NSG
Interims
In Japan, the outlook has remained uncertain, due to
increases in energy prices and the global credit crunch. Building Products
sales have continued to be adversely affected by building permit delays.
Vehicle build in Japan remains flat.
Western European economies continue to slow, with signs that Building
Products pricing throughout Europe is beginning to come under pressure.
Production of new cars in Europe has been flat, but the European Automotive
aftermarket (AGR) market remains strong. Demand for glass cord and flake
in Europe continues to be reasonably stable.
The North American economy continues to slow, with a further decline in
the domestic housing market now beginning to affect the commercial building
market. New car production is weakening, and there are indications that
AGR is also being adversely impacted by the economic slow-down.
Most of the emerging economies in which the Group operates continue to
perform well.
In the information technology and electronics sector, worldwide shipments
of PCs, cellular phones and other IT equipment continue to grow. The glass
fiber sector is also experiencing robust demand in relevant markets, including
Europe.
The performance of Pilkington, which became a consolidated subsidiary
in June 2006, has been included in the Company's consolidated income statement
from the second quarter of the previous fiscal year. Consequently, sales,
operating profits, and ordinary profits all saw substantial year-on-year
increases in the nine month period to this quarter.
Flat Glass Business
The Flat Glass business encompasses the Group's Building Products (BP)
business (glass and glazing systems for exterior and interior architectural
use) and Automotive business (glass and glazing systems for vehicles in
the Original Equipment and Aftermarket sectors). Overall, these businesses
accounted for around 90 per cent per cent of total Group sales in the
period under review.
Building
Products (BP) Business
In Europe, demand was strong in the first half of the year but slowed
during the third quarter. Performance of downstream operations in Europe
continues to improve across most markets. During the quarter, the European
Commission announced a decision to levy a civil fine of Euro 140 million
(approximately JPY 22.5 billion) on the Group following an investigation
into a number of glass manufacturers in the European Building products
glass sector. As announced in the Group's press release of 28 November
2007, this fine had previously been provided and as such there is no further
charge
to the income statement. On 31 st January 2008, the Group announced that
it had decided not to appeal against this fine.
Sales in Japan were slightly below the previous year. Market conditions
remain difficult, with a continuing decline in housing starts following
regulatory changes. Profits are above the previous year, largely due to
negative one-off items (a production adjustment) in the comparative period
results.
North America continued to experience a declining housing market resulting
in a decrease in sales and profitability.
In South America, results continue at good levels, with market conditions
remaining robust and in South East Asia profits demonstrated a marked
year-on-year improvement.
As a result, the Building Products business overall achieved sales of
JPY 305.5 billion and operating income of JPY 27.8 billion.
Joint Ventures and Associated companies
The group's share of the results of its joint venture and associated companies
is included within non-operating income in the income statement. Cebrace,
the Group's joint venture company in Brazil, performed strongly during
the period with significantly improved profits. In Russia, the Group's
joint venture company, Pilkington Glass Russia LLC, also improved profitability.
NH Techno Glass Co.,Ltd., the Group's joint venture company in the LCD
substrate business, achieved an improved operational performance, generating
a significant increase in its profit from the same period of last year,
when it suffered production problems.
