A new manufacturing plant at Colours & Coatings’ Meir, UK site supplies specialist pigments to all of the division’s businesses

Black enamels and conductive silver pastes for automotive glass

The Tile business provides innovative products and industry leading technical support to tile manufacturers worldwide

The Tableware business has invested in high technology production processes for decals and liquid gold and established a new Innovations Centre at Meir, UK to support its global customers

Colours & Coatings Division continued to make excellent progress during the year driven by strong growth in sales and profits in its Structural Ceramics and Glass businesses. The division increased its operating profits by 15% to £32.2 million.

The Colours & Coatings Division is one of the world's leading suppliers of inorganic colours and the associated frits, glazes and enamels by which they are applied to a wide range of substrates across a number of markets including automotive, glass, tile, tableware, plastics, inks and surface coatings. The division is organised into four sectors reflecting its major markets: Structural Ceramics, which combines the Tile, Sanitaryware and Zircon businesses, Glass, Tableware and Pigments and Dispersions. Colours & Coatings has operations in 30 countries, with its major manufacturing bases in Spain, Italy, the Netherlands and the UK. It is in the top three by market share in all its major market segments. 2000/01 has seen the continuation of the strategy of investing in order to exploit faster growing markets, particularly those of its Tile and Glass businesses, and refocusing resource away from declining or slower markets.

Structural Ceramics
The Structural Ceramics sector achieved strong sales growth in the year and good growth in operating profits. Robust Asian and European markets underpinned another record year for Tile operations in Spain and Malaysia, coupled with strong performances from Italy and the UK. The Spanish frit manufacturing facility is operating at full capacity and work is well advanced on the construction of a new plant nearby, which will be commissioned in the second half of this year. In addition, a smaller frit facility is under construction to serve the growing Brazilian market with clean, modern frits. The strategy of concentrating stain production in Structural Ceramics has paid handsome dividends, with growth in volumes and a fall in unit costs. The Tile business' design centre at Spezzano, Italy continues to provide innovative and pioneering support to the global tile market. In 2000/01 a small tile manufacturing line was installed in order to facilitate the development of new patterns and technologies. The Zircon business had a solid year, increasing volumes, prices and profits in a difficult market. Zircon is a milled white pigment used extensively in frit and glaze systems. The weak Euro and increasing energy prices both adversely affected the sector in 2000/01, but the outlook is expected to improve in the year ahead. A small zircon facility was acquired near Shanghai during 2000/01, which is expected to be earnings enhancing in 2001/02.

Glass
The Glass sector also had a very good year with strong profit growth on the back of a robust increase in sales. A £4 million expansion of Glass' masterplant in Maastricht, which was previously operating at capacity, is close to completion. This will enable the business to increase output and improve both quality and efficiency. A new obscuration silver paste product has gained widespread acceptance in the market and sales have doubled. There was also strong growth in sales of decorative gold pastes, particularly into the Middle East. The business remains committed to a strong pipeline of new products to assist customers in meeting stringent new environmental standards.

Tableware
Profits in Tableware improved on the prior year as a continuing fall in sales to UK manufacturers was offset by the benefits of the cost reduction initiative announced in December 1999 which have been delivered in full. Some leading UK companies are showing signs of recovery and there are growth opportunities with other tableware producers worldwide. In order to support its strategy of focusing on key accounts and growth prospects, the sector has invested in a new Innovations Centre, high technology production processes for decal and liquid gold manufacture and the implementation of new IT systems to better support customers with a more streamlined overhead. In July 2000 the business acquired Waterford Wedgwood plc's modern decal manufacturing facility at Fenton, UK and entered into a long term supply agreement. Its decal operations, previously based at Burslem, UK, have now been consolidated on the Fenton site.

Pigments and Dispersions
Pigments and Dispersions had a difficult year, with both sales and profits declining. The Pigments business suffered from delays to the introduction of new products and reduction in demand for transparent iron oxide in the US. The Dispersions business was also impacted by delays in a major transition from older products to new ranges. All new products have now been launched and are receiving a positive response.