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Pilkington profits beat forecasts

British glassmaker Pilkington Plc said its annual pre-tax profits rose to UK 175 million (US$ 262 million) from UK 135 million a year earlier, beating market forecasts.
Analysts had given a consensus…

British glassmaker Pilkington Plc said its annual pre-tax profits rose to UK 175 million (US$ 262 million) from UK 135 million a year earlier, beating market forecasts. Analysts had given a consensus forecast of UK 163.1 million for profits. Pilkington said it would recommend a final dividend of 3.25 pence, leaving the total unchanged from last year at 5p. Earnings per share rose by 40% to 9.1p from 6.5p. The group announced its Step Change restructuring programme in March, designed to boost competitiveness in Europe and North America, and cut overhead costs. Pilkington Chairman Nigel Rudd said in a statement the programme was “now delivering the anticipated substantial improvements in profits”. Analysts said they would upgrade their forecasts for Pilkington, which supplied the glass for Berlin“s Bundestag building. “Europe will drive the growth for 2001, and North America for 2002. The multiples on this stock are distinctly undemanding, it offers investors a good yield,” said one analyst at Paribas, who rates Pilkington a “buy” on a 12-month price target of 125p, said he would raise his forecast on the stock. Pilkington has a higher return on equity (ROE), a measure of profits returned to shareholders, than its Belgian rival Glaverbel, according to recent reports. Pilkington“s ROE is 8.3%, while Glaverbel has a ROE of 7.8%. French rival Saint-Gobain has a ROE of 12.8%. Meanwhile, Pilkington chief executive Paolo Scaroni said the firm would save UK 80 million annually from 2003 onwards in North America, adding that the firm would seek to make “focused, profit-enhancing acquisitions” over the next three years. Scaroni also said the company aimed to further develop its e-commerce strategy, which would cut down on internal logistics costs. “We want to be online with 100% of our customers and suppliers by the end of this year,” Scaroni said. He added that Pilkington planned to expand its developments in countries such as Brazil, Romania and the Czech Republic, where demand for glass is rising at 8% per year, above a 4% growth rate in established markets such as western Europe. Scaroni also said the firm“s recent deal with Japan“s Nippon Sheet Glass Co. Ltd would give it access to the country“s leading carmakers such as Toyota and Nissan. The deal, announced last week, saw Pilkington buy out NSG“s minority interests in four of its units for about UK 94 million. NSG in return will keep a 10% stake in Pilkington.

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