REG - Compagnie St-Gobain - 1st Quarter Results

Compagnie de Saint Gobain SAAnnouncement

27/04/2023 18:15

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230427:nRSa7761Xa&default-theme=true

RNS Number : 7761X  Compagnie de Saint-Gobain  27 April 2023

 

The worldwide leader

in light & sustainable construction

 

 

 

Solid sales growth in first-quarter 2023

 

 

 

·    Organic growth: +4.7%

·    Good level of pricing, helping to generate a positive price-cost
spread

·    Confirmation of the Group's resilience in a difficult environment

·    Confidence in the 2023 outlook: operating margin between 9% and 11%

 

 

Like-for-like sales progressed by 4.7%, with all segments reporting growth. In
a difficult geopolitical and macroeconomic environment, the Group continued to
outperform its markets thanks to the pertinence of its strategic positioning
at the heart of energy and decarbonization challenges, and to the strength of
its local organization by country.

 

In an environment that remains inflationary, the Group continued to
effectively serve and support its customers while managing energy and raw
material cost evolution. Prices were up by 10.2% over the quarter, owing to
price increases implemented last year and certain additional measures taken
locally at the start of 2023, generating a positive price-cost spread overall.
Volumes were down by 5.5% with a moderate market slowdown as expected, which
reflects a contrasting situation: a marked decline in new construction but
good resilience overall in renovation. The Group is proactively taking the
commercial and industrial measures necessary to adapt to its environment and
to continue its excellent operating performance in order to deliver an
attractive operating margin despite difficult markets.

 

On a reported basis, sales progressed by 3.3% to €12.4 billion, including a
negative currency effect of 0.5%. The Group structure impact reduced sales by
0.9% and results from the ongoing optimization of the Group's profile, both in
terms of disposals - mainly in distribution (UK, Poland and Denmark), glass
processing activities, Crystals & Detectors and ceramics for the steel
industry - and in terms of acquisitions, mainly in construction chemicals (GCP
Applied Technologies "GCP" and Impac in Mexico), in exterior products (Kaycan
in North America) and in insulation (Rockwool India Pvt Ltd.).

 

 

Proven resilience in a difficult environment

 

In an environment characterized by a marked decline in new construction and
good resistance overall in renovation, the first quarter demonstrated the
Group's resilience thanks notably to the rollout of the initiatives set out in
its "Grow & Impact" plan.

 

-  Strategically, the Group has benefited from the optimization of its
portfolio (one-third of sales rotated since 2018) which has reinforced its
profitable growth profile, and from its strong positioning on the structurally
supportive renovation market (new energy efficiency regulations and
subsidies).

 

-  Operationally, the Group has leveraged its efficient local organization
with close proximity to customers, priority given to the development of
low-carbon solutions and processes, and results-driven accountability for
country teams. This has allowed us to achieve in particular stronger pricing
power (constant focus on the price-cost spread) and to take proactive measures
to adapt to the local environment wherever necessary.

 

 

Segment performance (like-for-like sales)

 

Northern Europe: slight growth in sales amid a downturn in the new
construction market

Sales in the Northern Europe Region were up by 1% over the quarter, driven by
prices and amid a sharp slowdown in new construction, while renovation (around
55% of sales) proved more resilient.

 

Nordic countries reported a slight rise in sales against a high comparison
basis, thanks to their presence across the entire construction value chain and
despite a declining new construction market. The world's first carbon-neutral
plasterboard production started in Norway at our Fredrikstad plant,
reinforcing our leading positions in sustainable construction. The UK saw
growth in sales of façade and interior solutions. To prepare for the expected
introduction of stricter energy performance regulations as from 2025,
Saint-Gobain is leading the eHome2 ("Energy House 2.0") project with the
implementation of its light and sustainable solutions. The aim is to advance
the construction sector's knowledge of how to deliver residential buildings
with net zero CO(2) emissions under operation. Germany reported subdued sales
growth in a market affected by an energy shock and a rapid rise in interest
rates that penalized new construction. In March, Saint-Gobain achieved a
world-first, producing flat glass with a furnace powered by over 30% hydrogen
at its Herzogenrath site in Germany. Eastern Europe was down slightly after
its record performance in first-quarter 2022, amid a sharp rise in interest
rates.

 

 

Southern Europe - Middle East & Africa: increase in sales supported by a
resilient renovation market

The Southern Europe - Middle East & Africa Region saw an 8.1% rise in
sales, driven by prices and by good resilience in renovation (almost 70% of
sales), while the new construction market slowed.

 

France continued to benefit from its strong exposure to the renovation market,
which remained at a good level thanks to a favorable regulatory environment
(MaPrimeRenov' household stimulus package, Energy Performance Certificates)
and healthy order books - both in residential and non-residential (public
buildings), while new construction slowed. The recognition of Saint-Gobain as
the benchmark across the entire value chain - notably in terms of energy
efficiency - enabled the Group to outperform the market.

The rollout of comprehensive low-carbon solutions accelerated in France and in
other countries in the Region. Saint-Gobain also submitted the winning bid for
the athletes' village at the 2024 Paris Olympic Games, offering an innovative
dismountable solution. In Spain and Italy business was driven by good momentum
in the renovation market, supported by the comprehensive range of solutions.
Middle East and Africa reported significant growth. In Turkey, Dalsan merged
its activities with Saint-Gobain, thereby creating a leader in plaster and
plasterboard with a broadened offer of light and sustainable solutions.

 

 

Americas: sales stable at a good level amid a downturn in the new construction
market

The Americas Region delivered 0.5% organic growth, driven by prices and
despite a decline in the new construction market.

 

-  North America proved resilient, with sales up 0.5% over the quarter,
driven notably by its comprehensive range of light construction solutions for
interiors (gypsum, insulation, ceilings), despite a slowing new construction
market. In terms of exterior solutions, the siding business continued to
capture market share and to make good progress on the Kaycan integration; the
roofing business continued to see destocking from distributors, but is well
placed to benefit from the current recovery in trading. The integration of
GCP's waterproofing membranes for façade and roofing applications continued
to enjoy good business development momentum. The acquisition of Asphaltica, an
asphalt shingle recycling technology used in roofing, will help accelerate
circular economy initiatives in the Region.

 

-  Latin America reported 0.7% growth in a macroeconomic environment that
remains challenging in Brazil owing to high interest rates weighing on
construction. Mexico benefited from the successful integration of Impac in
construction chemicals. Most other countries in the Region reported good
growth, supported by higher sales prices and an enriched offer and mix, along
with a geographic footprint and product range extended by bolt-on
acquisitions. The completion of the acquisition of Termica San Luis, a leader
in insulation in Argentina, will consolidate the Group's strong operating
performance in this country.

 

 

Asia-Pacific: good sales momentum

The Asia-Pacific Region reported 5.0% organic growth over the quarter against
a high prior-year comparison basis.

 

India reported a good performance, thanks to market share gains and an
innovative, integrated offer, enhanced by its recent acquisition of the glass
wool insulation leader U.P. Twiga. Saint-Gobain continues to play a
pioneering role in promoting "green" buildings thanks to its sustainable
construction solutions. In an environment that continued to see disruptions
owing to the health situation early in the quarter, China nevertheless
delivered moderate growth. South-East Asia continued to see good growth owing
to a diversified offer focusing on integrated and high value-added solutions.

 

 

 

High Performance Solutions (HPS): strong sales growth

HPS sales were up by 9.0% over the quarter, benefiting from the strength of
its innovation, a recovery in automotive in Europe and a good level of sales
prices.

 

-  Businesses serving global construction customers saw a 50% rise in sales
as reported, due mainly to the integration of GCP. The good trends in Chryso
sales continued, driven by innovation in decarbonization solutions for
construction. Chryso benefited from Saint-Gobain's strong presence in Brazil
and Egypt to accelerate its external growth with the acquisition of Matchem
and IDP Chemicals. The new Construction Chemicals organization integrating GCP
has been in place since the end of 2022 and is helping us to swiftly achieve
all the expected synergies. In contrast, reinforcement solutions decreased
against a high comparison basis.

 

-  The Mobility business saw sales progress by 20.6%, supported by the
gradual catch-up in sales prices, an outperformance linked to its strong
technological positioning in electric vehicles, and a rebound in volumes in
Europe. The business continued to enjoy supportive conditions in the Americas
and in Asia.

 

-  Businesses serving Industry grew by 4.1%, driven by sales prices and
strong demand for cutting-edge materials and decarbonization technologies.

 

 

2023 outlook

 

In a difficult macroeconomic environment, Saint-Gobain's priority is to
continue to demonstrate its resilience by consolidating its high operating
performance level, thanks to its pertinent strategic positioning and its
commercial and industrial initiatives enabling it to adapt proactively to the
specific market trends in each country.

 

For Saint-Gobain, 2023 will mark another successful year with the
implementation of its "Grow & Impact" priorities. The Group confirms the
outlook for its markets in 2023 presented at the end of February, with
contrasting trends: a marked decline in new construction but good resilience
overall in renovation.

 

 

 Amid a moderate market slowdown, Saint-Gobain confirms that it is

targeting an operating margin of between 9% and 11% in 2023,

in line with the "Grow & Impact" strategic plan target

 

 
 
 
 

 

Financial calendar

 

A conference call will be held at 6:30pm (Paris time) on April 27, 2023:

+33 1 70 91 87 04 or +44 121 281 8004.

 

-  First-half 2023 results: Wednesday July 26, 2023, after close of trading
on the Paris stock exchange.

-  Third-quarter 2023 sales: Thursday October 26, 2023, after close of
trading on the Paris stock exchange.

 

 

 

 

 

 

 

 

 

 

 

 

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 2022 consolidated financial statements,
available by clicking here:
https://www.saint-gobain.com/en/news/full-year-2022-results
(https://www.saint-gobain.com/en/news/full-year-2022-results)

Operating margin = operating income divided by sales.

 

 

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 2022 Universal Registration
Document available on Saint-Gobain's 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: Sales by Segment

 

                                    Q1 2022 sales  Q1 2023 sales  Actual structure basis  Comparable structure basis  Like-for-like change

(in €m)
(in €m)

 Northern Europe                    4,014          3,519          -12.3%                  -2.2%                       +1.0%
 Southern Europe - ME & Africa      3,725          4,012          +7.7%                   +7.4%                       +8.1%
 Americas                           1,920          2,180          +13.5%                  +4.9%                       +0.5%
 Asia-Pacific                       479            491            +2.5%                   +1.7%                       +5.0%
 High Performance Solutions         2,191          2,556          +16.7%                  +10.4%                      +9.0%
 Internal sales and misc.           -322           -352           ---                     ---                         ---
 Group Total                        12,007         12,406         +3.3%                   +4.2%                       +4.7%

 

 

Appendix 2: Contribution of price and volumes to organic sales growth by
Segment

 

 Q1 2023                            Like-for-like change  Prices  Volumes
 Northern Europe                    +1.0%                 +11.4%  -10.4%
 Southern Europe - ME & Africa      +8.1%                 +12.5%  -4.4%
 Americas                           +0.5%                 +9.5%   -9.0%
 Asia-Pacific                       +5.0%                 +5.6%   -0.6%
 High Performance Solutions         +9.0%                 +6.3%   +2.7%
 Group Total                        +4.7%                 +10.2%  -5.5%

 

 

Appendix 3: Breakdown of organic sales growth and external sales

 

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  QRFPPUBACUPWGQM