REG - Compagnie St-Gobain - 3rd Quarter Results

Compagnie de Saint Gobain SAAnnouncement

29/10/2024 18:00

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20241029:nRSc1208Ka&default-theme=true

RNS Number : 1208K  Compagnie de Saint-Gobain  29 October 2024

The worldwide leader

in light & sustainable construction

 

 

Sequential improvement in sales in Q3 2024

Further increase in margin expected in 2024

 

 

 

·    Sequential improvement in organic growth

 

·   Significant contribution from recent acquisitions in North America,
Asia-Pacific and construction chemicals, with a positive 3.4% structure impact

 

·    Further increase in operating margin expected in 2024

 

 

 

Sales in the third quarter showed a sequential improvement, down 2.0%
like-for-like in the quarter (down 3.9% in the nine-month period to September
30, 2024 and down 4.9% in the first half of 2024), with good levels of
activity in the Americas, Asia-Pacific and High Performance Solutions, but
still affected by weak new construction markets in Europe, particularly in
France.

 

Prices were stable sequentially, down by 0.5% in the third quarter and by 0.8%
over the nine-month period, generating a positive price-cost spread thanks to
disciplined execution and the decrease in certain raw material and energy
costs.

 

Volumes were down by 1.5% in the third quarter and by 3.1% over the nine-month
period, in line with the Group's expectations for the year. This reflects a
contrasting situation: weakness in Europe - with a marked decline in new
construction but resilience in renovation - and good levels of activity in all
other segments.

 

On a reported basis, sales were stable at €11.6 billion in the third quarter
(down 4.1% to €35.0 billion over the nine-month period) despite a negative
1.3% currency effect, thanks to a positive 3.4% Group structure impact linked
to recent acquisitions: in Asia-Pacific (CSR in Australia, Hume in Malaysia),
North America (Building Products of Canada and Bailey in Canada, ICC in the
US) and construction chemicals (Izomaks in Saudi Arabia, Menkol Industries in
India, Technical Finishes in South Africa, Adfil and R.SOL in Europe). The
integration of recent acquisitions is progressing well, enabling the
implementation of the expected synergies. The Group continued to benefit from
the optimization of its business profile, with the disposals of distribution
and foam insulation businesses in the UK, glass processing activities, and
railing and decking in the US.

 

 

 

 

Segment performance (like-for-like sales)

 

Europe, Middle East & Africa: sequential improvement in sales

 

Sales in Europe were down 4.5% in the third quarter, a noticeable improvement
on the first half (down 7.9%), beyond the technical impact of working day
effects (around +2% in the quarter). New construction remained strongly down
while renovation (around 60% of sales) was more resilient.

 

-  Northern Europe was down 3.2% in the third quarter (after a decline of
7.1% in the first half), with most countries at or near a low point. Nordic
countries and Germany continued to be affected by weakness in new
construction, while renovation was more resilient. In the UK, volumes were
almost flat, thanks to a comprehensive range of solutions and systems with
quantified benefits. Eastern Europe continued to achieve volume growth as seen
for several quarters.

 

-  Southern Europe, Middle East & Africa contracted 5.2% in the third
quarter (after a decline of 8.6% in the first half). As expected, with the
exception of France most countries reached a low point. Saint-Gobain continued
to outperform in France in a new construction market which remains
significantly down, thanks to its strong exposure to renovation and its
comprehensive range of solutions. Despite the political situation postponing
the low point in France by several quarters, leading indicators for borrowing
are encouraging, driven by falling interest rates and an improvement in
housing affordability. The Group continues to optimize its business profile,
announcing in the third quarter that it had entered into exclusive
negotiations to divest PAM Building, its sanitary and rainwater drainage
business. Spain and Italy continued to progress in well-oriented renovation
markets. Middle East and African countries reported strong growth thanks to
the success of recent investments.

 

 

Americas: slight growth in sales

 

The Region delivered 0.8% organic growth in the third quarter (after 1.2%
growth in the first half), driven by the improvement in Latin America and good
levels of activity in North America.

 

-  North America remained stable at a good level in the third quarter. The
Group continues to benefit from its comprehensive light construction solutions
offer - bringing high added value for its customers - and recorded an increase
in prices. In light of the supportive growth outlook, the Group is preparing
to open additional capacity for plasterboard, roofing and glass mat underlay
during 2025.

 

-  Latin America returned to growth, up 3.7% in the third quarter, driven by
the start of a recovery in Brazil, which benefited from a more favorable
comparison basis and from market share gains in light construction with a
third plasterboard line opened during the first half of the year. The other
countries in the Region benefited from the enhanced offering and mix,
especially Mexico. The acquisition of OVNIVER (Cemix brand), expected to close
in the first half of 2025, will strengthen Saint-Gobain's construction
chemicals presence in the fast-growing markets of Mexico and Central America.

 

 

Asia-Pacific: good resilience in sales

 

The Region saw a 0.9% decrease in like-for-like sales in the third quarter
(after 1.2% organic growth in the first half), with a rise in volumes driven
by India despite the downturn in China.

 

India outperformed once again with continued volume growth, supported by its
comprehensive and innovative range of solutions, as well as by the strength of
the Saint-Gobain brand in the country. In a difficult new construction market
in China, the Group continued to capture market share thanks to its exposure
to renovation, its development towards inner China and its successful fully
digital sales model. South-East Asia reported sales growth, led by Vietnam and
Indonesia, benefiting mainly from the enhancement of its offering and its
innovation. The Group was awarded several data center projects in the region,
thanks to its specific solutions offering energy performance, fire resistance
and productivity. The acquisition of CSR, completed on July 9, establishes a
leading position in Australia's light and sustainable construction market.

 

 

High Performance Solutions (HPS): slight growth in sales

 

HPS like-for-like sales rose 0.7% in the third quarter, a clear sequential
improvement after a decline of 3.5% in the first half.

 

-  Businesses serving global construction customers reported a 4.6% increase
in the third quarter due to the recovery in Adfors reinforcement solutions and
further growth in the Construction Chemicals business (up 4.1%), driven by
infrastructure projects and innovation to decarbonize the construction sector.
The acquisition of FOSROC, expected to close in the first half of 2025, marks
an acceleration in the Group's construction chemicals presence in regions with
strong structural growth.

-  Mobility sales stabilized (down 1.2%), outperforming thanks to strong
technological positioning and innovation investments.

-  Businesses serving Industry were up by 0.7%, despite still uncertain
industrial markets, benefiting from decarbonization technologies and a rebound
in sales in specialty materials.

 

 

2024 outlook

 

In a geopolitical and macroeconomic environment that remains challenging,
Saint-Gobain is once again demonstrating its resilience and its excellent
operating performance in 2024, thanks to its focused strategy of worldwide
leadership in light and sustainable construction and its proactive and
disciplined execution of commercial and industrial initiatives, enabling it to
outperform.

 

As anticipated, Saint-Gobain expects some of its markets to remain difficult
over 2024 overall, with weakness in new construction and resilience in
renovation in Europe, and good levels of activity in the Americas,
Asia-Pacific and High Performance Solutions.

 

 

Despite a context which remains difficult in certain markets, Saint-Gobain
expects a further increase in its operating margin in 2024

 

Financial calendar

 

A conference call will be held at 6:30pm (Paris time) on October 29, 2024:

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

2024 results: February 27, 2025, 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 or 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 rate for the previous year (impact at constant exchange rates);

•     changes in applicable accounting policies.

- Operating income: see note 5 to the interim financial statements, available
by clicking here:
https://www.saint-gobain.com/en/finance/regulated-information/half-yearly-financial-report

- 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
Saint-Gobain's control, including but not limited to the risks described in
the "Risk Factors" section of Saint-Gobain's 2023 Universal Registration
Document and the main risks and uncertainties presented in the half-year 2024
financial report, both documents being 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

 

                                   9m 2023 sales  9m 2024 sales  Change on             Change on a comparable  Like-for-like

(in €m)
(in €m)
an actual structure
structure basis
change

basis

 Northern Europe                   9,696          8,709          -10.2%                -5.8%                   -5.9%
 Southern Europe, ME & Africa      11,337         10,511         -7.3%                 -8.0%                   -7.6%
 Americas                          7,264          7,490          +3.1%                 +0.0%                   +1.1%
 Asia-Pacific                      1,587          1,838          +15.8%                -2.5%                   +0.5%
 High Performance Solutions        7,624          7,404          -2.9%                 -2.9%                   -2.1%
 Internal sales and misc.          -988           -913           ---                   ---                     ---
 Group Total                       36,520         35,039         -4.1%                 -4.6%                   -3.9%

 

                                   Q3 2023     Q3 2024     Change on an actual structure basis  Change on a comparable structure basis  Like-for-like change

sales
sales

(in €m)
(in €m)

 Northern Europe                   3,022       2,905       -3.9%                                -2.8%                                   -3.2%
 Southern Europe, ME & Africa      3,361       3,195       -4.9%                                -5.8%                                   -5.2%
 Americas                          2,480       2,523       +1.7%                                -2.8%                                   +0.8%
 Asia-Pacific                      551         805         +46.1%                               -2.9%                                   -0.9%
 High Performance Solutions        2,461       2,435       -1.1%                                -1.1%                                   +0.7%
 Internal sales and misc.          -309        -288        ---                                  ---                                     ---
 Group Total                       11,566      11,575      +0.1%                                -3.3%                                   -2.0%

 

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

 

 9-month 2024                      Like-for-like change  Prices  Volumes
 Northern Europe                   -5.9%                 -1.4%   -4.5%
 Southern Europe, ME & Africa      -7.6%                 -2.3%   -5.3%
 Americas                          +1.1%                 +0.8%   +0.3%
 Asia-Pacific                      +0.5%                 -2.6%   +3.1%
 High Performance Solutions        -2.1%                 +0.3%   -2.4%
 Group Total                       -3.9%                 -0.8%   -3.1%

 

 Q3 2024                           Like-for-like change  Prices  Volumes
 Northern Europe                   -3.2%                 -1.3%   -1.9%
 Southern Europe, ME & Africa      -5.2%                 -1.9%   -3.3%
 Americas                          +0.8%                 +0.7%   +0.1%
 Asia-Pacific                      -0.9%                 -1.5%   +0.6%
 High Performance Solutions        +0.7%                 +0.8%   -0.1%
 Group Total                       -2.0%                 -0.5%   -1.5%

 

Appendix 3: Breakdown of organic sales growth and external sales

 9-month 2024                      Like-for-like                                                                    % Group

change

 Northern Europe                   -5.9%                                                                            23.8%
 Nordics                           -8.4%                                                                            11.1%
 United Kingdom - Ireland          -3.7%                                                                            3.5%
 Germany - Austria                 -6.5%                                                                            2.9%
 Southern Europe, ME & Africa      -7.6%                                                                            29.2%
 France                            -9.9%                                                                            22.1%
 Spain - Italy                     +1.6%                                                                            4.0%
 Americas                          +1.1%                                                                            21.0%
 North America                     +2.7%                                                                            16.2%
 Latin America                     -3.8%                                                                            4.8%
 Asia-Pacific                      +0.5%                                                                            5.1%
 High Performance Solutions        -2.1%                                                                            20.9%
 Construction and industry         -2.8%                                                                            13.1%
 Mobility                          -1.1%                                                                            7.8%
 Group Total                       -3.9%                                                                            100.0%

 

 Q3 2024                           Like-for-like                                                                    % Group

change

 Northern Europe                   -3.2%                                                                            24.1%
 Nordics                           -4.8%                                                                            10.9%
 United Kingdom - Ireland          -3.0%                                                                            3.6%
 Germany - Austria                 -3.1%                                                                            2.8%
 Southern Europe, ME & Africa      -5.2%                                                                            26.9%
 France                            -7.5%                                                                            20.1%
 Spain - Italy                     +1.2%                                                                            3.7%
 Americas                          +0.8%                                                                            21.4%
 North America                     -0.1%                                                                            16.5%
 Latin America                     +3.7%                                                                            4.9%
 Asia-Pacific                      -0.9%                                                                            6.8%
 High Performance Solutions        +0.7%                                                                            20.8%
 Construction and industry         +1.9%                                                                            13.1%
 Mobility                          -1.2%                                                                            7.7%
 Group Total                       -2.0%                                                                            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  QRTPPGPAUUPCGMB