Pilkington plc. trading update

In accordance with its established policy, Pilkington today issued the following trading up-date ahead of its interim results announcement for the period to 30 September 2001, which will be made on Thursday, 25 October 2001.

SummaryPaolo Scaroni, Chief Executive, commented: "Pilkington has performed well in the first five months of the year, in line with the expectations set out in our previous statements.Once again we expect to report a good underlying improvement in the Group's performance in the first half. It is too early to predict the impact of the terrorist attack in North America on the economies in which we operate. Subject to this uncertainty, we continue to expect to report further progress for the year as a whole."

Building Products

The Group's Building Products businesses continue to perform strongly. Float glass prices have remained firm and are, on average, ahead of those prevailing in the first half of last year. The continuing focus on efficiency means that results in the first five months of the year are well ahead of last year.


This business, which represents two thirds of Building Products sales, has continued to perform well. Demand has been steady with some variation between countries and glass prices are currently above their level at the end of last year. The market for processed products is more variable than that for float with the prices of double glazing units under some pressure. However, overall sales and profits for European Building Products have both increased significantly compared with a year ago.

North America

In North America demand has been weak and prices are under some pressure. Sales and profits are ahead of last year because of the initial benefits arising from the Step Change Programme as well as the absence of float tank repairs. Energy prices have declined somewhat from their highs but remain higher than last year.

In Mexico, demand at our associate, VVP, has been somewhat lower and the company is taking steps to rationalise some of its operations. However, their sales are ahead of this time last year because of strong exports and favourable currency movement has helped profits in sterling terms.

Rest of the World

In South America, although sales volumes are under some pressure and currency devaluation is affecting the reported result, the sales and profits have held up well and prices are firm.

In the smaller Australasian region one of the two float tanks is undergoing repair as planned. Sales and profits in the first half will be somewhat lower than a year ago.


The Group's sales of Automotive Glass to the Original Equipment Manufacturers (OEMs) are slightly down because of a reduction in world automotive production. Sales to the replacement market have been strong and automotive profits as a whole are running ahead of last year's levels.


In the European business, which accounts for approximately half of the Group's worldwide Automotive Glass sales, vehicle production has been slightly below last year's level but sales of Automotive Glass are only marginally down and profits are ahead, reflecting the benefit of last year's plant closures and continuing focus on costs.

In the European Automotive Glass Replacement (AGR) business demand has been steady and profits stable.

North America

North American Automotive Glass sales represent approximately 40 per cent of Pilkington's worldwide Automotive Glass sales. Sales to the OEMs are down about 6 per cent from a year ago, in line with vehicle production. The weaker performance in the OE business has been more than countered by a continued improvement in the AGR operation. Profits are well ahead of the same period a year ago.

VVP's automotive glass division in Mexico has experienced lower demand in line with the industry and is undergoing some rationalisation.

Rest of the World

Car production throughout the South American region is down compared with a year ago and the vehicle manufacturers have instituted programmes of temporary stoppage at some plants. As a consequence, sales of Automotive Glass are lower but profits are holding up well as a result of improved efficiency and a better product mix. Results in Australia are similar to the previous year.

Step Change Programme

Introduction of new work systems and productivity improvements at all plants is ongoing. As previously announced, the Sherman and Lathrop Automotive Glass plants in North America will close at the end of calendar 2001. The improved AGR performance reflects the success of restructuring in this area.

As previously reported, there will be additional redundancy and restructuring costs this year, in order to achieve further efficiencies. These will be in line with estimates previously given at approximately œ35 million for the year as a whole.


Earlier this month Pilkington announced the start-up of the new joint venture float glass plant in France, ahead of schedule. The plant has sales capacity of approximately 250,000 tonnes per year of which Pilkington's share is half. Full scale production is planned for November. Output from this low cost plant will help to bridge a capacity gap expected in early 2002 when a substantial number of float plant cold repairs are scheduled within the industry.

Reaction to the launch of Pilkington's new self-cleaning glass, Pilkington Activ, in its test markets of the United States, Ireland and Austria has been most encouraging. Construction of a second production facility, in Europe, is on schedule.

600450 Pilkington plc. trading update glassonweb.com

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