Pilkington, the UK-based glassmaker, is keen to reopen talks with Visteon, the world“s second-largest car parts manufacturer, about the sale of its automotive glass-making business in the US. Six mon…
Pilkington, the UK-based glassmaker, is keen to reopen talks with Visteon, the world“s second-largest car parts manufacturer, about the sale of its automotive glass-making business in the US. Six months of discussions collapsed last November after the two companies failed to agree on a sale price. Visteon has since pledged to sell the business within the year. Paolo Scaroni, Pilkington chief executive, said: “We are not negotiating with them right now but I believe there will be room for negotiations. The strategic fit is better with us than with anyone else.” Visteon“s automotive division, which holds an exclusive contract with Ford, had sales of about US$ 800 million last year but is loosing cash badly. It took a US$ 138 million charge to write down the assets of the glass business and made a fourth-quarter loss of US$ 87 million last year. Analysts reckon Pilkington is asking for US$ 300 million – 500 million from Visteon to cover the cost of restructuring the business. It is understood Visteon was unwilling to pay more than US$ 100 million at the last round of talks. “We estimate that the US automotive glass market will fall 8% this year”, Scaroni said. “That will hit the smaller players, including Visteon. Their problem is more urgent now.” Pilkington“s US operations continue to struggle, the company revealed 30 May, in results for the year to March. Operating profits fell from GB 35 million to GB 19 million in the US, mainly as a result of higher fuel charges, but the drop was offset by a 45% increase in Europe to GB 198 million. Total profits before tax recovered from GB 52 million to GB 172 million on sales 2% higher at GB 2.5 billion. The increase was achieved despite adverse currency movements and GB 30 million of additional fuel charges. In an unrelated development, Pilkington is to spend GB 15 million on Pilkington Activ, the self-cleaning chemically-coated glass that dissolves bird droppings and dead flies. The glass is expected to be launched in the UK and US within a year and GB 5 million will be spent converting each of three production lines. There are hopes for orders of over 70,000 tons by the end of 2003. Scaroni said: “It is with innovation like this that we will be able to find growth as the trading environment becomes difficult.” He underlined his faith in the company with the purchase of 150,000 worth of Pilkington shares. But his purchase lost almost 8% as the shares fell to 112.5p on 30 May. Pre-tax profits rose from 120 million to 172 million.