REG - Compagnie St-Gobain - 1st Quarter Results

Compagnie de Saint Gobain SAAnnouncement

28/04/2022 17:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220428:nRSb7676Ja&default-theme=true

RNS Number : 7676J  Compagnie de Saint-Gobain  28 April 2022

The worldwide leader

in light & sustainable construction

 

Sales at a new record high

 in first-quarter 2022

 

 

·    Very strong 16.4% organic growth on supportive underlying markets

 

·    Acceleration in prices, enabling the generation of a positive
price-cost spread in the first quarter

 

·    Deployment of our solutions for energy efficiency and decarbonization
ramped up in all geographies

 

·    2022 outlook confirmed

 

 

                                    Sales Q1    Sales Q1    Change on an actual structure basis  Change on a comparable structure basis  Like-for-like change

2021
2022

(in €m)
(in €m)

 Northern Europe                    3,387       4,014       +18.5%                               +20.9%                                  +19.2%
 Southern Europe - ME & Africa      3,526       3,725       +5.6%                                +14.9%                                  +15.9%
 Americas                           1,512       1,920       +27.0%                               +26.1%                                  +16.8%
 Asia-Pacific                       417         479         +14.9%                               +30.6%                                  +24.6%
 High Performance Solutions         1,811       2,191       +21.0%                               +14.8%                                  +10.2%
 Internal sales and misc.           -274        -322        ---                                  ---                                     ---
 Group Total                        10,379      12,007      +15.7%                               +19.0%                                  +16.4%

 

Like-for-like sales rose sharply, up 16.4% on first-quarter 2021. This strong
performance reflects the Group's positioning as the worldwide leader in light
and sustainable construction thanks to its unique range of innovative
solutions offering sustainability and performance to maximize the positive
impact for its customers. It also reflects good momentum across all our
segments, which each reported double-digit organic growth, in acceleration
from second-half 2021, driven in particular by renovation in Europe and by
construction in the Americas and in Asia. The Group's volumes progressed by
1.9% over the quarter and by 8.3% compared to first-quarter 2019 (pre-Covid
comparison basis), continuing their good trends despite a difficult
geopolitical environment. Price increases continued to accelerate - up to
14.5% in a far more inflationary raw material and energy cost environment -
enabling the Group to generate a positive price-cost spread in the first
quarter.

 

On a reported basis, sales came in at a new record high of €12,007 million,
with a positive 2.6% currency effect due mainly to the appreciation of the US
dollar, pound sterling, Brazilian real and other emerging country currencies.
Changes in Group structure reduced sales by 3.3% and resulted from the ongoing
optimization of the Group's profile, in terms of both divestments - mainly
Lapeyre in France, distribution in the Netherlands and Spain, specialist
distribution in the United Kingdom, Glassolutions in Germany and Denmark, and
pipe in China - and acquisitions, mainly Chryso in construction chemicals and
Panofrance, a French specialist in modular timber solutions.

The acquisition of GCP Applied Technologies in construction chemicals is
expected to be finalized by year-end 2022 as planned. GCP shareholders
approved the transaction in March and the procedure for obtaining clearance
from the competition authorities is proceeding as planned.

The optimization of the portfolio continues country-by-country, now being part
of the Group's profitable growth model within the scope of its "Grow &
Impact" plan.

 
Update on inflation and the geopolitical situation

 

Amid accelerating inflation, Saint-Gobain now expects its energy and raw
material costs to increase by around €2.5 billion in 2022 compared to 2021.
This inflation concerns in particular energy costs, especially in Europe where
the Group has hedged around 80% of its natural gas and electricity purchases
for 2022 as a whole. Saint-Gobain's total energy bill amounted to €1.5
billion in 2021, representing 3% of Group sales.

 

In light of its proactive energy cost hedging policy, the positive price-cost
spread in the first quarter, the acceleration in the positive price effect to
14.5% in the first quarter, and the new price increases being announced,
Saint-Gobain is confident that it will be able to offset the estimated
inflation in raw material and energy costs for 2022 as a whole.

 

Note that Saint-Gobain has no industrial operations in Ukraine and that Russia
represented around 0.5% of its consolidated sales in 2021. All our solutions
are manufactured and sold on local construction markets. Since the start of
the conflict, all investment projects have been cancelled. Local activities
are now operating at a minimum and on a standalone basis.

 

The countries currently most sensitive to Russian gas supplies for
Saint-Gobain are Germany, Poland and the Czech Republic. The Group has drawn
up various plans for continuing its operations in these countries enabling it
to significantly mitigate the impact of a scenario in which all supplies of
Russian gas were terminated. Various levers can be used by the Group such as
the classification of priority industries, using alternative energy sources
already prepared at certain sites, and increasing the flexibility of its
production capacities.

 

 

Segment performance (like-for-like sales)

 

Northern Europe: strong sales growth driven by renovation

Sales in the Northern Europe Region were up by 19.2% in the quarter, an
acceleration from second-half 2021, with volumes up 3.1% on structurally
supportive renovation markets.

 

Nordic countries reported further robust growth thanks to their successful
presence across the entire trade professional value chain; an omnichannel
digital offering; the recent launch of new lightweight and resource-efficient
plasterboard solutions; and a renovation market buoyed by energy efficiency
projects. The United Kingdom - which has been very active recently in
optimizing its portfolio - reported good growth driven by façade and interior
solutions in a dynamic renovation market. Germany also saw growth accelerate
on the back of its solid market positions in energy efficiency renovation,
with enhanced stimulus measures. Eastern Europe reported excellent momentum
with market share gains in its main countries, particularly Poland, the Czech
Republic and Romania.

 

 

Southern Europe - Middle East & Africa: strong sales momentum driven by

renovation

Sales for the Southern Europe - Middle East & Africa Region enjoyed good
momentum, with sales up 15.9%, an acceleration from second-half 2021, driven
by prices in the context of a high comparison basis in March. All countries in
the Region reported double-digit organic growth driven by an outperformance on
the renovation market, successfully targeted by our comprehensive solutions.
Compared to first-quarter 2019 (pre-Covid), volumes were up 7.3%.

 

France enjoyed further good momentum, driven by structurally supportive
renovation markets. MaPrimeRenov' - France's household stimulus package
encouraging home renovations - remains a success and trade professionals
continue to see full order books. The Group's unrivalled presence across the
entire value chain - from manufacturing to merchanting and in-store advice -
has driven its outperformance, thanks to an optimized service in close
alignment with customers' needs and a comprehensive range of sustainable and
innovative solutions. For example, Weber Flex Col Eco, our patented low-carbon
cement-free mortars, has seen a sharp increase in sales with market share
gains. Saint-Gobain also launched a €120 million capital expenditure
program for insulation in France, aimed at expanding its production
capacities, of which €20 million is earmarked specifically for efforts to
decarbonize activities and develop the circular economy. Spain and Benelux
progressed, particularly in light and sustainable construction solutions,
along with Italy, where the Group has fully leveraged its commercial synergies
to meet the strong demand for energy efficient renovation supported by tax
credits. In addition, the Group continues to invest to improve its energy mix,
for example by installing solar panels in Italy at its Vidalengo insulation
plant. Middle East and Africa delivered further robust growth, benefiting from
the opening of new plants and upbeat markets, particularly in Turkey and
Egypt.

 

 

 

 

Americas: strong sales growth driven by comprehensive light construction
solutions

The Americas Region delivered 16.8% organic growth over the quarter, an
acceleration from second-half 2021 on the back of a further improvement in
prices and despite a high comparison basis for volumes. Compared to
first-quarter 2019 (pre-Covid), volumes were up by 15.7%, buoyed by strong
demand and market share gains.

 

-  North America progressed by 16.3%, driven by the development of a
comprehensive range of solutions and by good momentum in light construction -
from roofing and siding for the building envelope to interior performance
solutions for user comfort and energy efficiency. Our local organization close
to customers once again helped us mitigate supply chain tensions along with
labor shortages at the start of the year in the context of the coronavirus
pandemic. Saint-Gobain has also launched its investments to increase
production capacities in plasterboard, roofing and insulation as part of its
capital expenditure program of more than USD 400 million over the next two
years.

 

-  Latin America reported robust 17.9% growth, on a par with second-half
2021, despite a higher comparison basis and a less dynamic macroeconomic
environment in Brazil. Growth in all countries of the Region continues to be
driven by increased sales prices, an improved mix, newly opened production
facilities, and an enhanced geographical footprint and product range thanks to
targeted acquisitions country-by-country.

 

 

Asia-Pacific: strong sales growth

The Asia-Pacific Region reported 24.6% organic growth over the quarter,
representing an acceleration from second-half 2021, with volumes up 7.3%.

 

India delivered another excellent performance thanks to market share gains and
an integrated and innovative range of solutions, particularly for energy- and
resource-efficient buildings. The integration of Rockwool India in stone wool
insulation was completed as planned in early February, and rounds out the
Group's leading positions in façade and interior solutions. Despite a
deteriorating health situation as from March, China also reported further
growth, driven by market share gains in the supportive light construction
sector, where recent low-carbon building directives will help accelerate
growth. South-East Asia had a very good quarter and continues to diversify its
offering - particularly in construction chemicals - after a second-half 2021
performance hard hit by the restrictions imposed in light of the coronavirus
pandemic.

 

 

High Performance Solutions (HPS): clear growth in sales despite a slow
recovery in the mobility market

HPS sales were up by 10.2% over the quarter, including a positive 4.7% volume
effect, benefiting from the broad market recovery excluding European
automotive.

 

-  Businesses serving global construction customers reported record sales and
outperformed the market with 22.2% growth. They continue to benefit from
upbeat trends in textile solutions for external thermal insulation systems
(ETICS) thanks to good momentum in sustainable construction. The very strong
trends in Chryso sales continued - driven by decarbonization in the
construction sector - as integration efforts ramped up.

 

-  The Mobility business advanced slightly, up 1.9% on the back of a
progression in sales to the Americas and China, particularly in electric
vehicles which represent an increasing proportion of sales. The downturn in
Europe continued, becoming more pronounced at the end of the period as the
geopolitical context and health restrictions in China weighed on value chains
and procurement capacities. However, thanks to its very strong positioning in
electric vehicles and high value-added products, the Mobility business
continued to significantly outperform the automotive market.

 

-  Businesses serving Industry progressed by 14.3%, supported by activities
relating to investment cycles such as ceramic refractories, which are now
trading above 2019 levels and which benefit from innovation in specialty
materials and decarbonization technologies for our customers. Against this
backdrop, Valoref, a pioneer in ceramic recycling in Europe, now plans to
expand operations into North America, China and India.

 

Outlook and strategic priorities

 

2022 outlook

Despite a difficult geopolitical environment along with ongoing disruptions to
global supply chains, in 2022 the Group should continue to fully leverage the
good momentum in its main markets - especially renovation in Europe as well as
construction in the Americas and in Asia - and reaffirm its excellent
operating performance thanks to a solid and well-aligned organization. In this
environment, and provided there is no new major impact related to the
coronavirus pandemic and the geopolitical situation, Saint-Gobain expects the
following trends for its segments:

 

-  Europe: supportive renovation market requiring comprehensive solutions
that increase efficiency and save time for customers within each country,
albeit with a high comparison basis in the first half;

 

-  Americas: upbeat market trends, particularly in residential construction
in North America and in Latin America overall, despite a less dynamic
environment in Brazil;

 

-  Asia-Pacific: market growth with continued good momentum in India and a
gradual recovery in South-East Asia; short-term uncertainties in China owing
to Covid-related restrictions;

 

-  High Performance Solutions: market growth with supportive long-term trends
in sustainable construction and a demand for innovation and new materials for
industry decarbonization and green mobility, despite uncertainties regarding
the automotive market in Europe.

 

 

Strategic priorities

Our strategic priorities for 2022 are fully aligned with the medium and
long-term structural growth scenario in the "Grow & Impact" plan:

 

1) Accelerate the Group's growth and impact

-  Outperformance versus our markets, thanks notably to our comprehensive
range of integrated, differentiated and innovative solutions offering
sustainability and performance for our customers, developed within the scope
of an organization as close to the ground as possible in each country or
market;

-  Strengthen our key role in building a carbon-neutral economy thanks to our
positive-impact solutions;

-  Ongoing optimization of the Group's profile, with the full effect of the
Chryso integration and preparation for the GCP acquisition, as part of a
vigorous dynamic of targeted and value-creating acquisitions and divestments.

 

2) Continue our initiatives focused on profitability and performance: maintain
a robust margin and strong free cash flow generation

-  Constant focus on the price-cost spread, with strong pricing proactivity
as in 2021;

-  Disciplined continuation of our operational excellence program;

-  Maintaining the structural improvement in operating working capital
requirement while rebuilding a good level of inventories to best serve
customers;

-  Capital expenditure of around €1.8 billion, in line with the Group's
objective of between 3.5% and 4.5% of sales, with strict allocation to
high-growth markets and digital transformation.

 

 

 

 

 
 
 

 

Financial calendar

 

A conference call will be held at 6:30pm (Paris time) on April 28, 2022: +33 1
72 72 74 03 or +44 20 7194 3759, dial-in code: 23231855#

-  First-half 2022 results: Wednesday July 27, 2022, after close of trading
on the Paris Bourse.

-  Third-quarter 2022 sales: Thursday October 27, 2022, after close of
trading on the Paris Bourse.

 

 

 

 

 

 

 

 

 

 

 

Glossary:

Indicators of organic growth and like-for-like changes in sales/operating
income reflect the Group's underlying performance excluding the impact of:

·   changes in Group structure, by calculating indicators for the year
under review based on the scope of consolidation of the previous year (Group
structure impact);

·   changes in foreign exchange rates, by calculating indicators for the
year under review and those for the previous year based on identical foreign
exchange rates for the previous year (currency impact);

·   changes in applicable accounting policies.

Operating income: see Note 5 to the 2021 consolidated financial statements,
available by clicking here:
https://www.saint-gobain.com/en/news/full-year-2021-results

EBITDA = operating income plus operating depreciation and amortization less
non-operating costs.

Free cash flow = EBITDA less depreciation of right-of-use assets, plus net
financial expense, plus income tax, less capital expenditure excluding
additional capacity investments, plus change in working capital requirement
over the past 12 months.

 

 

Important disclaimer - forward-looking statements:

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
the "Risk Factors" section of Saint-Gobain's Universal Registration Document
available on its website (www.saint-gobain.com (http://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, except as
required by applicable laws and regulations.

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 further information, please visit www.saint-gobain.com
(http://www.saint-gobain.com) .

 

 

Appendix 1: Contribution of prices and volumes to organic sales growth by
Segment

 

 Q1 2022                            Like-for-like change  Prices  Volumes
 Northern Europe                    +19.2%                +16.1%  +3.1%
 Southern Europe - ME & Africa      +15.9%                +15.8%  +0.1%
 Americas                           +16.8%                +17.7%  -0.9%
 Asia-Pacific                       +24.6%                +17.3%  +7.3%
 High Performance Solutions         +10.2%                +5.5%   +4.7%
 Group Total                        +16.4%                +14.5%  +1.9%

 

 

Appendix 2: Breakdown of organic sales growth and external sales

 

 Q1 2022                            Like-for-like  % Group

change
 Northern Europe                    +19.2%         32.4%
 Nordics                            +17.5%         13.1%
 United Kingdom - Ireland           +18.4%         9.8%
 Germany - Austria                  +16.9%         3.3%
 Southern Europe - ME & Africa      +15.9%         30.1%
 France                             +13.4%         23.7%
 Spain - Italy                      +20.4%         3.4%
 Americas                           +16.8%         15.7%
 North America                      +16.3%         11.2%
 Latin America                      +17.9%         4.5%
 Asia-Pacific                       +24.6%         3.8%
 High Performance Solutions         +10.2%         18.0%
 Construction and industry          +15.6%         11.8%
 Mobility                           +1.9%          6.2%
 Group Total                        +16.4%         100.0%

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  QRFPPURCCUPPGAR