Thursday, June 4, 1998 Published at 10:20 GMT 11:20 UK
Business: The Company File
Pilkington promises profits but job cuts
The glassmaker Pilkington faces higher costs, a more radical restructuring than expected and the loss of 7,500 jobs.
Full-year results show that the company's exceptional costs of £225m ($365m) were larger than expected, wiping out all the profit. The group said it would move out of the red in the year ahead.
Restructuring and rationalising
Pilkington said the higher exceptional costs reflected a more widespread rationalisation programme than had at first been envisaged.
The reformist chief executive Paolo Scaroni has ordered a radical restructuring, which will lead to a worldwide loss of 7,500 jobs by summer 1999. Previous estimates had assumed cutting 6,000 jobs.
Pre-exceptional pre-tax profits fell to £125m ($204m) (1997: £132m) in the year to March - ahead of the forecast of £113m.
But investors will be more concerned that the exceptional costs have widened pre-tax losses to £100m, wiping out last year's pre-tax profits of £77m.
Currency movements, especially the strong pound, wiped away £13m from Pilkington's profits, the firm said.
The group has been restructured on worldwide lines, marked as building products, automotive products, and technical products, while scrapping geographical structures. Much of the downstream glass operation has been shaken up or closed in the shuffle.
"We want to go from being a confederation of businesses to one successful company with standardised procedures," chief executive Paolo Scaroni told Dow Jones Newswires.
German operations hardest hit
Scaroni said the restructuring would be "bigger by 1,500 job losses, but these are all agreed now, so we can say that they have added £25m to costs, and all restructuring will be complete by March 1999."
Although Germany will endure a large part of the job losses, Pilkington will not stop producing in one of Europe's leading economies.
"We want to make a more efficient company, and already our overhead costs have been reduced to £800m from £900m a year ago. We want by the end of March to reduce this further to around £700m," Scaroni explained.
The Company File Contents