of the pandemic.
The accounts reported a £295mln profit for the year but that was achieved via a £410mln paper profit resulting from the £24mln reduced price it was bought for, despite its assets being valued at £434mln.
The company, which employs 3,000 people in Scunthorpe alone, received a £220mln loan to use as cash for everyday operations from the Chinese group last year.
In total, Jingye has said it will inject £1.2bn to enhance British Steel’s assets, which will include improving its energy efficiency in an attempt to reduce costs and carbon emissions.
This comes as the company claimed in September 2021 that soaring energy prices were making it near impossible to capitalise on the surging demand for steel and infrastructure goods, in light of the substantial economic recovery this year has seen.
A 50-fold rise in energy prices at certain points in the day in September compared with April was reported by the company – reemphasising how hard it is to make steel profitable when energy demand and prices are highest.