Ardagh posts pretax loss of €1.5m

Ardagh Glass says high energy costs are behind its continuing poor financial performance.

The group, in a document circulated to bondholders, has reported a pretax loss of €1.5 million in the three months to the end of September 2006, compared to a profit of €3.9 million in the same period last year.

The group has reported a pretax loss of €22.1 million for the nine months to the same date, compared to a gain of €42.3 million in the same period in 2005.

Turnover for the glassmaker in the third quarter was €168.7 million, up from €155.7 million in 2005, an increase of 8.3 per cent. Turnover for the first three quarters of 2006 was €472.4 million, up from €397.4 million the previous year.

However, the figures for the cost of sales for the first three quarters of 2006 show they have grown to €448.4 million from €346.5 million in the year-ago period.

"Escalating energy costs was the primary reason for the decline in gross margins across the group, with the UK being the worst affected," Ardagh Glass Holdings said in the report. The British operation is the largest part of the group.

Glass container turnover in Britain was broadly in line with the same period last year, while turnover with Heye Glas and Abruzzo Vetro was slightly ahead due to increased volumes.

In Britain, the group is in competition with Seán Quinn's glass operation.

Ardagh no longer produces glass in Ireland. It owns Rockware Glass in Britain, Heye-Glas in Germany, Abruzzo Vetro in Italy, and Huta Szkla Ujscie in Poland.

The site of Ardagh's former glass operation in Ringsend, Dublin, is now to be developed by builder, Bernard McNamara, financier Derek Quinlan and the Dublin Docklands Development Authority.

South Wharf, the company that owns the site, split from the old Ardagh Glass plc four years ago in a restructuring orchestrated by Paul Coulson, chairman and major shareholder in Ardagh.

Ardagh shareholders had the option of taking up a stake in South Wharf. Its sole asset was the site of the defunct bottling plant in Ringsend, Dublin. Earlier this month the shareholders voted to sell South Wharf to the developers for €412 million.

Mr Coulson's company, Yeoman International Holdings SA, Luxembourg, owns 41.28 per cent of Ardagh, which is incorporated in Jersey.

The chief executive of Ardagh, Eddie Kilty, is due to step down next year and is to be replaced by Niall Wall, who joined the Ardagh board in September.