NSG Group and the Flat Glass Industry 2011 NSG Group and the Flat Glass Industry 2011
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NSG Group and the Flat Glass Industry 2011 NSG Group and the Flat Glass Industry 2011 Legal Notice This document is intended as a briefing on the glass industry and the position within it of the NSG Group’s businesses. The content of the publication is for general information only, and may contain non-audited figures. Every care has been taken in the preparation of this document, but Nippon Sheet Glass Co Ltd., accepts no liability for any inaccuracies or omissions in it. Nippon Sheet Glass Co Ltd. makes no representations or warranties about the information provided within the document and any decisions based on information contained in it are the sole responsibility of the user. No information contained in this document constitutes or shall be deemed to constitute an invitation to invest or otherwise deal in shares in Nippon Sheet Glass Co Ltd. © 2011 Nippon Sheet Glass Co., Ltd. 2 NSG Group and the Flat Glass Industry 2011 Introduction 04 Introductory note and definitions Contents 05 Executive summary Global flat glass industry and market structure Industry & Market structure 08 Total world market for flat glass 08 Routes to market 09 Industry economics 10 Global players and market shares 11 World float/sheet glass markets 16 Automotive markets Glass – a growth industry Glass industry growth 23 Global demand for flat glass 28 Growth in Building Products 30 Growth in Automotive NSG Group – a glass industry leader NSG Group Overview 37 Corporate overview 38 Business profile 42 Building Products overview 49 Automotive overview 55 Sustainability 58 Glass manufacture Manufacturing 63 NSG Group and associates' float lines NSG Group and the Flat Glass Industry 2011 3 Introductory Note and Definitions The objective of this publication is to provide The Pilkington brand mark background information on the world’s flat glass industry and, as an industry leader, the position within it of the NSG Group. In June 2006, Nippon Sheet Glass Co., Ltd acquired Pilkington plc through NSG UK Enterprises Limited; a wholly-owned subsidiary. All of the operations of the former Pilkington plc are now fully integrated An important element of the acquisition of into the NSG Group. Pilkington plc by NSG in 2006 was the retention of the Pilkington brand in the NSG Group’s Building Where the operations of the whole Group are Products and Automotive businesses. referred to collectively, the terms ‘NSG Group’ or ‘the Group’ are used. The Group’s flat glass The Pilkington name promotes many of the Group’s businesses comprise Building Products businesses world-leading products and is used in some of the in Europe, Japan, North America, South America, names of Group subsidiary companies. China and South East Asia, which are managed on a regional basis, and the Group’s Automotive business, which is managed globally. It should be borne in mind that the flat glass businesses of the NSG Group account for just under 90 percent of the NSG Group’s business by sales and that the Group also has a third business line, Specialty Glass, accounting for around 11 percent of Group sales, which is not covered by this publication. Consequently, any figures referring to ‘Pilkington’ or ‘NSG Group flat glass’ sales and operating income are lower than those for the NSG Group as a whole. The strategic direction of the NSG Group itself is covered in Part Three of this publication. The operating currency of the NSG Group is the Japanese yen. However, for ease of reference, some figures are expressed in euro and any figures relating to financial performance are therefore approximate. This publication should be read in conjunction with the NSG Group Annual Report 2011, covering the fiscal year ended 31 March 2011. This document is also available to download in pdf format from the NSG Group website at www.nsg.com. 4 NSG Group and the Flat Glass Industry 2011 Introduction Executive summary The flat glass industry and global market • Following the acquisition of Pilkington by NSG, just structure less than 90 percent of the combined entity is concerned with flat glass, significantly higher • The global market for flat glass in 2010 was than the nearest competitor, AGC at less than approximately 56 million metric tonnes, 50 percent. representing a value at the primary manufacture level of around euro 23 billion and euro 53 billion at • Europe, China and North America, together account the level of secondary processing. for over 75 percent of high quality float demand. • This market has historically been growing in volume • Automotive light vehicle production in 2010 was terms at 4 percent to 5 percent a year. 72 million, of which 35 percent was in the two main markets of Western Europe and North America. • Of total global market demand in 2010, it is Build in Japan contributed a further 12 percent. estimated that 33 million tonnes was for high quality float glass, 1 million tonnes for sheet glass • These three regions account for 47 percent of global and 2 million tonnes for rolled glass. The remaining light vehicle production and are also the domiciles of 20 million tonnes reflects demand for lower quality most of the world’s vehicle manufacturers and are float, produced mainly in China. the centers for new vehicle development. • In 2010, 40 percent of float glass went into new Glass – a growth industry buildings and the same proportion into • Over the long term, demand for float glass is refurbishment for buildings. growing at almost 5 percent per annum. This • Approximately 3.7 million tonnes of the flat glass growth is fuelled by the demand for building glass produced globally for calendar year 2010 was and automotive glass, which in turn is driven by automotive glass. economic growth. • Globally, around 80 percent of Automotive glass goes • Over the last 20 years, float demand growth has into OE supplied to vehicle manufacturers for new outpaced real GDP growth. Over the past 10 years, vehicles and 20 percent in to the AGR aftermarket. float demand has exceeded GDP growth by around three percentage points. • Approximately 1.5 million tonnes of flat glass in calendar year 2010 was consumed in Technical • The world flat glass market is expected to recover to Applications. The most notable of these is almost 60 million tonnes in 2011, including 2 million solar energy. tonnes of rolled glass, from the recession-hit 2009 level of 52 million tonnes. • Considering high quality float alone, the industry is relatively consolidated, with four companies • The pace of capacity addition outside China has accounting for a majority of global capacity. moderated recently, with eleven new lines on stream in 2010 but only three expected in 2011. • In terms of the capacity, the world’s top four companies are led by the AGC and Saint-Gobain. • Architects are increasingly seeking to bring natural NSG comes in at number three, followed by environmental factors into the interior of buildings Guardian Industries. by maximizing natural daylight. This has been achieved through the use of larger glazed areas in • NSG Group’s share of global, high quality float façades and roofs, and through entirely glazed capacity is approximately 13 percent. façades, where the glass is a structural component • Three glass groups, NSG Group, AGC and of the building. Saint-Gobain together with its strategic partner Central Glass, supplied around two-thirds of the glass used in the automotive industry during calendar year 2010, according to our estimates. NSG Group and the Flat Glass Industry 2011 5 • Over the past 25 years, in developed regions such as Geographic positioning; Building Products Europe, Japan and North America, the growing need and Automotive for energy efficiency in buildings has transformed • Building Products has manufacturing operations in the markets for energy-saving glass and this is now 21 countries. Its largest operation is in Europe, with being echoed in developing regions. major interests in Japan, North and South America, • In Automotive, the basic driver of demand for China and South East Asia. suppliers to the OE industry is vehicle build. • Pilkington Automotive is one of the world’s largest Historically the global industry has exhibited steady suppliers of automotive glazing products. It growth; an average of around 2.5 percent per annum operates in three main sectors; supplying original over the last 13 years. equipment, aftermarket replacement glass and • However, the downturn which hit the industry in products for specialized transport. 2008 and 2009 on the back of the global economic • Its footprint, including fabrication plants, OE crisis was unprecedented both in terms of its spread satellite facilities and its AGR distribution network and its scale. Its severity reduced the historical encompasses Europe, Japan, North and South growth rate closer to 1%. The recovery now America, China, South East Asia and India. underway together with natural growth in developing markets is expected to restore the • The NSG Group is one of only four companies in the long-term average industry growth to 3% by 2015. flat glass industry that can claim to be true global players, the other three being AGC, Saint-Gobain NSG Group – a glass industry leader and Guardian. • The NSG Group, which operates under the • The integration of the Pilkington and NSG business Pilkington brand in Building Products and platforms has historically helped mitigate the Automotive, is one of the world’s largest effects of market cycles in the area of architectural manufacturers of glass and glazing products glass and has given the Group a superior presence in for the building and automotive markets. developing markets such as South America, China, • The Group has manufacturing operations in South East Asia and Russia. 29 countries on four continents and sales • The NSG Group’s manufacturing base includes float in around 130 countries.