Glass Maker Boosted by Cost Cuts

Glass maker Pilkington posted a 26% rise in annual profits today after cost-cutting measures helped it combat tough trading conditions.

Pre-tax profits before goodwill and exceptional items rose to £180 million in what the group described as a “strong” performance as it benefited from last year’s restructuring of its European business.Pilkington expected some recovery in the wider building products division, although lower prices were expected to continue due to challenging market conditions in Europe.Pressure on commodity and energy prices was likely to continue, although this would be offset by energy surcharges already introduced on building product deliveries in Europe and North America.Pilkington, which is one of the world’s largest glass makers, has cut around a third of its workforce over the past decade in a bid to become more competitive.It then focused on using its infrastructure such as machinery and factories more efficiently.

It said today that it was on track to start the third and final phase of its restructuring, meaning it will start to invest spare cash in future growth.

Debt was “significantly” reduced to £572 million in the year to March 31 from £664 million a year earlier.

Chairman Sir Nigel Rudd said: “This is another strong set of results from Pilkington. The group continues to benefit from improvements in operational efficiency and continuous cost reduction programmes.”

Pilkington, based in St Helens, Merseyside, employs around 24,000 people and has plants in Birmingham and Doncaster.

Building products, which is the largest part of the business, reported largely unchanged operating profits of £144 million on flat sales of £1.39 billion.

Its automotive division performed well during the year, boosted by a record 70 new product launches and strong sales from vehicles already equipped with its glass.

Automotive operating profits increased by 20% to £107 million, despite sales falling 4% to £1.19 billion.

Relatively modest increases in automotive production were expected in its main markets of Europe and North America over the coming year, while significantly higher growth was likely in emerging markets such as China.

Group turnover fell to £2.39 billion from £2.44 billion previously, while bottom line pre-tax profits rose to £165 million from £137 million.

Shares were 3% higher today, up 3p at 119.5p.

600450 Glass Maker Boosted by Cost Cuts
Date: 27 May 2005

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