85GQ Anz Bank 43

 

TIDM85GQ 
 
RNS Number : 4364M 
Nippon Sheet Glass Company Limited 
29 January 2009 
 

 
 
NSG Group announces initiatives to improve profitability and enhance operational 
efficiencies, and revises forecast for FY2009 
 
 
1.    Initiatives to improve profitability and enhance operational efficiencies 
 
 
The Board of the NSG Group (the Group) has today 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 onwards. 
 
 
On 14 November 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. 
 
 
The effect on the Group's sales and profitability is reflected in today's 
announcement of a revision of the Group's forecast for FY2009, details of which 
are given below. 
 
 
Both at Group and business line level, quick and decisive action has already 
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. 
The measures announced today 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 total investment in the approved restructuring will be 22 billion yen. 
Details of the initiatives to be implemented within the Group are as follows: 
 
 
a. Rationalization 
 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 per cent reduction 
of float capacity elsewhere in the Group. 
 
b.Headcount reduction 
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 5,800 people by March 2010. This 
represents around 15 per cent of the total global headcount. Around 3,000 of 
these employees will have left the Group by the end of the current financial 
year. 
 
 
c.Review of investment plans 
 The NSG Group has carefully reviewed its 
investment plans, with the aim of sharpening its focus consistent with the 
Group's growth strategy. The Group is reducing overall investment in the short 
term, but will be increasing the share of the reduced total for investment in 
the solar generation sector, which the Group continues to identify as a key area 
for expansion. 
 
 
Through such measures, the NSG Group is planning to contain investment across 
its businesses to around 70 per cent of depreciation for the next two financial 
years. 
 
 
The NSG Group plans to update the market further in its third quarter earnings 
announcement, scheduled for 13 February 2009. 
 
 
In the meantime, the Group announces the following revision to its forecast for 
the financial year to 31 March 2009. 
 
 
2.  Revision of Forecast for FY 2009 
 
 
The NSG Group announces a revision to its previous forecast for FY 2009 (April 
2008 through March 2009) published on 14 November 2008, as set out below. 
 
 
a.Revised forecast (consolidated) 
Full year forecast (1 April 2008 through 31 March 2009) 
 
 
 
 
+--------------+----------+-----------+----------+----------+------------+ 
| (Unit: JPY million, %)                                                 | 
+------------------------------------------------------------------------+ 
|              |   Net    |Operating  |Ordinary  |   Net    |    Net     | 
|              |  Sales   |  income   |  income  |  Income  |  income    | 
|              |          |           |          |          |    per     | 
|              |          |           |          |          |   share    | 
+--------------+----------+-----------+----------+----------+------------+ 
| Previous     | 810,000  |  20,000   |  8,000   |  9,000   |  JPY13.47  | 
| forecast (A) |          |           |          |          |            | 
| published on |          |           |          |          |            | 
| 14 November  |          |           |          |          |            | 
| 2008         |          |           |          |          |            | 
+--------------+----------+-----------+----------+----------+------------+ 
| Revised      | 750,000  |    0      |(13,000)  |(22,000)  |JPY(32.92)  | 
| forecast (B) |          |           |          |          |            | 
+--------------+----------+-----------+----------+----------+------------+ 
| Change (B-A) |(60,000)  | (20,000)  |(21,000)  |(31,000)  |     -      | 
+--------------+----------+-----------+----------+----------+------------+ 
| Change (%)   |   -7%    |  -100%    |    -     |    -     |     -      | 
+--------------+----------+-----------+----------+----------+------------+ 
| Previous     | 865,587  |  46,462   |  30,437  |  50,416  |  JPY75.44  | 
| year result  |          |           |          |          |            | 
| (FY2008)     |          |           |          |          |            | 
+--------------+----------+-----------+----------+----------+------------+ 
 
 
 
 
b. Reasons for the revision 
 
 
The reduction in operating and also ordinary income arises mainly as a result of 
the unprecedented, challenging market conditions being experienced in the 
Group's major markets and also partly as a result of the continually 
strengthening yen generating a reduced level of income on consolidation. These 
challenging market conditions are anticipated to continue during the remainder 
of the financial year. 
 
 
The additional reduction in net income (over and above the ordinary income 
shortfall) is mainly due to the said extraordinary restructuring costs 
anticipated to be charged to the income statement in the current financial year. 
The majority of these costs will be provided during the current financial year 
following announcement locally of the detailed restructuring plans.  Almost all 
of the cash expenditure required to facilitate the restructuring will be 
realized during the year to 31 March 2010. 
 
 
ends 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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