| The Cookson Group, reported today that it will not pay a dividend as it seeks to improve its cash position in the light of a difficult trading environment for its key product lines. The company, which operates primarily in electronic materials, ceramics and precious metals, delivered it’s fourth profit warning of the year and is causing some concern in the city of London over its ability to service its net debt position of 775m UK Pounds. The Electronics division continued to be affected by the unprecedented downturn in the global electronics industry. Sales for the division in the third quarter were £185 million, down 47% in comparison with a particularly buoyant third quarter last year and 15% lower than the second quarter of this year. Despite this, order books had begun to improve in early September and the rate of decline in sales started to moderate, offering tentative evidence that the sharp fall in demand in the electronics industry could be bottoming out and that inventory levels in the supply chain were more balanced. However, in light of the events of last month and the extremely uncertain outlook for business in general, it is not clear that this improvement in trend is sustainable. The sales shortfall in the quarter was experienced by all three of the division’s sectors, with the decline most acute for PCB laminates and PCB assembly equipment. As in the first half, the most difficult trading conditions were experienced by the division’s operations in the USA where, according to industry data, PCB billings for the industry were down some 45% in July and August compared with last year. As a result of the severe fall in sales, the Electronics division registered a trading loss in the third quarter of approximately £14 million. As in the first half, weakness persisted in the US and UK steel industries, both of which are major end-markets for the Ceramics division’s products and services. Steel production in the third quarter in these two areas was lower than that of the second quarter of this year and down some 12% compared with last year. There were also signs of deterioration in some northern European steel making countries, although production in southern Europe remained at or above last year’s levels. In the rest of the world, steel production levels held up reasonably well and the performance of the division’s Steel sector in these regions was less affected. In the division’s Foundry & Industrial Products sector, activity weakened in line with that of the steel industry to which demand for its products is indirectly linked. For the division’s Glass sector, sales in the quarter were in line with last year. In total, the Ceramics division’s sales in the third quarter were £173 million, 10% lower than last year, and trading profits for the three months ended September were approximately £8 million. For the Precious Metals division - which had performed well in the first half – sharply reduced consumer confidence in the USA in the third quarter resulted in a decline in sales for its Jewellery Products sector. This was exacerbated by a fall in orders and output in the sector’s US activities in the immediate aftermath of the 11 September attacks. As in the past, this sector’s results are highly dependent on Christmas and fourth quarter holiday season demand. The division’s Precision Products sector was also adversely impacted by a difficult US manufacturing environment. Sales for the quarter for the division as a whole were £99 million, which was 4% higher than last year, though 21% lower excluding the contribution of last year’s E-CLAL acquisition. Trading profits for the division were some £6 million for the three months. To counteract these downturns Cookson will close 7 plants in the electronics division with a headcount reduction of 900. In the Ceramics division 6 plants will be closed which will lead to a headcount reduction of 2500 or some 30% since the beginning of the year. | 
