Lex live: Corus
Two pieces of good news in the space of 24 hours are a rare event at Corus, the perennially troubled Anglo-Dutch
steelmaker. The withdrawal of Gallagher Holdings' nomination of a director to the Corus board is a victory, albeit
temporary, for good corporate governance. Directors should be appointed to serve the interests of the company, not any
particular group; and the intentions of Alisher Usmanov, the Russian metals magnate who controls Gallagher, remain
unclear.
Thursday's announcement of a return to operating profit in the first quarter is welcome news, but Gallagher
argues that performance is not all it should be in a booming steel market. However, even Aad van der Velden,
Gallagher's proposed nominee, has admitted that Philippe Varin, chief executive, is moving Corus in the right
direction.
In the past year Mr Varin has renegotiated Corus's debt, raised fresh capital through an equity placing and
embarked on a restructuring programme. Corus is no stranger to restructuring, but this time rationalisation is being
accompanied by investment, both in production and marketing. Margins are improving and Corus believes the pick-up is not
entirely due to market conditions.
Corus's share price, meanwhile, appears fully up with events - trading in line with the European sector on
earnings multiples and at a premium to larger rival Arcelor. There is still a long way to go in delivering a business
that is cash generative across the cycle. It is to be hoped that Gallagher will desist from distracting management from
this daunting task.
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