STEEL group Corus reported annual profits for the first time today (17), before warning that trading conditions were set to become more uncertain.

The company - formed from the merger of British Steel and Dutch firm Hoogovens in 1999 - brought a halt to five years of losses with a surplus of £559 million. The improvement from losses of £255 million in 2003 comes after Corus benefited from a sharp pick-up in steel prices and a major restructuring.

Chief executive Philippe Varin said the company was closing the gap on its European rivals, although he added a note of caution to the results. Mr Varin pointed out that stock building in European and North American markets had softened demand in the first half of 2005, although strong demand from China was expected to make up for this shortfall.

The company also faces significant rises in raw material costs, which it expects to recover through higher selling prices and further benefits from its Restoring Success programme.

Since the merger Corus has racked up losses totalling more than £2 billion and axed thousands of jobs. It has major plants at Port Talbot, Scunthorpe and Rotherham.