Ceramic Industry

NSG Announces Profitability Improvement Initiatives (posted 2/6/09)

February 6, 2009
Automotive production will be reduced in Europe and North America, and other initiatives will be implemented in South America, Japan and Asia.

The board of the NSG Group recently approved a series of measures designed to address the economic downturn and improve profitability going forward. These initiatives build on action already taken by management in response to the sudden and rapid changes in the global economic environment. The overall objective is to protect the business in the short term and also to re-establish profit growth from FY2011 onward.

On November 14, 2008, the NSG Group published results for the first half of the current financial year (FY2009). The Group was able to report that sales and profits were in line with the forecast, with further progress achieved on reducing debt. Since then, the speed and depth of the slowdown in international trade have been unprecedented. All three of the Group's business lines have been adversely affected, with the impact on Automotive particularly marked.

At both a Group and business line level, quick and decisive action has been taken to ensure that the Group's organization and business approach reflect the realities of the current trading environment. Measures already implemented include adjusting production, lowering operational expenses and reducing headcount. It is clear, however, that more radical measures are now required. Consequently, the NSG Group is taking further action to realign its global manufacturing sites, to reduce capacity and to reduce headcount further.

Since the acquisition of Pilkington plc in June 2006, excellent progress has been made on integration. Successful action has been taken to increase operational efficiencies, to realize synergies, to reduce overheads, and to standardize management and manufacturing procedures throughout the Group. The integrated NSG Group now provides a robust platform for future development. These latest measures are designed to help ensure that the company emerges from the current slump in world trade strengthened and realigned to address future challenges and opportunities in the sectors in which the Group operates.

The Group is taking action to reduce capacity and output to match the requirements of its customers. In Automotive, production capacity will be reduced in Europe and North America, and a number of other initiatives designed to align the Group’s production capacity to demand will also be implemented in South America, Japan and Asia. The Group will also reduce its float glass capacity. This will involve taking out capacity equivalent to two float lines in Europe and a 15% reduction of float capacity elsewhere in the Group.

Immediate action has already been taken to reduce headcount in the Group's seasonal and temporary workforces from June 2008 levels. Through measures including the realignment of its manufacturing sites and the streamlining of its central functions, the NSG Group will now implement a Group-wide restructuring.

As a result of the above measures, the NSG Group will have reduced overall headcount in the Group by approximately 5800 people by March 2010. This represents around 15% of the total global headcount. Around 3000 of these employees will have left the Group by the end of the current financial year.

Additional details are available at www.nsggroup.net.