Pilkington shares steady on upbeat trading

Its expectation of "improved results" for the year to March 31 stemmed possible downgrades for the current year.Analysts said the statement was in-line with expectations and any moves on recommendations on Pikington's stock for 2003 would now take place after the annual results announcement at the end of May.They are predicting flat profits for the coming year.

Pilkington said on Wednesday that the improved results would come "despite the deterioration we have experienced in our major markets in the second half of the financial year, where trading conditions were as bad as the group has faced for several years".

Describing current conditions as "steady as she goes", it offered no details on outlook.

The shares have been sliding since Friday when Glaverbel, its Belgian rival, announced capacity cuts. In early Wednesday trade Pilkington shares fell 1p to 111-1/2p.

Concerns about Pilkington, which supplies the automotive and construction markets, centre on three issues: potential production overcapacity in the European glass sector; its exposure to the US, where building construction has slowed and automotive sales are below recent highs; and its business in the UK, which has not felt the full benefit of the recent surge in home renovation.

Before Wednesday ABN Amro had already issued a "reduce" recommendation.

However, some analysts believed the fears were slightly unrealistic because Pilkington should start experiencing the benefits of its restructuring programme in the US this year and Glaverbel's move might actually benefit its competitors by taking capacity out of the market.

"I think most of the bad news has already been factored into the share price," said one analyst.

Traditionally, the company has not given substantial guidance about future performance in the year-end trading statement. However, this year it has delayed the statement - which is normally made in March - to give analysts a better picture of its financial situation, and other changes to its reporting style may be forthcoming.

In October, the company announced a 29 per cent rise in pre-tax profits in the first half, from £79m ($113m) to £120m, on turnover up 8 per cent to £1.47bn.

But Paolo Scaroni, chief executive, warned it was difficult to predict conditions in the second half because of the softening of the market.