PILKINGTON plc TRADING STATEMENT
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.
"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."
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 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
Pilkington's new joint venture float glass plant in Russia started glass making in February and the current year reflects initial start-up losses.
The Group has continued to generate free cash flow through continued close control of costs and capital expenditure.
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