Pilkington 2nd-Half Profit Rises 18% on Cost Cutting

Pilkington Plc, the world's largest maker of car windshields, said fiscal second-half profit rose 18 percent after the U.K. company cut costs and sold assets to help counter slowing demand in some of its markets.

Net income in the six months through March was 39 million pounds ($71 million), or 3.1 pence a share, from 33 million pounds, or 2.6 pence, a year earlier. Sales remained at 1.36 billion pounds and full-year cash flow added 53 percent to 207 million pounds.

``The results are likely to be taken as a good performance in difficult markets,'' said David Taylor, an analyst at Teather & Greenwood in London with a ``buy'' rating on shares of the St. Helens, northwest England-based company. ``The feature of the year was cash generation. They can now fund growth internally.''

Pilkington, in the middle of a three-step plan to pay down borrowings and build up cash reserves, reduced its net debt by one- quarter to 664 million pounds last fiscal year. It cut about 1,000 jobs last year and begins a phase of investment in new products and regions from mid-2005.

Shares of Pilkington, a member of the FTSE 100 index of leading U.K. stocks until December 1996, gained as much as 2.75 pence, or 3.3 percent, to 87 pence and were trading at 86.5 pence as of 8:30 a.m. in London. The stock has lost 9 percent this year, reducing the company's market value to 1.11 billion pounds.

`Driving Efficiency'

``We've been reducing our overheads and we're constantly driving efficiency in our factories,'' Chief Executive Stuart Chambers, 48, said on a conference call with journalists. Pilkington saved 65 million pounds in costs last year, he said. ``Against a flat sales background we're pleased to report we've moved ahead in our profitability.''

Fiscal full-year net income rose 15 percent to 78 million pounds, the statement said. A survey of nine analysts by Thomson Financial forecast 82.9 million pounds.

Pilkington in July sold its aerospace division to GKN Plc, a U.K. maker of helicopters and car parts, for $67.5 million in cash.

The 180-year-old glassmaker competes with Cie. de Saint- Gobain SA, Europe's biggest distributor of building materials, as well as Asahi Glass Co., Japan's largest glassmaker.

Pilkington supplied glass for Berlin's new Reichstag building, finished in 1999, as well as the European Court of Human Rights in Strasbourg, France.

The company operates in a total of 24 countries. It has expanded into China, with four plants that supply glass for cars built by manufacturers such as Toyota Motor Corp., Asia's biggest automaker, and Volkswagen AG, Europe's biggest.

Since the mid-1990s, Pilkington has cut its workforce by about one-third to about 24,000 employees. In the 1950s it invented the ``float'' method of glassmaking that's now licensed to 40 other companies.

600450 Pilkington 2nd-Half Profit Rises 18% on Cost Cutting glassonweb.com
Date: 27 May 2004
Source: Bloomberg.com

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