Last Friday, share prices for Belgian glassmaker Glaverbel (a subsidiary of Japan“s Asahi Glass Co. Ltd.) rose 5% to BFr 4,200 in early trading on the Brussels bourse after the company reported bette…
Last Friday, share prices for Belgian glassmaker Glaverbel (a subsidiary of Japan“s Asahi Glass Co. Ltd.) rose 5% to BFr 4,200 in early trading on the Brussels bourse after the company reported better-than-expected annual results. Glaverbel said on Thursday that group net profit more than doubled in 1996, boosted by extraordinary items, with operating results, which suffered after volumes and glass prices dropped in the first half of last year, expected to improve in 1997. Growth in European glass consumption in 1997 is estimated at 2% overall, and is expected to be strong in the automotive sector. “Given the continuing upturn in European glass consumption and assuming prices hold up, the group anticipates an improvement in its operating result in 1997,” the company said in a statement. In 1996, Glaverbel“s operating profit fell 8.5% to BFr 2.73 billion (US$ 78.4 million) from BFr 2.987 billion after recession in the first half of last year when raw glass volumes and prices fell to all-time lows. The second half saw quantities recovering significantly but there was no improvement in prices. Chief executive officer Luc Willame said the 1996 fall in price of 10-20% for raw glass in Europe had wiped BFr 1 billion off turnover, which increased by just 1% (1.6% on a comparable consolidation basis) to BFr 38.66 billion. However, most of this negative effect was compensated by increased volume, productivity and cost control. The recovery of some weaker currencies also helped offset the price fall. Net earnings for 1996 rose to BFr 1.768 billion from BFr 621 million in 1995, after extraordinary profit of BFr 606 million. This included a net capital gain of BFr 1.166 billion from the sale of Glaverbel“s stake in the US glass group, AFG Industries. Glaverbel said net financial expenditure fell to BFr 1.3 billion in 1996 from BFr 2.2 billion in 1995. Net debt at the end of 1996 was BFr 14.5 billion, down from BFr 21 billion at the end of 1995. Willame told a news conference that Glaverbel was “reasonably confident” for 1997. “Unless there is something new on the currency front or a big price drop, there should be an improvement in profit,” he said. The company pointed out that future investments would focus on providing “added value” now that its modernisation programme was beginning to pay off. “We now have the most modern production equipment in Europe,” Willame said. Generally, Glaverbel said its strategy was to “grow in a profitable way” according to its financial resources, and to diversify more geographically. It also had to tackle low profitability in its processing activities, especially in Belgium, where labour costs are relatively high. The company also predicted 100% activity for 1997 at its Glavunion unit in the Czech Republic, after a six-month long repair of its float line in 1996. This year will also see the repair of the float line at its Maasglas subsidiary in the Netherlands. Glaverbel will announce its 1996 dividend on 11 April.