Pre-tax profits of �135m for the year to the end of March were up by �15m compared with the previous year.

But the Merseyside-based firm - one of the world leaders in glassmaking - said its earnings had been hit by the strength of sterling and economic instability in Brazil, where it has a big market for car windscreens and windows.

Pilkington's Chief Executive, Paolo Scaroni, said cost-cutting had turned around the company's fortunes, and that he now intended to seek out new markets. He dismissed persistent media reports suggesting the firm was being targeted for takeover by rivals.

Most of the jobs will be lost from the company's operations in the United States and Germany.

Pilkington's Finance Director, Andrew Robb, said sales were down slightly from the previous year after unprofitable businesses were sold off. But he said the European division had been transformed by restructuring, resulting in an 80% rise in operating profits.

Mr Robb said retailing in South America and Australia had performed less well, with sales down 13% and 10% respectively.

Merrill Lynch analyst Kevin Cammack said the results marked "a turning point" for Pilkington. "Investors have heard this story for many years, but there now seems to be something actually coming through," he said.