It has been announced by Belgian glass maker Glaverbel S.A. that the first quarter of 1996 has been tough. However, if business recovers in the course of the year the board has considered paying an in…
It has been announced by Belgian glass maker Glaverbel S.A. that the first quarter of 1996 has been tough. However, if business recovers in the course of the year the board has considered paying an interim dividend, for the first time in the company“s history. In the meantime all-round cost-cutting programmes were intensified in both central and western Europe. Glaverbel, a unit of Japan“s Asahi Glass Co. Ltd., said that it was cutting 1995“s gross dividend to BFr 83.53 per share from BFr 111.75 paid in 1994 to reflect the difficult economic situation being experienced by the group. First quarter sales fell by 8% to BFr 8.7 billion. However, there were signs of a recovery in April in the construction and car sectors, although prices had not yet improved. Prices had fallen by about 15-20% in the first quarter compared with the average of the first six months of 1995, partly as a result of a drop in demand in the construction sector following a long and severe winter. Glaverbel announced that it is negotiating to buy Stratton Investments“ 25%-plus stake in glass company Glavunion. Glaverbel already holds a 73.1% stake in Glavunion. Stratton“s stake in Glavunion came through its acquisition of a majority holding in Sklo Union. Glavunion, which is the largest producer of plate glass in the Czech Republic, achieved Czk 5.3 billion turn-over last year but does not plan to pay any dividends until 2000 because of heavy recent investment costs. Stratton originally put forward the proposal for Glaverbel to buy up the remaining Glavunion shares, probably because of the company“s no-dividend policy, Glavunion managing director Stepan Popovic said. In fact, after five years of operating in the Czech Republic, western Europe“s largest sheet glass producer Glaverbel is very much satisfied with its results. Glavunion, with an annual turnover of Czk 5 billion, accounts for 15% of Glaverbel“s overall turnover. “We“ve paid US$ 85 million for our present controlling share in Glavunion, and investments in modernisation, equipment and the workforce are close to US$ 200 million,” said Luc Willame, a member of Glaverbel“s board in charge of Glavunion. “This is Belgium“s largest investment in the Czech Republic and one of the most important foreign investments in the Czech Republic,” Willame added. Glaverbel has been quick to incorporate the modernised Czech factories in its European network. Today, nobody is able to see at first sight whether the glass for Renault or General Motors cars came from Belgian or Czech factories, said Willame, adding that difference in quality have been evened out but minor problems still were at medium management level. Four years ago the Belgian complained about the mentality of Czech workers who, though excellent glass makers, still had marks left on them from decades of bureaucratic and inefficient management. Today, Willame praises the excellent Czech managers who have been trained in the meantime. Though labour productivity apparently increased 20%, it still hardly makes up more than half of the west European average, but wages are eight times lower. “The average wage is quite high by Czech standards, with workers earning around Czk 120,000 per year, but a Belgian worker costs eight to nine times as much,” says Willame, adding that it will take at least 20 years before the wage difference is eliminated. Glavunion currently sells 60% of sheet glass, car glass and mirrors in the Czech Republic, Poland, Hungary and Slovakia. Glavunion“s turnover last year rose 20% after some disappointment in 1993-94, due to more intensive construction activity, increasing car production and rising consumer purchasing power. Glaverbel is also to invest BFr 210 million in a new production line at its Zeebrugge, Belgium, mirror factory, which is using niches with higher added value to combat the fierce price war on the interiors and furniture market.