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Pilkington blighted by energy cost
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Glass maker Pilkington's turnaround plan has been frustrated by tough conditions in Britain, where the construction of a rival glass factory has compounded problems caused by the strong pound and high energy prices.
In a trading update released yesterday, Pilkington said its European building-glass division had suffered a 10pc fall in operating profit over the past six months.
The division, which makes up one third of the company, offset gains in other areas to leave overall profit about the same as last year.
The news did not worry analysts, who said it was a good performance under the circumstances, but did highlight the company's vulnerability in the UK and Europe, where a glass-making glut is expected to keep prices low for up to two years. This has added to the problem of the stronger pound and the flow-through effects into energy prices of the high cost of oil.
Stuart Chambers, chief executive, said: "When Europe bounces back in 18 months to two years' time, together with the continuing growth in some of the developing markets like South America, China and Russia, you get all that together and I think the medium-term prospects are pretty good."
He also said it would take up to 18 months for prices to recover in North America, where Chinese companies have launched a price war on replacement windscreens. The shares rose 2.25p to 88p.
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September 29th, 2004
Source: Telegraph.co.uk |
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