British Steel reported a first quarter profit of £21 million and announced the biggest single investment in its manufacturing operations for a decade.

The resurrected British Steel was created in 2016 when Greybull Capital took over the Long Products Europe business of Tata Steel.

In its second annual trading update, British Steel said its turnaround remains “firmly on track” and said £50 million will be invested to upgrade its Scunthorpe Rod Mill.

The investment will see a new modern wire rod line open at Scunthorpe.

To support growth plans, British Steel recently secured £90 million of new financing from White Oak Asset Finance, an affiliate of White Oak Global Advisors, LLC.

British Steel’s bank financing is provided by a syndicate led by PNC Financial Services UK Ltd.

British Steel said £40 million has been committed to other capital expenditure in 2019 to maintain and improve its existing asset base and a further £500 million of projects “are being pursued.”

Annual turnover was £1.4 billion in full-year 2018 versus £1.2 billion in full-year 2017.

British Steel said 1,000 people have joined the business since its launch in June 2016.

It said employees are now receiving a staggered 4% pay rise and have been allocated a further one million company shares

British Steel executive chairman Roland Junck said: “Our transformation remains firmly on track and continues apace with unprecedented levels of investment going into the business.

“Without the unique blast furnace chill last summer – the impact of which was widely reported by media – we’d have exceeded our year 2 target which demonstrates the growing strength of our business.

“This strength is why a number of leading financial institutions continue to provide us with additional financing to support our investment and growth plans.

“This is not only enabling us to improve our plant, products and services – as demonstrated with our rod mill investment – it’s allowing us to expand our portfolio by making strategic acquisitions such as FNsteel.

“Increased raw material costs and fluctuating steel prices continue to be a challenge.

“It’s important safeguarding action is taken to prevent the dumping of cheap steel into Europe following the imposition of steel tariffs by the US.

“However, we remain in positive talks with the Government, and our other stakeholders, and are confident about our future.

“Our order book is strong and we’ve the capacity and capability to play a significant role in major infrastructure projects such as HS2 and the Heathrow expansion.

“We continue to invest in our people and products, remain focused on reducing the cost of liquid steel and are growing into new markets across the globe.

“With the support of our employees we’ve achieved a great deal in a short space of time and while a lot of hard work lies ahead, we’ve made significant progress towards building a sustainable future.”

British Steel deputy CEO Paul Martin said: “This is a major investment in the future of our business, underpinning our commitment to providing customers with higher technical specifications of steel and a diverse, premium product range.

“Not only will this increase our ability to serve the domestic wire rod market, it will allow us to become a more competitive exporter and accelerate the growth of British Steel in line with our company strategy.

“By continuing to make investments like this our aim is to become the steel supplier of choice for more businesses across the world.”

Tom Otte, president of White Oak Asset Finance, said: “Our investment in British Steel speaks strongly to the company’s turnaround over the past few years.

“We are very optimistic on the company’s continued growth, and fully expect our capital to finance its organic expansion.”

Three significant appointments have been made to British Steel’s executive team – Gerald Reichmann has joined as chief financial officer, Ron Deelen as chief marketing officer and Ugur Yilmaz as chief operating officer.

The company now employs more than 5,000 people while FNsteel, which has more than 300 employees, is being integrated into the business.

Paul McBean, Scunthorpe site multi-union chairman, said: “It wasn’t long ago that people were doubting if these works had a future but since the launch of British Steel the business has gone from strength-to-strength.

“The rod mill investment is a fantastic second birthday present for British Steel and the 5,000 employees contributing to our turnaround.

“While we still have a long way to go, investments of this scale – and the ongoing commitment to capital expenditure – demonstrate the great optimism flowing through this company.”

Richard Sims, British Steel managing director, Wire Rod, said: “Our wire rod performs an essential role in letting people go about their everyday lives, from the car or bus they travel to work in to the bed they sleep in at night.

“It’s one of the most diverse products available so this investment will not only deliver significant improvements to our customers but to hundreds of millions of end-users.

“Today is also hugely significant for our employees whose skill, and dedication to customer satisfaction, enable us to invest with such confidence.

“Together we look forward to opening the new line and growing into the new markets this investment allows.”