Volume 14, Issue 1 - January/February 2012

International Issues

NSG Group Reports
OE Auto Glass Demand is on the Rise

The NSG Group recently reported that vehicle manufacturer demand for auto glass “recovered to more normal levels” during the second quarter of fiscal year (FY) 2012. On the auto glass replacement side, the company says it is “performing well, with improved product mix.”

Overall, NSG reports decreased revenue and profits in its auto glass division from the same quarter of FY 2011, “due largely to the impact of the March 2011 Japan earthquake.”

“The financial impact was less than expected, as many of the customers were able to recover production levels more quickly than had previously been anticipated,” writes the company.

Worldwide, the automotive business recorded sales of approximately $1.6 billion USD (128,181 million JY) and an operating profit of $47 million USD (3,725 million JY).

In North America, the company reports decreased OE revenues and profits from the previous year, but improved profitability on the replacement glass side “due to a strong product mix and an improved operational performance.”

Company officials says OE profits also were affected in North America by “increased input costs.”

In Europe, which represents 48 percent of NSG’s automotive sales, revenues increased in the OE sector due to improving demand, but profit decreased due to rising costs, start-up costs on new facilities and demand volatility, the company reports. Company officials say demand levels have now stabilized in the European OE market. On the European replacement side, the company reports that “business [was] robust, as reduced volumes were offset by an improved product mix.”

Japan makes up 16 percent of the Group’s automotive sales and both revenues and profits were below last year, “as customers reduced their production levels during the first quarter in response to component shortages, following the Japan earthquake.” Demand recovered during the second quarter, but is still below the levels of the previous year, according to the company.

South America officials report an increase in volume, “although the second quarter was relatively weak with some customers taking extended closures to re-balance inventory levels.” NSG officials say profits were similar to the previous year in South
America, as the higher volume was partially offset by increased input costs, demand volatility and start-up costs on new investments.

In other news, NSG has instituted the use of a new logo, which company officials say “will help [its] employees, customers, suppliers and other stakeholders recognize that [it is] a single and distinctive company, while at the same time retain[ing] the valuable Pilkington brand name.”

According to a company statement, the new NSG Group brand identity was created to capitalize on company’s position in the auto glass, building products, and specialty glass markets. “The NSG Group mark becomes the single top-level identity for the Group’s operations,” writes the company. “There are no plans to change the use of ‘Pilkington’ in many of our legal company names, so we will still be known as Pilkington North America, but when speak of ‘our group’ or ‘our company,’ we mean NSG. As such, we will begin transitioning to our new identity with more evidence of the NSG Group logo on our premises, marketing material, stationery, etc.”

Company officials say the term “Pilkington” will now be a “product brand mark.”

Additionally, NSG Group also has announced plans to build a new float glass line in Argentina with Saint-Gobain to serve both the auto and construction markets. The companies expect the line to produce 800 tons of glass daily. The new line is due to come on stream in the first quarter of 2014.

Belron Reports 4 Percent Year-to-Date Drop in Jobs from 2010 to 2011
Belron’s total worldwide repair and replacement jobs was down 4 percent for 2011, when compared with the same year-to-date period in 2010, according to a financial report by the company’s Belgium-based parent company, D’Ieteren.

Repair and replacement jobs, totaling 2.9 million, remained flat for the third quarter when compared with 2010, according to the company.

The company reports that worldwide, sales dropped one percent in the third quarter when compared with the same period in 2010­­­—comprised of 1.3 percent organic growth for the period and 0.8 percent acquired growth, but offset by a 3.1 percent adverse currency translation effect.

Belron experienced a 1.5 percent drop in year-to-date sales, consisting of a 0.7 percent organic decrease, 0.7 percent acquired growth and 1.5 percent “adverse currency translation.”

In Europe, company officials say third-quarter sales were 3.6 percent lower than in 2010, consisting of a 3.5 percent organic decrease, 0.9 percent acquired growth, and a 1 percent adverse translation impact.

“The organic sales decrease was due to market declines in the majority of countries, primarily as a result of the challenging economic environment,” writes D’Ieteren. “The acquired growth is predominantly in Russia following the acquisitions in late 2010 and early 2011.”

Outside Europe, the company saw third-quarter sales growth of 2 percent, consisting of 7 percent organic growth and 0.6 acquired growth, partially offset by a 5.6 percent unfavorable translation effect. Belron attributes the organic growth to “the benefit of investments in both marketing activities and key account relationships which have enabled the business to grow despite challenging marketing conditions.” The company reports the “acquisition of a number of franchisee businesses” in Canada as part of this growth.

Belron predicts moderate organic sales growth for the rest of the year, “as share gains are expected to offset continued market declines.” The company’s net unusual costs for the year are expected to reach approximately $16 million USD (12 million Euros) for the full year, related to the Canadian acquisitions, along with “the impairment of certain intangible IT assets following a change in strategy to leverage new technology, partially offset by a one-off gain relating to a change in the [United Kingdom] government index for pension revaluations from the retail price index to the consumer price index.”

At press time, company officials had not yet responded to requests for further details on the noted Canadian acquisitions.

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