11 June 1998: Britain“s Pilkington Plc, one of the world“s leading float and automotive glass makers, is expected to announce lower annual profits, after a year of heavy rationalisation and tough pr..
11 June 1998: Britain“s Pilkington Plc, one of the world“s leading float and automotive glass makers, is expected to announce lower annual profits, after a year of heavy rationalisation and tough price competition, according to recent reports. Analysts say, however, they will be focusing on the company“s outlook for this year and next, looking for news on cost-cutting and reassurances that its European glass and US replacement glass markets are improving. “We have to look at this year before we see any real fruits from the rationalisation. The year we have just had has been characterised by lower pricing in Europe, particularly the German business,” one analyst was reported as saying. For the year to end-March, 1998, analysts expect Pilkington to report profit before exceptional items of between UK 108 million and UK 116 million after UK 132 million a year earlier. The total dividend is expected to remain unchanged at 0.05p while earnings per share are forecast at between 5.2p and 5.8p. Those profit forecasts exclude exceptional charges of between UK 160 million and UK 200 million, which cover the departure from Pilkington“s downstream businesses in Germany and the cost of major redundancies, analysts said. Last year the company said it would shed around 6,000 jobs – almost one sixth of its workforce – and close, merge or sell off plants in 60 locations after a review of its operations by newly-appointed Chief Executive Paolo Scaroni. “We“ll be looking for them to reiterate the progress on cutting costs on both the construction and automotive glass side. They“ll be trying to impress on people that the European glass market has turned the corner in terms of demand and pricing,” the analyst said, adding that Pilkington was also likely to argue that it was now past the worst in the US replacement glass market. Analysts also noted that Pilkington, which supplies glass to all the world“s major vehicle manufacturers, was facing a difficult time in the automotive glass industry as car makers pushed for even greater savings, and that the company could be hit indirectly by the Asian economic crisis. “Far East manufacturers may become more competitive but the more competition there is at the sharp end, the lower the recovery in basic profitability among car makers and hence the less they are going to be expected to ease the pressure on their suppliers,” the analyst said.