REG - Compagnie St-Gobain - 1st Quarter Results

Compagnie de Saint Gobain SAAnnouncement

25/04/2024 17:30

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RNS Number : 1061M  Compagnie de Saint-Gobain  25 April 2024

The worldwide leader

in light & sustainable construction

 

 

First-quarter 2024 sales:

sequential improvement in volumes

 

 

·    Sequential improvement in volumes in Q1 2024 at comparable working
days and positive price-cost spread

 

·    Decisive strategic steps reinforcing the Group's worldwide leadership
in light and sustainable construction, with targeted and disciplined capital
allocation:

 

o  Geographically, with the announcement of the acquisitions of CSR Limited
in Australia and Bailey in Canada

 

o  In construction chemicals, with six acquisitions announced or closed since
the start of the year

 

·    Confidence in the 2024 outlook: double-digit operating margin for the
fourth consecutive year

 

 

 

Like-for-like sales were down 5.8%, impacted by the decline in new
construction in Europe but supported by growth in the Americas and
Asia-Pacific.

 

Group prices were down 1.1% but the price-cost spread was positive, thanks to
well-managed pricing and the decrease in certain raw material and energy
costs.

 

As expected, volumes were down by 4.7% in first-quarter 2024 - with a negative
working day effect of 1.5% at Group level - an improvement at comparable
working days on the fourth-quarter 2023 performance (down 4.5%).

 

On a reported basis, sales came in at €11.4 billion, with a negative
currency effect of 0.5%. The negative Group structure impact of 2.2% reflects
the optimization of the Group's profile, both in terms of disposals - mainly
in distribution (UK), glass processing activities, foam insulation (UK), and
railing and decking (US) - and in terms of acquisitions, mainly in
construction chemicals (Izomaks, Adfil, Menkol Industries, Drymix, Technical
Finishes, IDP Chemicals), in North America (Building Products of Canada, ICC
in the US) and in Asia-Pacific (U.P. Twiga in India, Hume in Malaysia).

 

The acquisitions of CSR Limited and Bailey, leading players in light and
sustainable construction in the high-growth Australian and Canadian markets,
will reinforce the Group's profitable growth profile. The processes necessary
for completion are underway.

Segment performance (like-for-like sales)

 

Europe, Middle East & Africa: sequential improvement in volumes, close to
a low point

 

Sales in Europe were down 10.3% over the quarter, with a negative volume
effect of 8.2% based on actual working days and of 6% at comparable working
days (owing to the more negative working day effect than at Group level) - an
improvement on fourth-quarter 2023 (down 8.2%). This was amid a sharp slowdown
in new construction, with renovation (around 60% of sales) more resilient.

 

-  Northern Europe was down 11.0%, with the slowdown in new construction
significantly affecting Nordic countries and Germany, while renovation proved
more resilient. The UK reported a smaller decline, benefiting from a strong
commercial dynamic thanks to its comprehensive range of solutions. In Eastern
Europe, Saint-Gobain delivered volume growth for the second consecutive
quarter.

 

-  Southern Europe, Middle East & Africa fell by 10.1% amid a sharp
decline in new construction in France. Saint-Gobain nevertheless continued to
outperform its market thanks to its strong exposure to renovation (benefiting
from regulatory tailwinds and an increase in stimulus measures for energy
renovation) and an enhanced offering. Spain and Italy saw volumes rise in
resilient construction markets. Middle East and Africa posted strong growth,
particularly in Turkey and Egypt thanks to the success of recent investments.

 

Americas: strong sales growth driven by North America

 

The Region delivered strong organic growth of 5.9%, with an increase in both
volumes and prices, driven by the outperformance of North America.

 

-  North America was up by 12.2%, driven by a dynamic renovation market
(against a weak 2023 comparison basis for roofing) and with new construction
having stabilized at a good level. The Group saw further market share gains
thanks to its comprehensive, differentiated range of interior and exterior
light construction solutions. The recent integrations of Kaycan and Building
Products of Canada added to this robust sales momentum.

 

-  Latin America contracted 10.8% in markets that remained down, although the
volume decline has now stabilized at the level seen in fourth-quarter 2023. In
Brazil, certain macroeconomic indicators improved and the Group is benefiting
from its comprehensive range of light construction solutions, for example with
the renovation of São Paulo's Pacaembu stadium, where 20 of Saint-Gobain's
solutions were used. The other countries in the Region benefited from the
enhanced offering and mix.

 

Asia-Pacific: good sales momentum

 

The Region reported robust organic growth of 4.5% in the first quarter,
notably driven by strong momentum in India.

 

India delivered another outperformance, with a double-digit rise in volumes,
thanks to its comprehensive and innovative range of solutions. The Group is
seeing the benefits of its numerous recent sustainability-driven initiatives:
the production of very low-carbon plaster, the use of biogas, systems for
recovering heat produced during manufacturing, and an increase in the
proportion of recycled materials in production. In a difficult new
construction market in China, the Group progressed and continued to capture
market share owing to its reinforced positioning in the renovation market and
to the attractiveness of its offer centred on performance and light
construction along with circularity and service excellence. South-East Asia
remained at a good level, led by Malaysia, Indonesia and Singapore, owing
mainly to the diversification of its portfolio and strong innovation.

 

High Performance Solutions (HPS): good momentum in Construction Chemicals;
lower sales on industrial markets

 

HPS reported like-for-like sales down 5.4% over the quarter owing to a high
prior-year comparison basis.

 

-  Businesses serving global construction customers saw sales decline 6.7%,
due to the sharp decline in Adfors' reinforcement solutions, which are exposed
to new construction in Europe. Chryso and GCP reported further good momentum,
driven by infrastructure projects and innovation for decarbonizing
construction. During the quarter Saint-Gobain Construction Chemicals signed a
partnership agreement with Fortera in additive technologies for low-carbon
cement and concrete, and opened two new plants.

 

-  Mobility sales stabilized (down 0.9%) against a high comparison basis
following the rebound in sales in 2023, with further investments for
innovation and the continued optimization of its industrial facilities with
the announced closure of Avilès in Spain.

 

-  Businesses serving Industry contracted 8.6%, affected by a decline in
industrial markets, especially those linked to investment cycles.

 

2024 outlook

 

In a geopolitical and macroeconomic environment that remains challenging, in
2024 Saint-Gobain will once again demonstrate its resilience and its excellent
operating performance thanks to its focused strategy and its proactive
commercial and industrial initiatives, enabling it to outperform its markets.

 

Saint-Gobain expects some of its markets to remain difficult in 2024,
especially in the first half of the year owing to a high comparison basis,
with a contrasting situation between Europe and the rest of the world:

·    Europe: resilience in renovation; new construction remaining
difficult before gradually reaching a low point country by country;

·    Americas: construction to hold firm in North America (new build and
renovation); recovery expected during the year in Latin America;

·    Asia-Pacific: good growth in most countries;

·    High Performance Solutions: Construction Chemicals to see dynamic
growth; Mobility to hold firm and a contrasting situation on industrial
markets in terms of demand.

 

 

 

Despite a context which remains difficult in certain markets,

in 2024 Saint-Gobain expects a double-digit operating margin

for the fourth consecutive year

 

 

 

 

 

 

 

 

Financial calendar

 

A conference call will be held at 6:30pm (Paris time) on April 25, 2024:

dial +44 12 1281 8004, +1 718 705 8796 or +33 1 70 91 87 04.

 

·    UK site visit (Manchester): Tuesday July 2, 2024.

·    First-half 2024 results: Thursday July 25, 2024, after close of
trading on the Paris stock market.

·    Sales for the third quarter of 2024: Tuesday October 29, 2024, after
close of trading on the Paris stock market.

 Analyst/investor relations                Press relations
 Vivien Dardel:         +33 1 88 54 29 77  Patricia Marie:   +33 1 88 54 26 83
 Floriana Michalowska:  +33 1 88 54 19 09  Laure Bencheikh:  +33 1 88 54 26 38
 Alix Sicaud:           +33 1 88 54 38 70  Yanice Biyogo:                +33 1 88 54 27 96
 James Weston:          +33 1 88 54 01 24

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 consolidated financial statements at
December 31, 2023, available by clicking here
https://www.saint-gobain.com/en/news/full-year-2023-results
(https://www.saint-gobain.com/en/news/full-year-2023-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 2023 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 2023 sales  Q1 2024 sales  Change on an actual structure basis  Change on a comparable structure basis  Like-for-like change

(in €m)
(in €m)

 Northern Europe                   3,519          2,779          -21.0%                               -11.4%                                  -11.0%
 Southern Europe, ME & Africa      4,012          3,617          -9.8%                                -10.4%                                  -10.1%
 Americas                          2,180          2,349          +7.8%                                +6.2%                                   +5.9%
 Asia-Pacific                      491            504            +2.6%                                +0.1%                                   +4.5%
 High Performance Solutions        2,556          2,420          -5.3%                                -5.8%                                   -5.4%
 Internal sales and misc.          -352           -313           ---                                  ---                                     ---
 Group Total                       12,406         11,356         -8.5%                                -6.3%                                   -5.8%

 

 

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

 

 Q1 2024                           Like-for-like change  Prices  Volumes
 Northern Europe                   -11.0%                -1.7%   -9.3%
 Southern Europe, ME & Africa      -10.1%                -2.4%   -7.7%
 Americas                          +5.9%                 +0.7%   +5.2%
 Asia-Pacific                      +4.5%                 -4.0%   +8.5%
 High Performance Solutions        -5.4%                 -0.3%   -5.1%
 Group Total                       -5.8%                 -1.1%   -4.7%

 

 

Appendix 3: Breakdown of organic sales growth and external sales

 

 Q1 2024                           Like-for-like change  % Group
 Northern Europe                   -11.0%                23.4%
 Nordics                           -15.0%                10.9%
 United Kingdom - Ireland          -4.5%                 3.6%
 Germany - Austria                 -13.1%                2.9%
 Southern Europe, ME & Africa      -10.1%                31.1%
 France                            -12.3%                23.6%
 Spain - Italy                     -0.7%                 4.2%
 Americas                          +5.9%                 20.2%
 North America                     +12.2%                15.5%
 Latin America                     -10.8%                4.7%
 Asia-Pacific                      +4.5%                 4.2%
 High Performance Solutions        -5.4%                 21.1%
 Construction and industry         -8.0%                 13.1%
 Mobility                          -0.9%                 8.0%
 Group Total                       -5.8%                 100.0%

 

 

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