BS. Base Grp.

RNS No 6475b
BRITISH STEEL PLC
22nd July 1998

STATEMENT BY CHAIRMAN AND CHIEF EXECUTIVE

SIR BRIAN MOFFAT

AT THE ANNUAL GENERAL MEETING, 22 JULY 1998.

In my statement in the Annual Report and Accounts I said that the steel 
trading outlook is complex.   Whilst the results for the first quarter to 
the end of June are up to our expectations and the underlying level of 
demand remains good in Europe and North America, the trading situation for 
the rest of this year will depend on a number of external factors.

As a result of the economic crises in the Far East there have recently been 
further increases in the levels of imports into Europe and the USA so that 
we have seen some weakening in prices and increases in customers' stock 
levels.   The situation in the Far East is still far from clear and while 
significant efforts are being made to bring about stability, the ability of 
Japan to overcome its own difficulties is crucial to these efforts. 

There has been some slight fall in the value of sterling recently, which we 
welcome, but its level remains too high and it is jeopardising the 
competitive position of British industry and, in particular, our customers 
involved in exporting.  However, with doubts being expressed about the 
strength of the Euro when it is introduced in January of next year, we 
believe that we must manage our business on the basis that sterling will
remain relatively strong for some time to come.

Accordingly we continue to drive forward on our cost and efficiency plans.  
In this regard further moves have been made since the year end on the 
radical manpower review programme.  Team working agreements are now in place 
in almost all businesses in the UK, further reductions in manpower are being
achieved, and our training and education programmes are accelerating.

The initiative launched in March 1997 to improve the quality of our supplies 
and services and to reduce the number of suppliers has already achieved 
significant input cost reductions and, which will accelerate this year.  In 
addition, business improvement programmes are now being developed in 
conjunction with Cap Gemini.   These are market led and focused on bringing
us closer to our customers while improving margins, costs and working 
capital.  We are confident that significant benefits will result from this 
work on a progressive basis over the next few years.

I am pleased to report that the continuous annealing line at Port Talbot, 
the major item of capital expenditure undertaken last year, commenced hot 
commissioning earlier this month and is now producing commercial products.  
It will enhance our capability to meet customers' increasingly demanding
requirements, particularly in the automotive sector.

We continue to look for suitable opportunities for growing the business in 
steel or steel-related activities, particularly in Europe and North
America.

Our ongoing cost and efficiency campaigns, as well as capital investment 
programmes, also embrace an area about which the general public is becoming 
more and more aware , namely the environment.  British Steel has for many 
years been working to improve its environmental performance and continues to 
do so.  We have a very good record in this area and I thought you would
be interested in reading about it in our latest Environmental Report.   
Copies are available for each of you today and I would urge you to take one 
on the way out.  The Report complements the open approach we try to adopt in 
the communities where we operate when we explain and discuss environmental 
issues.

These are challenging times for the world steel industry but British Steel 
remains in good shape with a highly motivated workforce determined to meet 
the challenges ahead.

END

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