German slump forces Pilkington to cut dividend

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The Independent Online
PILKINGTON, the St Helens-based glass maker, cut its final dividend for the second year running in the wake of a continuing slump in Germany, its biggest market, writes Clare Dobie.

The final dividend is 1.07p a share, making a total of 4p for the year, down from 6p in the previous year and 10.5p in 1991.

Sir Antony Pilkington, chairman, said: 'In December when we maintained the interim payment, we did not know that Germany was going to fall off a cliff.'

Glass prices in Germany fell by 9 per cent last year, with most of that fall taking place in the second half, as glass makers unloaded supplies from underused factories elsewhere in Europe. Prices have held steady since the year-end.

Profits dived from pounds 96m to pounds 41m before tax in the year to 31 March under FRS3, the latest accounting standard. The underlying rate of decline was 28 per cent.

Profits were wiped out by a pounds 46m tax charge, partly reflecting unrelieved advance corporation tax. The company decided against launching an enhanced scrip - offering shareholders the chance of taking up shares worth more than the cash dividend - as it would have smacked of cash-raising.

Sir Antony ruled out a rights issue even though borrowings rose to 78 per cent of shareholders' funds by the year-end and have risen to 88 per cent since, after buying Heywood Williams. The company plans to bring down the ratio through disposals.

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