TROUBLED steelmaker Corus yesterday confirmed it is to press ahead with a review of its operations on Teesside, despite the plant playing a major role in stabilising its UK business.

The Anglo-Dutch group posted half-year pre-tax losses of £89m, compared to £234m for the same period last year. Group turnover was up to £4bn from £3.5bn.

It said UK operations had stabilised and manufacturing performance had improved across the group.

The impact of exchange rates from the strengthening euro had also made a positive contribution. But some of this was offset by the higher cost of raw materials.

Tony Poynter, chairman of the Teesside multi-union committee, said: "We know for sure that we have played a significant part in that improvement.

"We have met our targets throughout that six-month period, hitting targets of 68,000 tons of steel a week. This is much better than we have managed in previous years."

But the group is sticking to its proposed reforms of the North-East sites. During the next three years, most of its Teesside works will stop supplying Corus.

By 2006, the Teesside Cast Products operation will be a stand-alone business.

If it is to survive, it will have to compete in international markets with mass-produced steel from countries such as China and Russia.

Corus bosses said market conditions remained difficult.

Chief executive Philippe Varin said: "Corus has some strong businesses but is currently producing unsatisfactory results.

"Although we have developed considerable momentum, implementing all our plans will take some time.

"Meanwhile, we foresee difficult market conditions, which will limit further improvements in our financial results in the immediate future."

Corus has already announced plans to cut 1,150 jobs before the end of next year.

But the group is investing £90m in its engineering business, which has its main base at Rotherham, South Yorkshire, and makes specialised products for sectors including the aerospace industry.

The total cost of the UK overhaul is £250m, which will be raised by asset sales and export credit agency finance.

Plans to raise the money through the sale of Corus's aluminium business were blocked by the company's Dutch supervisory board earlier this year.