Pilkington sees no recovery this year

Pilkington, the UK glass manufacturer, on Wednesday delivered flat full-year profits in weak market conditions which it warned would not improve during the current financial year.

The world's second largest glass maker, which is in the middle of a three-stage turnround programme, saw operating profit remain largely flat year-on-year but the group was able to cut net debt by nearly a quarter to £664m ($1.2bn) from £861m thanks to increased cost cutting.

Sir Nigel Rudd, chairman, said this was due to a record cash performance, which had been the group's prime objective for the current part of its strategy.

But Sir Nigel also warned: "We do not expect to see significant improvement in trading conditions in our major markets this year."

The group said it would continue to focus on cash generation in order to reduce borrowing and invest in growth when market conditions improve in the last part of its turnround programme expected in 2005.

Pilkington's car glass division, which has outperformed the traditional building glass division over the last few years, once again chalked up a strong performance in Wednesday's full-year results. Operating profits from automotive products increased by 20 per cent.

Pilkington said the last year had seen the highest concentration ever of new model introductions in the car sector and that it had been involved in more than 50 product launches, including the Maserati Quattroporte and General Motor's Astra.

Building products continued to suffer, especially in Europe where there is strong price competition due to overcapacity. But the group also said there were signs of improvement outside Europe. On marginally improved revenues, the division saw a 13 per cent decline in operating profit.

Overall, operating profit rose from £175m to £179m on turnover that stayed largely flat at £2.4bn.

Net profit excluding exceptionals and amortisation came in at £151m versus £145 last year, whereas pre-tax profit fell slightly to £136m from £140.

Pilkington proposed an unchanged dividend of 5p, to be paid out of earnings per share of 6.2p.

Pilkington shares, which risen 31 per cent in the last 12 months, added 3.2 per cent at 87p in morning trading in London.

600450 Pilkington sees no recovery this year glassonweb.com
Date: 28 May 2004
Source: FT.com

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