Glassmaker Pilkington sparkles

GLASSMAKER Pilkington raised its dividend for the first time in 10 years on Wednesday as annual profits beat forecasts. The firm also said it expected some recovery in its main building products market.

Pilkington raised its final dividend to 3.35p from 3.25p last year, boosting the total payout to 5.1p.

Britain's biggest glassmaker said pre-tax profit was £180m for the year to 31 March, up from £152m the previous year.

The 18% rise in profit was ahead of the range of £154m to £177m brokers had expected pound, and Pilkington's own forecast in March of a 15% increase.

'The surprise to me was the dividend increase,' said Mike Betts, an analyst at investment bank JPMorgan. 'I thought that might be something they looked at in 12 months time so it's encouraging. It was only 18 months ago that people were fearing another dividend cut.'

The firm is in the midst of a three-stage turnaround programme and has already slashed costs, including thousands of jobs, to focus on its main car and construction markets. It has generated cash to pay down debt. Net debt fell by 14% to £572m in the year, while free cashflow stood at £172m.

Over the next year the company said it expected to begin stage three of the revamp -- using free cash flow to invest in profitable growth opportunities.

'This is another strong set of results from Pilkington,' said chairman Sir Nigel Rudd. 'The group continues to benefit from improvements in operational efficiency and continuous cost reduction programmes.'

The company, which invented a float process that revolutionised glassmaking half a century ago, said it expected some recovery in demand in its building products division, although weak pricing was expected to continue. It said it was well placed to win new business from the expanding global vehicle market.

Pilkington shares rose 2½p to 119p in early trading.