REG - Compagnie St-Gobain - 3rd Quarter Results
27/10/2022 17:15
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RNS Number : 4014E Compagnie de Saint-Gobain 27 October 2022
The worldwide leader
in light & sustainable construction
Strong rise in sales in third-quarter 2022
· Sales: +19.6%
· Dynamic organic growth: +13.4%, up double-digit in all segments
· Value-added solutions generating a positive price-cost spread at the
Group level
· 2022 outlook confirmed
Like-for-like sales rose by 14.5% in the nine-month period to September 30,
2022 and by 13.4% in the third quarter of 2022 versus third-quarter 2021. This
good performance reflects the Group's position as worldwide leader in light
and sustainable construction thanks to its unique range of innovative
solutions offering sustainability and performance, rolled out as part of the
"Grow & Impact" plan. It also reflects good momentum in our segments,
which all reported double-digit organic growth, driven in particular by High
Performance Solutions, Asia-Pacific and North America. Renovation in Europe
remained resilient, while new construction slowed. Each country CEO is
adapting in real time and looking for opportunities to outperform their
market.
Thanks to the added value of Saint-Gobain's solutions and its local
organization close to its customers, prices increased 15.0% in the third
quarter (15.3% in the first half), generating a positive price-cost spread at
Group level for the quarter and over the nine-month period, amid continued
high raw material and energy cost inflation.
The Group's volumes were down slightly, decreasing 0.8% over the nine-month
period and 1.6% in the third quarter, with a negative working day effect of
around 0.5% (more pronounced in Southern Europe) in the third quarter.
On a reported basis, sales were up strongly by 16.6% to €38,402 million over
the nine-month period and by 19.6% in the third quarter alone, with a positive
currency impact of 4.0% over the nine-month period and of 5.4% in the third
quarter. The Group structure impact, which reduced sales by 1.9% over the
nine-month period, added 0.8% to sales in the third quarter. This reflects the
ongoing optimization of the Group's profile, in terms of both divestments
(mainly distribution in the Netherlands, specialist distribution in the UK,
Glassolutions in Germany, Austria, Denmark and the UK, and pipe in China) and
acquisitions, which primarily included Chryso and Impac in Mexico in
construction chemicals, Kaycan in exterior products in North America, which
was consolidated as of August 1, 2022 (the small US distribution business was
sold in mid-October 2022), and Panofrance, a French specialist in modular
timber solutions.
GCP Applied Technologies (GCP) in construction chemicals was consolidated with
effect from October 1, 2022. The new organization has been put in place, with
Thierry Bernard, former Chryso CEO, appointed CEO of Construction Chemicals
within High Performance Solutions, which includes both Chryso and GCP (except
the North American waterproofing membranes business which is included within
the North America Region owing to strong synergies with CertainTeed's roofing
and siding activities). The GCP integration process which has been in
preparation since the beginning of the year has started well.
The third quarter also saw the Group complete a €1.5 billion bond issue in
three tranches (at 3, 6 and 10 years) on August 2, illustrating Saint-Gobain's
ability to take advantage of a low interest-rate window to extend the average
maturity of its debt with an average coupon of approximately 2.1%, and further
strengthen its liquidity. Its €500 million, 10-year sustainability-linked
bond tranche reflects the position of sustainable growth at the heart of
Saint-Gobain's business model and demonstrates the relevance of its ESG
roadmap.
Update on inflation and the energy situation
Amid rising inflation, Saint-Gobain now expects its energy and raw material
costs to increase by slightly over €3 billion in 2022 compared to 2021. This
inflation concerns raw materials, freight and energy, especially in Europe.
The Group has hedged around 80% of its natural gas and electricity purchasing
needs for 2022 and around 60% for 2023. Saint-Gobain's total energy bill is
expected to represent almost €2.5 billion in 2022.
Saint-Gobain has once again shown its capacity to proactively manage inflation
in energy and raw material costs amid strong volatility, allowing it to be
confident that it will be able to offset the increase in these costs in 2022
at the Group level and begin 2023 in a position of strength.
Given the current strongly inflationary environment, the Group continues to
proactively put in place measures to support its customers wherever possible,
in terms of advance information, understanding and visibility on pricing
movements, extended quotation validity, granting optimal credit conditions,
and ensuring the necessary inventory for a good level of service and supply.
For its main gas-consuming manufacturing businesses in Europe, the Group has
made rapid progress in rolling out continuity plans and ensuring the
flexibility of production to operate with less or alternative energy:
- Glass: Saint-Gobain has 13 float lines in Europe and is putting in place
production continuity plans. Four plants are already able to operate using
fuel or diesel; four are currently being prepared for a possible conversion by
the end of 2022 and two additional in 2023;
- Insulation: more than half of the 25 plants in Europe have an
electricity-powered furnace; additional investments are being undertaken to
use alternative energies (e.g., for the four plants in Germany by the end of
2022);
- Plasterboard, construction chemicals and other production lines are
extremely flexible.
Segment performance (like-for-like sales)
Northern Europe: good sales growth driven by prices
Sales in Northern Europe were up by 14.1% over the nine-month period and by
11.9% in the third quarter amid strong inflation, leading to a sequential
increase in prices against a high comparison basis in 2021. Volumes decreased
slightly against the backdrop of a slowdown in new construction. Renovation
remained at a good level, given government stimulus measures and stricter
energy performance regulations.
Nordic countries outperformed thanks to their successful presence across the
entire construction value chain and to a renovation market supported by energy
efficiency projects, despite a slowdown in certain projects in new
construction. In Sweden, Saint-Gobain delivered the world's first zero-carbon
plasterboard production at its Balsta plant powered by biogas and 100% green
electricity. The UK delivered a satisfactory performance driven by prices in a
declining market. The country has been very active in optimizing its
portfolio, with almost €700 million in sales divested (specialty
distribution and Glassolutions) since the summer of 2021. Germany benefited
from its solid positions in energy efficiency renovation; it is making swift
progress in ensuring its production facilities are more flexible and able to
use alternative energy sources. A comprehensive, prefab façade solution has
been launched on the market as "pre.formance", a solution for quick and
minimally invasive renovation. Eastern Europe benefited from supportive
markets, reporting market share gains in its main countries. A renewable
electricity supply agreement has been signed in Poland which will cover around
45% of Saint-Gobain Poland's electricity needs from 2025.
At the end of September, the Group signed a strategic partnership with Megasol
- Europe's leading supplier of building integrated photovoltaics, thereby
extending its range of sustainable solutions in a fast-growing segment.
Southern Europe - Middle East & Africa: good sales growth thanks to a
resilient renovation market
Sales in Southern Europe - Middle East & Africa were up by 12.7% over the
nine-month period and by 10.5% in the third quarter which saw a strongly
inflationary environment, leading to a sequential increase in prices against a
high comparison basis in 2021. Volumes were down slightly (with a negative
working day effect of 2%) as the new construction market slowed. Renovation
remained more resilient on the back of demand driven by government stimulus
measures, quicker payback for energy renovation projects owing to high energy
costs, and stricter regulations.
France continued to benefit from structurally more resilient renovation -
thanks notably to a favorable regulatory environment and household stimulus
packages such as MaPrimeRénov' and energy saving certificates (CEE). Trade
professionals are still seeing full order books and the Group continues to
benefit from its comprehensive range of innovative and sustainable solutions
across the entire value chain. In the third quarter, Saint-Gobain began to
roll out ORAÉ(®), a low-carbon glass providing superior energy performance,
which has been particularly popular among property developers. To support this
initiative, the Group launched "Saint-Gobain Glass Recycling" which is
designed to recycle glass at the end of its life in a closed loop. Firmly
committed to accelerating the transition to a circular economy, Saint-Gobain
has also produced and marketed Placo(®) Infini 13, the first plasterboard
made from over 50% recycled gypsum.
Spain and Italy continued to outperform the market, particularly in light and
sustainable construction solutions, and capitalized on sales synergies thanks
to a comprehensive range of renovation solutions. Benelux benefited from its
comprehensive range of solutions for individual and multi-family housing
renovation. Middle East and Africa continued to see robust growth, benefiting
from the opening of new plants and dynamic markets, particularly in Egypt.
Americas: strong sales growth driven by North America
The Americas delivered 15.9% organic growth over the nine-month period and
14.2% in the third quarter, thanks to a good level of prices and despite the
start of a slowdown in new construction due to a sharp rise in interest rates.
- North America maintained its good sales momentum in the third quarter
(up 16.9%) and over the nine-month period (up 17.1%), driven by the
development of a comprehensive range of light construction solutions. The new
construction market slowed but remained at a good level. The third quarter
also saw the addition of Kaycan to the Region, with excellent results. Good
progress is being made in terms of the integration of Kaycan and of GCP's
specialty building materials business (waterproofing membranes, representing
around USD 250 million in annual sales) which serves CertainTeed's local
customers in North America. After a renewable wind farm energy supply
agreement executed in 2021, the Group has signed a new contract based on solar
energy: together these agreements will cover over 60% of Saint-Gobain's
electricity needs in North America by the end of 2024.
- Latin America reported 12.7% growth over the nine-month period and
7.7% in the third quarter, amid uncertainty in Brazil. Dynamic growth in the
Region's other countries was driven by increased sales prices, new capacity
(Chile, Argentina, Brazil, Peru and Mexico), and targeted acquisitions in
construction chemicals, especially in waterproofing (Impac in Mexico and
Brasprefer in Brazil).
Asia-Pacific: strong sales growth driven by India and South-East Asia
Asia-Pacific reported 28.7% organic growth over the nine-month period and
26.9% in the third quarter, driven by India and South-East Asia.
India delivered another excellent performance thanks to market share gains and
an integrated and innovative range of solutions which are rolled out to new
customers. A total of 75 "MyHome by Saint-Gobain" showrooms were deployed in
just one year in the country. Despite the health situation, China saw moderate
growth driven by prices, benefiting from its distinctive positioning on the
fast-growing light construction market, which helped offset the construction
market slowdown. In the third quarter South-East Asia saw a strong growth
dynamic and outperformed the market - particularly in Vietnam and Malaysia -
supported by a diversified offering, especially in construction chemicals.
High Performance Solutions (HPS): strong acceleration in sales growth in the
third quarter
HPS sales were up by 14.8% over the nine-month period and by 19.4% in the
third quarter, driven by an acceleration in prices and volumes thanks to
resilient main markets and the recovery of European automotive.
- Businesses serving global construction customers reported record sales and
outperformed the market with 25.1% growth in the third quarter (22.5% for the
nine-month period). 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. In early
October, Saint-Gobain and Ecocem signed a partnership agreement to accelerate
the commercialization of new low-carbon cement and concrete technology
benefiting from Chryso's expertise in innovative high performance additives.
- The Mobility business saw sales progress 27.8% in the third quarter (12.7%
for the nine-month period), supported both by a catch-up in sales prices
thanks to the high priority given to price renegotiations with customers, and
by a rebound in volumes against a weak 2021 comparison basis in Europe. The
business continued to enjoy upbeat momentum in the Americas, India and China.
Thanks to its very strong positioning and technological lead in solutions for
electric vehicles - which account for an increasing proportion of sales - and
to its high value-added solutions, the Mobility business continues to
outperform the automotive market.
- Businesses serving Industry progressed 12.8% in the third quarter (14.9%
for the nine-month period), supported by activities relating to investment
cycles such as ceramics, which benefit from innovation in specialty materials
and new decarbonization technologies for our customers.
Outlook and strategic priorities
As part of the rollout of the strategic priorities of its "Grow & Impact"
plan, Saint-Gobain is focused on consolidating its strong operating
performance and on adapting to the specific market trends in each of its
countries: leveraging the structural margin improvements made over the last
three years, increasing the flexibility of energy sources in Europe, and with
each country CEO optimizing their P&L in real time in order to react
swiftly and effectively to market developments.
In a more uncertain geopolitical and macroeconomic environment, the Group
continues to outperform its underlying markets thanks to the pertinence of its
strategic positioning to respond to the energy and decarbonization challenges
and its optimized organization and business profile.
Saint-Gobain expects the following trends for its segments in fourth-quarter
2022: resilience in renovation in Europe while new construction markets are
slowing down; the Americas should hold firm; solid growth in Asia-Pacific and
good momentum in High Performance Solutions supported by innovation.
Saint-Gobain confirms that it is targeting a further increase in operating
income
in 2022 compared to 2021 at constant exchange rates
Financial calendar
A conference call will be held at 6:30pm (Paris time) on October 27, 2022.
Please register using the following link in order to receive your individual
pin code by email:
https://event-registration.arkadin.com/633ac2f8cd0c1747a74a9cdf
(https://event-registration.arkadin.com/633ac2f8cd0c1747a74a9cdf)
Please then dial the following number, five to ten minutes before the time
indicated:
+33 1 72 72 74 74 or +44 20 3009 2476, followed by your individual pin code.
- 2022 Results: February 23, 2023, after close of trading on the Paris
Bourse.
Glossary:
- Indicators of organic growth and like-for-like changes in sales/operating
income reflect the 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). Note that in light of Turkey's classification as a
hyperinflationary economy, this country, which represents less than 1% of
Group sales, is excluded from the like-for-like analysis as from July 1, 2022;
· changes in foreign exchange rates, by calculating the 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 interim financial
statements at June 30, 2022, available by clicking here:
https://www.saint-gobain.com/fr/finance/information-reglementee/rapport-financier-semestriel
(https://www.saint-gobain.com/fr/finance/information-reglementee/rapport-financier-semestriel)
- Operating margin = operating income divided by sales
- ESG: Environment, Social, Governance
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, particularly the risks described in the "Risk
Factors" section of Saint-Gobain's 2021 Universal Registration Document and in
the "Main risks and uncertainties" section of Saint-Gobain's Half-year
financial report 2022 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, 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
Q3 2021 sales Q3 2022 Actual structure basis Comparable structure basis Like-for-like change
(in €m)
sales
(in €m)
Northern Europe 3,816 4,157 +8.9% +13.0% +11.9%
Southern Europe - ME & Africa 3,150 3,491 +10.8% +10.5% +10.5%
Americas 1,808 2,514 +39.0% +32.2% +14.2%
Asia-Pacific 447 588 +31.5% +37.7% +26.9%
High Performance Solutions 1,815 2,485 +36.9% +28.7% +19.4%
Internal sales and misc. -234 -314 --- --- ---
Group Total 10,802 12,921 +19.6% +18.8% +13.4%
9m 2021 sales 9m 2022 sales Actual structure basis Comparable structure basis Like-for-like change
(in €m)
(in €m)
Northern Europe 11,234 12,556 +11.8% +15.3% +14.1%
Southern Europe - ME & Africa 10,607 11,317 +6.7% +12.0% +12.7%
Americas 5,068 6,791 +34.0% +30.6% +15.9%
Asia-Pacific 1,322 1,601 +21.1% +37.9% +28.7%
High Performance Solutions 5,494 7,085 +29.0% +21.8% +14.8%
Internal sales and misc. -792 -948 --- --- ---
Group Total 32,933 38,402 +16.6% +18.5% +14.5%
Appendix 2: Contribution of price and volumes to organic sales growth by
Segment
Q3 2022 Like-for-like change Prices Volumes
Northern Europe +11.9% +15.5% -3.6%
Southern Europe - ME & Africa +10.5% +14.9% -4.4%
Americas +14.2% +18.1% -3.9%
Asia-Pacific +26.9% +17.2% +9.7%
High Performance Solutions +19.4% +11.5% +7.9%
Group Total +13.4% +15.0% -1.6%
9-month 2022 Like-for-like change Prices Volumes
Northern Europe +14.1% +16.3% -2.2%
Southern Europe - ME & Africa +12.7% +16.5% -3.8%
Americas +15.9% +17.3% -1.4%
Asia-Pacific +28.7% +17.9% +10.8%
High Performance Solutions +14.8% +8.5% +6.3%
Group Total +14.5% +15.3% -0.8%
Appendix 3: Breakdown of organic sales growth and external sales
Q3 2022 Like-for-like % Group
change
Northern Europe +11.9% 31.4%
Nordics +8.8% 12.4%
United Kingdom - Ireland +9.7% 8.8%
Germany - Austria +22.8% 3.3%
Southern Europe - ME & Africa +10.5% 26.2%
France +8.0% 20.1%
Spain - Italy +24.2% 3.4%
Americas +14.2% 19.1%
North America +16.9% 13.6%
Latin America +7.7% 5.5%
Asia-Pacific +26.9% 4.3%
High Performance Solutions +19.4% 19.0%
Construction and industry +14.6% 12.2%
Mobility +27.8% 6.8%
Group Total +13.4% 100.0%
9-month 2022 Like-for-like % Group
change
Northern Europe +14.1% 31.8%
Nordics +11.7% 12.9%
United Kingdom - Ireland +11.6% 9.0%
Germany - Austria +19.1% 3.3%
Southern Europe - ME & Africa +12.7% 28.6%
France +9.5% 22.3%
Spain - Italy +24.7% 3.5%
Americas +15.9% 17.4%
North America +17.1% 12.4%
Latin America +12.7% 5.0%
Asia-Pacific +28.7% 4.0%
High Performance Solutions +14.8% 18.2%
Construction and industry +16.0% 11.9%
Mobility +12.7% 6.3%
Group Total +14.5% 100.0%
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