Efficiency improvements achieved over the past few years enabled Pilkington to generate its highest ever net cash inflow. The Group's borrowings were reduced by nearly one quarter over the year, producing the lowest level of Group borrowings recorded since 1997.
Pilkington is implementing a clear three-stage strategy - "Cash for Growth".
The stages are first, improve the operational fitness of the businesses, second, produce net free cash from operations - initially to reduce debt - and third, invest surplus cash in future profitable growth.
Good progress has been made in meeting the objectives we set out for stages one and two. Planning is well underway on stage three, and, with Pilkington already established in key emerging markets, we would expect to move on to stage three during 2005.
The Groups new float plant in Russia is under construction and due to come on stream next year. Consolidation of our Automotive plants in China is underway and the fourth float plant in Brazil is now in production.
Turning to current trading, I would now like to highlight the elements in our businesses that have determined our performance in the early part of the year:
As indicated previously, most continental European markets are showing signs of modest volume improvement in Building Products, though price levels are still below the average for last year. In North America, the economic indicators are improving, while the South American and Australasian businesses continue to perform well. Efficiency and productivity levels continue to improve across all businesses.
Sales volumes to the OE manufacturers are slightly better than last year, due to the ongoing success of models containing Pilkington glass. Efficiency and productivity levels in our Original Equipment businesses continue to improve across the globe, and overall results so far are ahead of last year.
In Automotive Glass Replacement, slower demand and price pressures in Europe and North America have impacted results in the first quarter, though there are indications that prices are stabilising in North America.
Overall, business conditions are in line with those indicated at the time of the announcement of the Group's preliminary results in May.