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 markets as well as a range of pigments and surface coatings markets. All business sectors serve the full range of international markets and the division has a presence in all major geographical regions, with core production sites in Spain, the Netherlands, Italy, Brazil, the UK, Malaysia, India, China and the USA.
2003/04 was a mixed year with the Structural Ceramics and Speciality Coatings markets impacted by difficult trading conditions but continued good growth in the Glass sector.
The rationalisation of the division’s activities, completed last year, has helped support underlying profitability in the face of these challenging market conditions and the business is well placed
to benefit from the market upturn which began to materialise in the last quarter of 2003/04.
Structural Ceramics Sales in 2003/04 were down on prior year, affected by continued weakness in the large Southern European tile markets. Margins were impacted by the weakness of the US dollar, particularly in the growing Asian market and operating profits were down. However, with the investments made in recent years, Structural Ceramics is now one of the lowest cost producers in the world and is well positioned to benefit from anticipated future growth in the developing markets of Eastern Europe, the Middle East and China and any future upturn in domestic European demand.
Glass In the Glass business, sales continued to grow substantially during 2003/04 in flat market conditions. New product development continued to underpin the sector’s success with the introduction this year of recyclable automotive enamels, highly conductive silver pastes and unleaded architectural enamels. The business has also expanded into new geographic markets in Eastern Europe, Russia and China, which has contributed to strong revenue growth. Operating profits were well ahead of last year. Glass continues to focus on process improvements and production efficiencies, which are key to maintaining margins in an increasingly competitive environment. Going forward, we anticipate that core markets will be relatively flat and future success will depend upon continued high investment in R&D and our focus on increasing market share through new product development and enhanced customer service. The business is well positioned to meet these challenges.
Speciality Coatings Speciality Coatings is split broadly into two market facing segments: the Pigments & Dispersions businesses, which supply the surface coatings and plastics industries; and the Tableware business, which supplies glazes, decorative precious metals and decal products. The general trend within the tableware market away from highly decorative, fine ware and towards more casual dining shows no signs of abating. This has resulted in the continued decline of the high margin UK market. Pigments & Dispersions also had a challenging year with poor demand for wood stains from the US market, caused mainly by the weakness of the dollar, which has impacted on profitability. However the business is well positioned for growth in 2004/05, driven by further expansion of its range of Micraflo® free flowing pigment concentrates for plastics and the launch of Solaplex™, a novel yellow pigment that provides an environmentally friendly alternative to lead-chrome and cadmium based materials.