Trading expectations clear for glass-maker

Glass-maker Pilkington said it was trading in line with expectations despite the impact of soaring energy costs and adverse currency movements.

The firm - one of the world’s largest manufacturers of glass and glazing products for the building, aircraft and automotive markets - was updating investors ahead of its interim results statement, which is due to be published on November 3.

Chief executive Stuart Chambers said the group continued to make good progress "through further improvements in manufacturing efficiency and cost reduction".

He added: "Overall, trading is in line with our expectations and in the first half pre-tax profits will be in line with the first half of last year, notwithstanding the impact of rising energy prices and the effect of the strong pound on our reported profits."

Pilkington, which is headquartered in St Helens on Merseyside, has slashed thousands of jobs in recent years to cope with tough conditions in its main car and construction markets.

The global workforce has been reduced by about 30 per cent over the last ten years to current levels of just over 25,000.

Pilkington said the strong pound would negatively affect its reported first-half pre-tax profits by £8 million.

Within its building products division, the firm said efficiency gains and cost savings were continuing.

However, the combination of competitive pressures in the UK market and the currency impact on a flat continental market means that overall operating profit at the European building products business will be ten per cent lower compared with the first half of 2003.

At the North American building products division, which makes up 15 per cent of the unit’s overall sales, Pilkington pointed to signs of a market recovery following a period of weakness in commercial construction.

It said half-year operating profits in dollars would be at similar levels to last year.

Meanwhile, at the group’s automotive division, where just over 55 per cent of sales are generated within Europe, the glass-maker reported a "relatively flat" market for light vehicles, although the launch of new models has helped Pilkington’s sales volumes to motor ahead.

The firm warned the strong pound would depress the top line figure, but as cost reduction efforts continue, overall profits in Automotive Europe are set to be up on last year.

In North America, which accounts for about 30 per cent of the automotive business, light vehicle build is expected to be around two per cent higher than last year.

However, due to the impact of exchange rates, higher energy costs and strong pricing pressure, North American operating profits will show a fall.

Pilkington said its automotive joint ventures in China continued to expand as the market there gathers pace.

Interest costs in the first half have been lower than last year, the company added, as a result of a reduction in group borrowings.

600450 Trading expectations clear for glass-maker
Date: 28 September 2004
Source: Edinburghnews Scotsman

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