Corus brings in consultants as job cut fears refuse to die
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Your support makes all the difference.Corus, the struggling steel group, refused to rule out another round of job cuts yesterday and attempted to play down fears that the £543m sale of its aluminum business was in trouble. It described reports of another 1,500 redundancies as "pure speculation".
However, Corus confirmed that it had brought in McKinsey, the management consultants, to help on its strategic review as the company tries to find a way forward after the collapse of its planned merger with the Brazilian steel maker CSN in November. The shares fell 20 per cent on the news, valuing the steel giant at just £560m. The stock stood at 174.5p three years ago.
Corus has already worked with Hatch Beddows, a management consultancy specialising in the metals industry, on the sale of the aluminum unit to Pechiney of France. The decision to hire a second firm suggests Corus fears the sale may fail and that a contingency plan is required.
Corus said: "McKinsey's remit is to conduct a review of the group's strategic decision to adopt a strategy focusing around carbon steel and, specifically to consider the strategic decision to divest the group's aluminum business."
The review is expected to take a few weeks and be completed in time for the group's full-year results on 13 March.
Corus has run into severe problems with the sale of its aluminum operation. Because the business is part of a Dutch holding company workers committees in the Netherlands must be consulted and have been opposing the sale. The issue has since been referred to the group's management board in the Netherlands though no decision has yet been made.
Paul Smith, at Barclays Capital, said: "The longer we don't have a definitive statement from the company on the remaining obstacles, and how they're going to deal with them, the more concerned one should be."
Paul McTaggart, an analyst at Morgan Stanley, said: "I'd expect the sale to go ahead. The banks will want to substantially reduce the current loan facility."
Corus is in talks with its banks about refinancing a £1.2bn credit facility. The main lenders are HSBC, ABN Amro and CSFB and they are thought to be insisting on tough new conditions on the original loan, which expires next year.
Corus was formed when British Steel merged with Royal Hoogovens of the Netherlands in 1999. It employs 26,000 workers in the UK and 52,000 worldwide. But it has been hit by cheaper steel being manufactured in markets such as South Korea.
Michael Leahy, general secretary of the Iron and Steel Trades Confederation, said: "There is no need for further major job losses in the UK, especially in light of the blows that Corus' loyal UK workforce have had to endure in the recent past."
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