Pilkington slashes debt pile

PILKINGTON, the world's second-biggest glassmaker, has slashed debt by nearly a quarter in the past year despite weakness in its main car and construction markets.

Profits were in line with the City's expectations at £151m for the year to the end of March, up from £145m a year earlier. But the company warned it did not expect to see significant improvement in trading conditions in its major markets this year.

Pilkington, second only to France's Saint Gobain, said net debt was down 23% over the year to £664m as it used record cash flow to pay off borrowings.

'Our focus on keeping down costs has enabled Pilkington to report substantially maintained profits despite challenging conditions in some of our biggest markets,' said chairman Sir Nigel Rudd. 'Operational and manufacturing efficiency improvements achieved over the past few years have resulted in a record cash performance - our prime objective for this stage of our strategy.

'Pilkington remains on track with its strategy and is delivering on its promises.'

The company has launched a programme to cut costs by 20% over the next three years. It is also investing in the explosive growth markets of Russia and China.

Earlier this month JP Morgan upgraded its rating on the stock to 'neutral' from 'underweight', citing the company's new cost-cutting programme. The broker also raised its valuation on the stock to 99p from 91p.

The shares rose 2 1/2p to 86 3/4p in the first hour of trading.