Last year we experienced very tough trading conditions in all our markets, particularly in the second half. In spite of this, we delivered our fourth consecutive year of profit growth, demonstrating how much fitter and more competitive Pilkington has become.

We also anticipated difficult trading conditions and challenging markets this year and the current financial year has started in line with these expectations.

At the time of our results announcement in May, Stuart Chambers highlighted his plans for continuing the efficiency gains made over the past five years. Our focus on increasing the competitiveness of our manufacturing base, which has a strong portfolio of innovative products, puts Pilkington in a robust position.

Building Products

As expected, Building Products markets continue to be difficult everywhere, other than the United Kingdom and Australasia, where demand is strong and some product lines are in short supply. In Continental Europe demand is lower than a year ago and for Europe as a whole float prices are approximately 10% below the average for last year, although there are welcome signs of stabilisation.

In North America, whilst the residential market is relatively firm and prices are now hardening, commercial construction, in which we have a significant share, is down about 20%. Nevertheless, because of continued progress in transforming this business, results are in line with last year. Our 35% Mexican affiliate, VVP, has also been affected by the slowdown in commercial construction in the United States. Its results to-date are lower than last year, as expected.

Financial and political instability in South America is affecting our businesses there, however results are still good.

Automotive

In Automotive, vehicle production in Europe is running slightly below last year but our European Automotive glass businesses continue to improve their efficiency and productivity so that results are tracking last year’s performance in both Original Equipment and Replacement glass.

Vehicle production in North America is showing signs of a return to growth, which, together with the significant improvements we have made there in manufacturing productivity and efficiency, are reflected in improved results to-date of our Original Equipment business. Our Automotive Glass Replacement business in North America is continuing last year’s strong performance.

The Automotive businesses in South America, Australasia and China are operating close to or better than last year despite variable market conditions.

Outlook

At our results presentation back in May I stated that we expected these tough market conditions to prevail through this year, and what we have seen so far confirms that view. Nevertheless, even with the situation in South America, our expectations overall have not changed. Pilkington is demonstrating its resilience in difficult markets and I expect we will continue to do so.


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