TIDMCOD
RNS Number : 2406F
Compagnie de Saint-Gobain
25 October 2018
PRESS RELEASE
Paris, October 25, 2018
Sales for the first nine months of 2018
Organic growth at 4.3% for the nine-month period
Objectives confirmed
-- Organic growth at 4.3% for the nine-month period and at 3.1% in Q3
-- Negative currency impact of 3.6% over the nine-month period
and of -1.9% in Q3; positive Group structure impact of 1.1% over
the nine-month period and of +0.6% in Q3
-- Acceleration in pricing, up 3.5% in Q3 (up 2.9% over the
nine-month period) amid continued cost inflation
-- Volumes slightly down by 0.4% in Q3 against a high comparison basis in Q3 2017
-- 11.8 million shares bought back at the end of September 2018
-- 2018 objectives confirmed
Pierre-André de Chalendar, Chairman and Chief Executive Officer
of Saint-Gobain, commented:
"Saint-Gobain continues along its growth trajectory despite a
tough comparison basis in Q3 2017. Our focus on increasing prices -
critical in an inflationary environment - continues to pay off. The
industrial issues that had weighed on our profitability in the
first half of the year are largely behind us.
Saint-Gobain is therefore confirming its objectives for
full-year 2018 and for the second half expects the like-for-like
increase in operating income to be clearly above the level achieved
in the first half.
The strategic initiatives announced in July are moving forward;
they will help accelerate the Group's profitable growth momentum.
This new organization will be outlined in a specific announcement
on November 26(th) ."
Consolidated sales for the first nine months of 2018 were
EUR31,130 million compared to EUR30,570 million for the first nine
months of 2017.
The negative currency impact was 3.6% over the nine-month
period, with a smaller 1.9% negative impact in the third quarter
resulting mainly from the appreciation of the US dollar against the
euro, despite the ongoing depreciation of the Brazilian real,
Nordic krona and other Asian and emerging country currencies.
The Group structure impact added 1.1% to total growth over the
nine-month period, essentially reflecting the consolidation of
acquisitions in Asia and emerging countries (KIMMCO, Megaflex,
Isoroc Poland, Tumelero), in new niche technologies and services
(TekBond, Scotframe, Maris, Logli Massimo) and to consolidate our
strong positions (Glava, Kirson, Wattex, Biolink, SimTek, bolt-on
acquisitions in Building Distribution such as Per Strand).
The smaller Group structure impact in the third quarter (+0.6%)
reflects the acceleration in the Group's portfolio optimization
program, with in particular the disposal of the EPS insulation foam
business in Germany and glazing installation operations in the UK.
The Group has also launched a process to sell the legal entity of
its Pipe business in Xuzhou, China. It should be noted that in
light of the now hyperinflationary environment in Argentina, this
country which represented less than 1% of the Group's 2017 sales,
is excluded from the like-for-like analysis as of July 1, 2018.
On a like-for-like basis, sales were up 4.3% over nine months
and 3.1% in the third quarter. This reflects a further acceleration
in pricing, up 3.5% after a 2.5% rise in the first half, in a
context of continued raw material and energy cost inflation.
Volumes were up 1.4% over the nine-month period, and remained
almost stable in the third quarter (down 0.4%), affected in
particular by a high comparison basis in High-Performance Materials
and Exterior Products in the US.
EURm 9-month 9-month Change on Change on Like-for-like
2017 2018 an a change
sales sales actual comparable
structure structure
basis basis
-------- ----------- ------------
Sector and division:
Innovative Materials(a) 7 787 7 859 0,9% 0,4% 5,2%
Flat Glass 4 247 4 229 -0,4% -0,6% 3,4%
High-Performance Materials 3 559 3 646 2,4% 1,5% 7,3%
Construction Products(a) 9 512 9 668 1,6% 0,4% 5,6%
Interior Solutions 5 113 5 330 4,2% 1,7% 5,9%
Exterior Solutions 4 468 4 412 -1,3% -1,1% 5,3%
Building Distribution 14 019 14 365 2,5% 1,5% 3,1%
Internal sales and misc. -748 -762 --- --- ---
Region:
France 7 875 8 128 3,2% 3,1% 3,1%
Other Western European
countries 13 216 13 632 3,1% 1,2% 3,0%
North America 4 179 4 183 0,1% -0,5% 6,8%
Emerging countries and
Asia 6 791 6 794 0,0% -0,8% 7,9%
Internal sales -1 491 -1 607 --- --- ---
----------- ------------ --------------
Group Total 30 570 31 130 1,8% 0,7% 4,3%
-------- -------- ----------- ------------ --------------
(a) Including inter-division
eliminations.
EURm Sales Sales Change on Change on Like-for-like
Q3 2017 Q3 2018 an a change
actual comparable
structure structure
basis basis
--------- ----------- ------------
Sector and division:
Innovative Materials(a) 2 545 2 577 1,3% 0,9% 3,5%
Flat Glass 1 382 1 377 -0,4% -0,1% 3,2%
High-Performance Materials 1 172 1 205 2,8% 1,9% 3,5%
Construction Products(a) 3 183 3 192 0,3% 0,6% 3,0%
Interior Solutions 1 696 1 751 3,2% 1,1% 3,5%
Exterior Solutions 1 510 1 465 -3,0% 0,3% 2,7%
Building Distribution 4 675 4 815 3,0% 1,8% 3,0%
Internal sales and misc. -242 -241 --- --- ---
Region:
France 2 477 2 559 3,3% 3,1% 3,1%
Other Western European
countries 4 480 4 598 2,6% 0,6% 1,7%
North America 1 355 1 399 3,2% 2,6% 1,3%
Emerging countries and
Asia 2 334 2 290 -1,9% -0,4% 7,1%
Internal sales -485 -503 --- --- ---
----------- ------------ --------------
Group Total 10 161 10 343 1,8% 1,2% 3,1%
--------- --------- ----------- ------------ --------------
(a) Including inter-division
eliminations.
Like-for-like performance of Group Business Sectors
Innovative Materials sales rose 5.2% over the nine-month period,
including 3.5% in the third quarter.
- Flat Glass performed in line with first-half trends, reporting
organic growth of 3.2% in the third quarter and of 3.4% over the
nine-month period. The automotive business continued to enjoy good
growth momentum, particularly in Asia and emerging countries,
despite market disruptions relating to the introduction of the new
automotive emission regulations in Europe. The recent capital
expenditure and innovation investments continued to gather pace.
Sales linked to the construction market continued along the lines
of the positive trends seen in the first half in the Group's main
regions, driven in particular by a better mix effect and an
acceleration in price increases for transformed glass in Europe.
Following the restart of production at the float glass facility in
Romania in the second quarter, production resumed in Poland and
Egypt in September as expected, and India started up its fifth
float line.
- High-Performance Materials (HPM) sales were up 7.3% over the
nine-month period and 3.5% over the third quarter, with advances in
all businesses. This slower pace of growth reflects the high
comparison basis, especially in Ceramics, which had reported
exceptionally strong sales in the prior-year period. Over the nine
months all businesses and regions progressed.
Construction Products (CP) sales were up 5.6% over the
nine-month period, including an increase of 3.0% in the third
quarter.
- Interior Solutions delivered organic growth of 5.9% over the
nine-month period and 3.5% in the third quarter, driven by pricing.
Western Europe progressed slightly despite lower volumes in the UK.
In North America, the acceleration in price increases in the
quarter weighed on volumes. Asia and emerging countries reported
good growth.
- Exterior Solutions sales rose 5.3% over the nine-month period
and 2.7% in the third quarter, against a very high comparison basis
in Exterior Products, which had been boosted by additional
weather-related demand in the US in the third quarter of 2017.
Despite a clear decline in volumes, Exterior Products implemented
significant price increases in August. Excluding the Group
structure impact relating to China, sales trends improved in the
Pipe business, which is pursuing its restructuring program. Mortars
progressed, particularly in Asia and emerging countries, despite
uncertainties in Brazil.
Building Distribution like-for-like sales advanced at the same
pace in the third quarter (3.0%) as in the first half, rising 3.1%
over the nine-month period. France delivered a good quarterly
performance, and the Nordic countries continued the good trends
seen in the first half of the year. The UK reported further growth,
still driven by a strong price effect despite declining volumes.
Germany and Brazil were down over the third quarter.
Like-for-like analysis by region
- France enjoyed further good momentum in the quarter and over
the nine-month period, with sales up 3.1%, benefitting from robust
markets in new construction and renovation where growth remains
nevertheless constrained by the lack of skilled labor.
- Other Western European countries progressed 3.0% over the
nine-month period and 1.7% in the third quarter. Nordic countries
continued to report a good pace of growth. The UK was up slightly
thanks to sales prices but with declining volumes in an uncertain
environment. Germany remained hesitant.
- North America climbed 6.8% over the nine-month period and 1.3%
in the third quarter, against a very high comparison basis in
Exterior Products and HPM. Construction and industrial markets
remained robust.
- Asia and emerging countries continued to enjoy good momentum
in the third quarter, up 7.1% (up 7.9% over nine months), reporting
growth in all regions.
Strategic priorities and 2018 outlook
Saint-Gobain continued its pace of small and mid-sized
acquisitions during the third quarter. Over the nine months to
September 30, 2018, the Group acquired 17 companies for a total
amount of EUR561 million. These acquisitions will enable
Saint-Gobain to:
- consolidate its leading positions and unlock synergies (e.g.
Per Strand in Norway);
- accelerate its growth in emerging countries (e.g. KIMMCO in
Kuwait);
- acquire additional technological bricks to be combined with
its portfolio of innovative solutions (e.g. HKO in Germany).
The additional strategic initiatives intended to accelerate the
Group's transformation are moving forward. They involve in
particular:
- accelerating the renewal of the Group's portfolio by the end
of 2019 through divestments representing sales of at least EUR3
billion, resulting in a positive impact of around 40 basis points
on the operating margin;
- defining a new organization closer to the markets, offering
greater agility and unlocking more synergies. A specific
announcement on this subject will be made on November 26, 2018.
The Group expects the following trends for the fourth
quarter:
- a robust construction market in France, but which remains
constrained by the lack of skilled labor;
- progression in other Western European countries, despite
continued uncertainty in the UK and temporary disruption from the
automotive market;
- growth in North America in both construction markets and
industry;
- good momentum in Asia and emerging countries.
The Group confirms its action priorities for the year as a
whole:
- its focus on sales prices amid continued inflationary pressure
on costs;
- its cost savings program, with the aim of unlocking additional
savings of around EUR300 million (calculated on the 2017 cost
base);
- its capital expenditure program of around EUR1.7 billion
(representing around 4% in sales, in line with our objectives),
with a focus on growth capex outside Western Europe and also on
productivity (Industry 4.0) and digital transformation,
particularly in Building Distribution;
- its commitment to invest in R&D to support its
differentiated, high value-added strategy;
- its focus on high levels of free cash flow generation.
Saint-Gobain confirms its objective for full-year 2018 of a
like-for-like increase in operating income and for the second half
expects the like-for-like increase to be clearly above the level
achieved in the first half.
Glossary:
Organic growth and like-for-like changes in sales and operating
income reflect the Group's underlying performance excluding the
impact of:
-- changes in Group structure: indicators for the period
concerned and those for the previous period are calculated based on
the scope of consolidation for the previous period (Group structure
impact);
-- changes in exchange rates: indicators for the period
concerned and those for the previous period are calculated using
exchange rates for the previous period (currency impact);
-- changes in applicable accounting policies.
Operating income: see Note 3 to the financial statements in the
interim financial report, available by clicking here:
https://www.saint-gobain.com/en/finance/regulated-information/half-yearly-financial-report
Free cash flow: cash flow from operations excluding the tax
impact of capital gains and losses on disposals, asset write-downs
and material non-recurring provisions, less capital
expenditure.
Capital expenditure: investments in property, plant and
equipment.
Financial calendar
- Announcement of the new organization: November 26, 2018,
before open of trading on the Paris Bourse.
- 2018 results: February 21, 2019, after close of trading on the
Paris Bourse.
Analyst/Investor Relations Press relations
+33 1 47 62 44
29
+33 1 47 62 35 +33 1 47 62 30
Vivien Dardel 98 10
Floriana Michalowska +33 1 47 62 30 Laurence Pernot +33 1 47 62 43
Christelle Gannage 93 Susanne Trabitzsch 25
------------------------ ------------------ -------------------------------------------- -----------------
A conference call will be held at 6:30pm (Paris time) on October
25, 2018: dial +33 (0) 1 72 72 74 03 followed by the code
49602867#.
Important disclaimer - forward-looking information:
This press release contains forward-looking statements with
respect to Saint-Gobain's financial condition, results, business,
strategy, plans and outlook. Forward-looking statements are
generally identified by the use of the words "expect",
"anticipate", "believe", "intend", "estimate", "plan" and similar
expressions. Although Saint-Gobain believes that the expectations
reflected in such forward-looking statements are based on
reasonable assumptions as at the time of publishing this document,
investors are cautioned that these statements are not guarantees of
its future performance. Actual results may differ materially from
the forward-looking statements as a result of a number of known and
unknown risks, uncertainties and other factors, many of which are
difficult to predict and are generally beyond the control of
Saint-Gobain, including but not limited to the risks described in
Saint-Gobain's registration document available on its website
(www.saint-gobain.com). Accordingly, readers of this document are
cautioned against relying on these forward-looking statements.
These forward-looking statements are made as of the date of this
document. Saint-Gobain disclaims any intention or obligation to
complete, update or revise these forward-looking statements,
whether as a result of new information, future events or
otherwise.
This press release does not constitute any offer to purchase or
exchange, nor any solicitation of an offer to sell or exchange
securities of Saint-Gobain.
For any further information, please visit
www.saint-gobain.com
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END
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