Pilkington makes positive forecast

The Merseyside-based firm said it had continued to cut costs in the past six months and had further improved its manufacturing performance.Pilkington, which is selling its aerospace glass business to focus on construction and automotive glass, said the boost - taking pre-tax profits to around £83 million - was partly due to weak results a year earlier.But the company cheered investors with a clear sign that dividend payments will be maintained as it said a continued emphasis on cash flow generation meant it could report "another strong cash performance".Pilkington, which makes glass for homes built by major housebuilders and for all the major car makers, said the market for building products continued to be weak, with the exception of the UK and Australian markets.Nevertheless, cost savings from efficiency improvements meant profits from the unit would be flat on last year.The US business is also restructuring in a move which is expected to save 35 million US dollars (£21m) before 2004.Pilkington added its European construction business continued to be hit by gloomy economic conditions, particularly in Germany, although the UK operation has held up well, boosted by demand for Pilkington's energy-efficient "K glass".Chief executive Stuart Chambers said: "Overall, trading is in line with our expectations and in the first half year pre-tax profits will be ahead by approximately 10%."Despite sluggish automotive markets, Pilkington said a combination of progress on new car and van models featuring its glass and further cost cutting meant it had improved operating profits by around 20% at the half year.Pilkington said it would incur £7 million of one-off costs for pulling out of the replacement glass business in New Zealand.Final approval for the sale of its aerospace glass operation to GKN for £42 million, first announced in July, is expected in the next few weeks, it added.Pilkington, based in St Helens, employs 25,000 people and has other plants at Birmingham and Doncaster.It has cut around a third of its workforce in the last decade.

More details of cost savings are expected with the interim results due out on November 5.

The company manufactures in 25 countries and has sales and distribution operations in more than 130. Shares rose 3% to 82p today.