A NORTH-EAST steelmaker, which has written off £1bn from its balance sheet, says it expects another tough year, despite slight improvements in its UK operations.

Tata Steel says deliveries dropped from 14m tonnes to 13m tonnes during the last financial year, which it put down to repairs and outages.

The company, which employs about 1,500 workers at plants including Hartlepool and Skinningrove, east Cleveland, says production and deliveries increased from the last quarter, standing at 3.4m tonnes, but said demand for steel remained “subdued”.

However, Dr Karl-Ulrich Köhler, Tata Steel Europe managing director and chief executive, today warned the European recession would continue to make business difficult, after revealing the company's full-year results.

He said: “Europe’s economic deterioration last year reversed the modest recovery in European steel demand that had been going on since 2009 and our deliveries fell as a consequence.

“But we did not allow the downturn to divert us from our longer-term objective of building an all-weather business and invested in significant improvements to our operational base, increasing the proportion of high-value products and services, which have risen by about 20 per cent in the last two years.

“These improvements have given us a firmer foundation as we enter another tough year of subdued steel demand in Europe.”