Corus unveiled pre-tax earnings of £559 million for 2004, compared with a 2003 loss of £208 million, with profitability accelerating towards the end of the year. At an operating level, the company made nearly three times as much profit in the last half of 2004 as in the first.

This year had begun where 2004 left off. "We expect the first half trading environment to be broadly in line with the second half of last year," Philippe Varin, the Corus chief executive, said.

Strong global growth and a tight steel market were "generally supportive of a positive outlook for 2005".

However, he added: "As the year progresses, we see conditions are more uncertain."

The company highlighted the influence on the steel market of China, which accounted for 26 per cent of global production but 28 per cent of demand.

"Any chance in Chinese domestic production or demand can, therefore, have a material effect on the global supply-demand balance," this morning’s statement said.

The average steel price achieved by Corus last year rose by 17 per cent to £434 million, allowing the company to raise group turnover by 17 per cent to £9.33 billion despite failing to increase production.

Although the prices of raw materials, such as coal, iron ore and scrap metal, rose by 18 per cent, the company was able to raise margins through cost savings brought by the three-year "restoring success" restructuring drive, which has reached its half-way point.

The campaign has achieved nearly half its target of £680 million in annual cost cuts through measures including the loss of thousands of jobs and a rationalisation of production.

"We are sharpening our commercial performance," M Varin said. "We are building a firmer foundation for growth."

Michael Leahy, the general secretary of Community, the steelworkers' union, higlighted the role of Corus workers.

"The improvement in productivity of the company’s UK operations are nothing short of magnificent," he said.

"Corus’s UK workforce now expects to see further sustained investment which, allied to the continuing strong market conditions, will ensure that the song of success can be sung for many years to come."

The results, which follows four years in which Corus lost a total of more than £2 billion, beat City forecasts and prompted Standard & Poor's to raise its rating on the steelmaker's debt.

"The continued favourable steel market and Corus’ strong liquidity position will allow the group to address the key challenge presented by the restructuring of the group’s UK operations into a business that is free cash flow positive over the cycle," S&P said.

However, the warning of "uncertain" conditions was blamed for a 1.5p fall to 56p in Corus shares.

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