Pilkington forecasts fragile future

Pilkington, the glassmaker, continued to warn of challenging trading conditions today, saying that it expected its building products market to remain weak.

The company said it remained on course to hit results forecasts, however, as it benefited from cost-cuts.The group, which has cut around a third of its workforce over the last decade, told investors in a trading statement that like-for-like sales had been held steady while operating profits would be maintained at last year’s levels.The performance for the year to March 31 reflects contrasting fortunes for its core divisions of building products and automotive glass.In building products, Pilkington said pricing pressure was likely to put operating profits from this business line down by 10 per cent on a year earlier.Only the UK and Australia have offered respite, although the company said efficiency improvements and cost savings helped mitigate market weakness.Depressed economic conditions on the continent, particularly in Germany, have hit Pilkington hard, particularly as it generates two-thirds of its building products sales in Europe.The North American arm of the division has also been affected by weakness in commercial construction, with Pilkington the region’s leading glass supplier.There was better news from the automotive division as manufacturing efficiencies helped Pilkington offset a flat market to improve operating profits in the financial year by around 30 per cent.In Europe, where just over half of Pilkington’s automotive sales take place, sales have increased through gains on new model instructions and higher shipments of specialised bus, coach and truck products.Pilkington, based in St Helens, Merseyside, employs around 25,000 people and has other plants at Birmingham and Doncaster.The company manufactures in 25 countries and has sales and distribution operations in more than 130.

In November, results for the six months to September 30 showed an 11 per cent hike in underlying profits to £84 million, even though turnover was flat at £1.4 billion.

Before today, analysts had expected annual pre-tax profits of £155 million, against £153 million a year earlier.

600450 Pilkington forecasts fragile future glassonweb.com
Date: 1 April 2004
Source: Pilkington

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