STEEL firm SSI moved last night to reassure workers at its North-East plant after another year of massive losses.

SSI UK, which runs the former British Steel works at Redcar, has reported an annual deficit of $309.4m (£193.5m), down from $439.2m (£275m) losses the previous year – leading its accountants to voice “significant doubt” the company can continue as a going concern.

Two-and-a-half years after it restarted production, following a lengthy hiatus, the Redcar works, which employs 1,800 people, still depends on funding from its Thai owner and a syndicate of banks to meet day-to-day costs.

However, SSI has stuck by the plant and says the business is now close to profitability.

Quarterly figures are expected to show a modest profit when they are published next month.

However, auditors KPMG, writing in SSI UK’s annual report, published over the weekend, cautioned: “A return to profitability is forecast, but is dependent on volatile steel prices.

“The company is reliant for its funding on the continued support of its banks and of its parent company, the 2013 financial statements of which referred to various uncertainties.

“These factors (together with other matters laid out in the report) indicate the existence of a material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern.”

The firm blamed weak global demand for steel as a key reason behind its failure to balance the books. Production was affected by delays last year to the start of a pulverised coal injection (PCI) plant, which has since boosted output and cut raw material costs.

It said: “The accounts reflect the financial performance in 2013, during which SSI UK encountered extremely difficult business conditions, as did many steel businesses across the world.

“SSI’s long term commitment to the business was again demonstrated with the commissioning of the PCI plant, although the start-up was delayed by two months until July. Further capital expenditure is continuing with the objective of reducing costs and increasing revenue through improved operational efficiency.

“The financial performance during 2014 has continued to improve and in June a positive monthly EBITDA (earnings before interest, tax, depreciation and amortisation) result was achieved for the first time since the plant was restarted in April 2012.

“This trend is continuing and with the support of the parent company, key stakeholders and suppliers, we are confident of achieving our goal of SSI UK becoming established as a viable and sustainable business.”

Paul Warren, chairman of the multi-union at the plant, told The Northern Echo: “Normally, there would be doom and gloom when you read a report like this, but it is not like that at all. These figures relate to last year and things have improved a lot since then.

“We have no worries whatsoever about jobs or the future of steel making on Teesside. This was always going to be a 20 to 30 year project. The mood at the plant is positive because we are heading in the right direction.”

Former steel worker George Dunning, leader of Redcar and Cleveland Borough Council, said he believed SSI could make substantial profit once steel prices picked up.

He said: “Steel prices are low and that is part of the problem, but prices pick up, as was proved before with the consortium back in 2005, and they made substantial amounts of profit, but then when the tide turned they pulled out. SSI are in for the long term.”

Tom Blenkinsop, Labour MP for Middlesbrough South and East Cleveland, said: “SSI knew what world market it was entering. With any process manufacturer you have to look at the long game. We are not talking about the service industry.

Ian Swales, Liberal Democract MP for Redcar, said the business had turned its first profit in earnings before tax and said: “I am confident that it is turning the corner. As far as I understand it the banks are heavily committed to the business and to put the business under would cause them enormous losses. They share my faith that SSI will turn the corner.”