Pilkington reassures on the dividend as cashflow surges

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The Independent Online

Pilkington, the historic glassmaker, has held its final dividend at the same level as last year, and moved to assure doubters in the City that it has the cash to fund the payout for the forseeable future.

The group has spent so much money in redundancy payments and restructuring costs in the past six years that analysts have been betting the group would have to slash the dividend in the current downturn for the glass industry.

However, Pilkington's full-year results yesterday, which showed pre-tax profit down, beat expectations and showed the group generated its strongest cashflows in over a decade.

Stuart Chambers, chief executive, said: "Pilkington has been on a three-stage journey starting in 1997, first to improve profitability, then to generate net free cash from these newly-fit businesses, and to invest in profitable growth. I think we are largely there now."

Pilkington shares, which hit a 20-year low earlier this year, rose 0.75p to 66.25p yesterday as even arch-sceptics began to reassess their view. Darren Shaw, analyst at Dresdner Kleinwort Wasserstein, who had a "sell" rating on the stock, said: "If the truth be told, these were very disappointing numbers, only we had been told about them in March. But they are focusing on the right things and, even stripping out the one-offs, net cashflow covered the payment of the 5p dividend. The question is whether these cashflows are sustainable and they are not going to be helped by the difficult markets."

Pilkington has cut 14,000 jobs in the past six years under the leadership of Paulo Scaroni, since poached to run the Italian utility Enel.