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'In Europe, our BP business, representing two thirds of total BP sales, continues to be adversely affected by depressed economic conditions on the continent, particularly in Germany. Trading performance in the UK has held up well, supported by strong sales of energy efficient Pilkington 'K-Glass'. Management of the primary and processed operations was combined during the year to improve operating effectiveness and over the next two years we will take out more costs from this business.

'As we have indicated for some time now, trading conditions remain challenging in most of our major markets. In spite of this, the transformation in manufacturing and operational efficiency accomplished over recent years means that results for the current year are in line with our expectations. Like for like sales have remained steady and operating profit from Group businesses will be maintained at last year's levels with a strong profit performance in Automotive offsetting the decline in profits within ÐÇ¿Õ´«Ã½ Products. The robustness of our business will again enable us to report good progress against our prime objective of generating free cash flow, leading to another substantial reduction in Group borrowings.'

BP North America, which represents 15 per cent of BP sales, continues to be affected by the weakness in commercial construction, where Pilkington is the leading North American glass supplier. Office vacancy rates are still high, making near-term market improvement unlikely. However efficiency improvements continue to flow from the 'Step Change' programme, resulting in a return to operating profit in the North American BP business during the year.