The Colours & Coatings
Division is organised into three market facing sectors: Structural Ceramics
serving the tile, sanitaryware and related construction markets; Glass
serving specialised applications in the automotive, architectural and
container glass markets; and Speciality Coatings supplying the tableware
and plastics industries as well as a range of niche markets for pigments
and surface coatings. All business sectors serve the full range of international
markets and the division has a presence in all major geographical regions,
with main production sites in Spain, the Netherlands, Italy, Brazil,
UK, Malaysia, India, China and the USA.
Fiscal year 2002/03 has
seen the completion of the rationalisation of the division’s activities
announced in January 2002, the principal element of which was the closure
of its major UK site at Meir in North Staffordshire. Production capacity
has been relocated to other sites both within the UK and in Europe.
This project has been a great success, considerably reducing the cost
base of the division and allowing the operations to sharpen their focus
on the structure and needs of the markets that they serve.
The Structural Ceramics
sector is focused on the production and marketing of base products including
frits, colours and glazes. Primarily located in the major tile producing
areas of Italy and Spain, the business continues to expand in the key
developing markets of Asia and South America. Structural Ceramics achieved
sales in line with 2001/02 despite continued fragile conditions in its
principal European markets. Margins improved during the year, partly
due to the strength of the euro but also through an improved product
mix, with good growth in sales of higher added value products. Consequently,
the business achieved encouraging growth in operating profits.
The first phase of Structural
Ceramics’ new, state of the art frit manufacturing facility in
Spain is now fully operational. A new frit manufacturing plant was completed
in Brazil during the year and is already producing benefits through
improved margins. A new colours manufacturing plant has been added in
Spain to serve demand following the closure of the Meir factory and
additional capacity also added in Italy. Prospects for the future focus
on continued expansion in Northern Asia and increased opportunities
from growing markets in Eastern Europe.
The Glass sector chiefly
supplies glass enamels, liquid precious metals and other coating materials
for a wide range of applications onto glass. With manufacturing and
marketing based in the Netherlands, the sector reaches all major markets
through a centrally administered sales and distribution network. During
the year the business’ sales grew substantially despite flat market
conditions. New improved product ranges introduced during the year,
including recyclable, lead free products, have been well received by
customers around the world. The business has also seen expansion into
new geographic markets particularly in the Middle East and Latin America,
which contributed to strong revenue growth. Operating profits were ahead
of last year.
Following last year’s
successful completion of the Glass masterplant expansion programme at
Maastricht, 2002/03 has seen a continued focus on improvements in manufacturing
processes. While major markets, such as automotive, are expected to
remain relatively flat, continuous new product development and investment
in new technology provides an encouraging outlook for the Glass sector.
Speciality Coatings serves
two broad market segments: the surface coatings and plastics industries,
to which it supplies pigments and pigment dispersions, and the tableware
market, which consumes its pigments, glazes, decorative precious metals
and decals. The market for finished tableware has been relatively flat
in recent years. However, the value of the market for decorative materials
for tableware has been declining due to the continuing trend towards
casual dining which has resulted in the predominance of less highly
decorated, lower cost tableware. The outlook for the tableware industry
in Stoke-on-Trent, which remains the highest margin market for the business,
continues to look particularly bleak and the decision to close the major
UK site at Meir was taken last year in response to this. Following the
closure of Meir, the business is leaner and more focused on the requirements
of the industry and profits have improved as a result. The pigments
and dispersions area achieved good growth in both sales and profits
during the year. Further expansion is underway in pigments with investment
in a new plant for Micraflo® products and further state of the art
production facilities for cadmium pigments.
