Pilkington to build glass plant in Iran

UK glassmaker Pilkington said yesterday it would enter the Iranian market by building a new glass plant there, but its shares fell on concern over its U.S. automotive unit. Pilkington Plc, which announced last month its invention of the world's first self-cleaning glass, said the new Iranian plant would have capacity of 180,000 tonnes per year. A company spokeswoman said the plant should generate about £30 million in annual turnover.

However, shares fell on a cautious outlook for its U.S. automotive business. The group said production had slowed down in the second half of the year, as lower overall demand led to manufacturers closing plants. The outlook triggered a downgrade from U.S. investment bank Merrill Lynch, which cut its rating on Pilkington to "accumulate" from "buy".

Analyst Mark Hake said he had lowered his estimates for Pilkington's pre-tax profits for the year ending 2001 to £215 million from a previous £220 million. Pilkington has a price to earnings (PE) ratio of 11.2 for the year ending 2001, slightly above a respective PE of 10.9 for its rival Saint-Gobain, according to financial publisher Barra.

Under the Iranian deal, Pilkington will take a minor equity stake in Iran's Ghazvin Glass Co and will jointly control the business. Ghazvin reported last year earnings of £8 million, on turnover of £19 million, according to Pilkington. "Iran is a small and isolated market, but a profitable one. Growth rates tend to be higher in emerging markets," said Merrill's Hake.