Press information

CHAIRMAN'S ADDRESS TO AGM – 28 JULY 2005

At today's Annual General Meeting of Pilkington plc, the Chairman, Sir Nigel Rudd, made the following statement:

“As I reported at the time of our Annual Results in May, Pilkington continues to benefit from improvements in operational efficiency and unremitting cost reduction programmes.

Our continuing focus on cash generation enabled the Group to report a further significant reduction in net debt by 31 March. The adoption of a progressive dividend policy is an indication of the Board's growing confidence in the capability of the business to generate cash sustainably.

Over the course of this financial year, our priorities are to maintain momentum on our cost reduction programme, started in Stage 1 of our three-stage “Cash for Growth” strategy, to complete the rebuilding of our financial strength, begun in Stage 2, and to begin the transition into Stage 3, with targeted investments into profitable growth opportunities.

The Pilkington-constructed fourth float line in Brazil for our South American joint venture is now in full production, following an excellent start-up. A sound base has been established in China as a platform for future growth, with the three Automotive plants now fully integrated into the global Pilkington Automotive business. The joint venture float line in Russia is on target to start production later this year.

Turning to current trading, I would now like to highlight the performance of the main parts of our business in the first quarter of the current financial year:

Building Products

As expected, conditions in most European Building Products markets remain challenging. Energy-related costs are still rising, though the energy surcharge introduced in Europe in November of last year has provided some relief. Significant improvements in manufacturing performance have reduced costs further and as a result our performance is in line with last year.

In North America, economic indicators are improving and strong residential demand has underpinned the good level of industry capacity utilisation and pricing.

The economies in Brazil, Argentina and Chile continue to strengthen and demand for float glass remains robust.

In Australasia, the softening economy is affecting demand as anticipated, though rising transport costs and the weaker Australian dollar have reduced the pressure from imports.

Automotive Glass

At this stage sales volumes of Original Equipment are up on the same period last year, due to the ongoing success of models fitted with Pilkington glazing.

In Automotive Glass Replacement, demand has increased in Europe and remains stable in North America.

Efficiency and productivity levels in both the Original Equipment and Automotive Glass Replacement operations continue to improve across the world, and results generally are ahead of last year.

In summary, the year has started in line with expectations. Pilkington remains on track to begin its transition into the third phase of its strategy over the course of this financial year, and has begun to target investments into profitable growth opportunities in our core business areas.

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