A further stage in the strategic programme of restructuring its operations in Europe and the US has been announced by the UK company Pilkington Plc.
This programme will improve operating efficiencie…
A further stage in the strategic programme of restructuring its operations in Europe and the US has been announced by the UK company Pilkington Plc. This programme will improve operating efficiencies and yields and further reduce overhead costs. As foreshadowed in the October circular to shareholders, the acquisition of control of Italian company SIV at the end of 1995, in addition to strengthening Pilkington“s position in supplying the automotive industry in Europe, has presented the opportunity to consolidate and to optimise production facilities for automotive glass, thereby increasing yields and reducing manufacturing costs significantly. In a parallel move, the group is also rationalising its automotive glass fabrication plants in the US, in order to focus production of laminated, tempered and encapsulated glass parts in the most cost effective manner. In addition, the group has reviewed the assets employed in Germany and is restructuring its building products business there in order to remove excess capacity and improve its competitive position in a trading environment which is expected to be more difficult in 1996. The restructuring programme will result in the write down of UK 85 million of assets and cash costs of one-off redundancy and restructuring totalling UK 70 million over three years. As a consequence, the group intends to take an exceptional charge to profits in 1995/96 of UK 155 million, to provide for these in full. The restructuring entails a progressive reduction in jobs of approximately 1,900, spread across Europe and North America. Pilkington stated that it does not see the necessity, in the foreseeable future, of further large scale consolidation of its operations. Group chief executive, Roger Leverton said he would not, however, rule out the possibility of continuous small-scale restructuring of the kind seen over the past five years. “We“ve been spending on a fairly regular basis between UK 10 and UK 15 million on redundancies over the last five years. I expect that sort of level of cost to continue, but not of the UK 155 million magnitude,” he said. A rapid and progressively increasing pay back will arise, with the full benefit being realised by the end of 1998. The restructuring programme is planned to be self financing in cash terms. Pilkington is continuing with its investment strategy in the less developed but high growth markets of South America and Asia. The results for the current year to 31 March 1996, before taking account of the exceptional charge referred to above, have been affected by the strike at General Motors“ plants in North America which has only just come to an end. In addition, severe winter conditions in continental Europe have affected construction activity and contributed to a general weakening of glass prices. However, costs continue to be taken out of the business and value added product sales emphasised. Overall, as a result of these specific issues we expect our results for the year to be marginally below current market expectations. Market conditions have become more difficult in recent months. Nevertheless, the board expects further progress in 1996/97, underpinned by the restructuring actions announced above. Furthermore, Pilkington has bought a 90% interest in a glass processing company near Teplice, for UK 360,000, its first acquisition in the Czech Republic. Berling Bor Glass s.r.o., in which the present managing director has a 10% interest, has modern cutting equipment and manufacturing lines and a turnover of about UK 800,000. The business is supplied with float glass by Pilkington Sandoglass of Poland. An announcement said the acquisition, in combination with a newly opened sales office in Liberec, would form the base for the future development and strengthening of Pilkington in the Czech Republic. In addition, there is every indication that before long Pilkington Sandoglass and Polfloat Saint Gobain will practically divide the Polish flat glass market between them. Using the float glass production method they will leave only a few per cent of the market to Polish glassmakers using traditional processes. Pilkington has also provided glass for the refurbishment of glazed roofs at the National Gallery, London, UK. Dr. David Saunders, the gallery“s conservation scientist, asked for the glass to have a light transmittance of 15-30%, to exclude ultraviolet light and have a maximum U-value of 2.3 W/ sq. m. C. Although Pilkington could not supply one type of glass that would satisfy all the gallery“s requirements, a combination of its existing glasses satisfied the brief.