AGRR Magazine


In accordance with its established policy, Pilkington today issued the following trading up-date ahead of the announcement of its results for the year to 31 March 2006.


Stuart Chambers, Group Chief Executive commented:

"Trading in Group companies remains in line with our expectations, with a good performance in Automotive and Building Products holding up.

Finance costs have reduced, despite rising interest rates, though the post-tax contribution from joint ventures and associates will be substantially lower than the previous year. The Group has continued to generate strong free cash flow through close control of costs and capital expenditure."


Pilkington Original Equipment (OE) volumes have grown strongly, due in part to several successful new product launches by vehicle manufacturers supplied by Pilkington Automotive. The Group's North American Automotive Glass Replacement (AGR) sales benefited from the acquisition of the Autostock branches, and AGR sales in Europe have improved.

More than 55 per cent of Pilkington's automotive sales are in Europe. The market for light vehicles has been flat, but once again, due to the success with new models, Pilkington sales volumes continue to move ahead. European AGR sales have increased due to our improving competitive position.

Over 30 per cent of our Automotive business is in North America, where overall light vehicle build is expected to be around 2 per cent down on last year. Our sales to OE manufacturers are higher than last year and the acquisition of Autostock branches has generated higher sales in the AGR market. There is still significant pressure on prices, and energy costs continue to increase.

In South America, light vehicle demand has risen by around 10 per cent. Strong sales volumes and manufacturing efficiency improvements will improve results for the year. Results in Australasia have been affected by restructuring costs. In China, the market continues to expand rapidly, where our emphasis has been on further improving the cost and operational efficiency of the businesses.

Building Products

Building Products markets remain mixed, though sales revenues were higher than last year. The rise in energy costs has been mitigated by energy surcharges, cost savings and continuing efficiency improvements, although underlying prices in Europe have continued to fall.

Building Products Europe, representing two-thirds of total Building Products sales, has been impacted by difficult trading conditions in the UK. Demand elsewhere, principally in Central and Eastern Europe, has improved although pricing pressures remain.

In Building Products North America, which represents around 12 per cent of Building Products sales, demand has been weak for most of the year and improvements in operational efficiencies have only provided a partial offset. A rise in demand in the final quarter, chiefly from the commercial sector, has helped keep results close to last year.

In South America, our Group Building Products businesses continued to perform well, helped by the improving economies in Argentina and Chile. Cost pressures have increased throughout the region, while local selling prices have fallen in Brazil, due primarily to currency fluctuations.

The Australasian market has had another solid year of trading, despite the residential sector being flat, and results will show a small improvement on last year.

Associates and Joint Ventures

Operating profits declined again at Vitro Plan SA de CV, Pilkington's 35 per cent associate in Mexico. Profits in Cebrace (Brazil) and Shanghai Yaohua Pilkington (China) were also down on last year.

Pilkington's new joint venture float glass plant in Russia started glass making in February and the current year reflects initial start-up losses.


Following the changeover to IFRS, finance costs have become more volatile and more difficult to predict, due to the requirement to value derivative financial instruments at the period end. Nevertheless total finance costs are expected to be lower than last year, despite rising interest rates.

The Group has continued to generate free cash flow through continued close control of costs and capital expenditure.

Scheme of Arrangement

On 27 February 2006 the boards of Pilkington and NSG announced that they had reached agreement on the terms of a recommended cash acquisition by NSG of Pilkington, at 165 pence for each Pilkington share, to be effected by way of a Scheme of Arrangement. The Scheme Document is being posted to Pilkington shareholders today. In light of the proposed acquisition, which is conditional on Pilkington shareholder approval, the consent of relevant regulatory authorities and the sanction of the Court, the announcement of Pilkington results for the financial period to 31 March 2006 is likely to be delayed.


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