TIDMCOD
RNS Number : 4651R
Compagnie de Saint-Gobain
26 October 2023
The worldwide leader
in light & sustainable construction
Solid performance in Q3 2023
New record margin expected in 2023
-- Sequential price stability in Q3 2023, generating a positive price-cost spread
-- Volumes in Q3 2023 in line with expectations for the year
-- Further proof of the Group's resilience in a difficult environment
-- Share buyback of EUR540m so far this year, ahead of target
-- 2023 outlook: new record operating margin expected in 2023,
double-digit for the third consecutive year
Like-for-like sales were stable over the nine-month period to
September 30, 2023 despite a contraction of 3.1% in the third
quarter of the year versus third-quarter 2022 given the more
difficult pricing comparison basis due to the price increases
implemented proactively in the last few years. In a less
inflationary environment prices rose by 5.9% over the nine-month
period and by 1.9% in the third quarter, reflecting overall
sequential price stability since the start of the year, generating
a positive price-cost spread once again.
In a difficult 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, which
enables it to offer comprehensive solutions to its customers.
Thanks to its recent acquisitions and investments, the Group has
successfully repositioned itself on North America, Asia and
emerging countries, and construction chemicals. These markets with
strong growth outlooks now represent two-thirds of the Group's
operating income. Construction chemicals overall posted organic
growth of 3.1% over the nine-month period.
In line with expectations for the year, volumes were down by
5.9% over the nine-month period and by 5.0% over the third quarter
(including a negative working day effect of around 2%), with a
moderate slowdown in markets reflecting a contrasting situation: a
marked decline in new construction but good resilience overall in
renovation. In each local market, the Group is taking the proactive
commercial and industrial measures necessary to continue to
outperform its markets and maintain its excellent operating
performance achieved since 2019.
On a reported basis, sales were down by 4.9% to EUR36.5 billion
over the nine-month period and by 10.5% to EUR11.6 billion over the
third quarter, with negative currency effects of 2.2% over the
nine-month period and 3.9% in the third quarter, and negative Group
structure impacts of 2.7% over the nine-month period and 3.5% in
the third quarter.
Group structure impacts result 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", Impac in Mexico, Matchem in Brazil and
Best Crete in Malaysia), exterior products in Canada (Kaycan and
Building Products of Canada) and insulation (U.P. Twiga in India).
The integration of recent acquisitions is progressing well, helping
us to achieve the expected synergies.
Segment performance (like-for-like sales)
Northern Europe: limited decline in sales thanks to better
resilience in renovation
Sales in the Northern Europe region were down by 5.0% over the
nine-month period and by 7.6% in the third quarter (including a
negative working day effect of around 2%) amid a continued slowdown
in new construction, while renovation (around 55% of sales) proved
more resilient. After several quarters in which volumes fell
sharply, the volume decline eased in the third quarter of 2023
compared to the second against a lower comparison basis. Prices
continued to be well managed against a higher comparison basis and
in a less inflationary environment.
In Nordic countries, the sharp drop in the new construction
market, especially in Sweden and Norway, was partly offset by our
strong exposure to the renovation market. The world's first
carbon-neutral (scope 1 and 2) plasterboard production at the
Group's Fredrikstad plant in Norway allowed Saint-Gobain to further
differentiate its offer. The UK progressed slightly and captured
market share thanks to its strong positioning in façade and
interior solutions, and also benefited from an optimized portfolio
following the divestment of its distribution businesses. Germany
continued to suffer in a difficult macroeconomic context which
weighed on new construction. After a sharp decline in volumes of
around 15% in the first half, Eastern Europe improved in the third
quarter, driven by its comprehensive range of interior and exterior
solutions.
Southern Europe - Middle East & Africa: slight growth in
sales supported by resilience in renovation
The Southern Europe - Middle East & Africa Region saw a
slight rise of 1.0% in sales over the nine-month period and a fall
of 2.7% in the third quarter (including a negative working day
effect of around 2%), thanks to good resilience in renovation
(almost 70% of sales), while the new construction market continued
to slow. Prices continued to be well managed against a higher
comparison basis and in a less inflationary environment.
Saint-Gobain continued to outperform its market in France,
thanks to its strong exposure to renovation, supported by a
favorable regulatory environment. The announcement by the French
government in October that it is to double its MaPrimeRénov'
household renovation stimulus package to EUR5 billion in 2024,
along with its objective of a three-fold increase in the number of
complete renovations to 200,000 per year from 2024, illustrate the
country's commitment to accelerate energy-efficiency renovation of
existing buildings and to reduce CO(2) emissions in the
construction sector. The rollout of Saint-Gobain's low-carbon, high
value-added solutions for its customers is also accelerating.
In Spain and Italy, sales were stable in broadly resilient
construction markets. Middle East and Africa posted strong growth,
especially in Egypt and Turkey.
Americas: slight sales growth driven by North America
The Americas delivered organic growth at 2.2% over the
nine-month period and at 0.1% in the third quarter, buoyed by the
volume increase in North America.
- North America progressed by 5.0% over the nine-month period
(up 11.0% as reported, with the integration of Kaycan, Building
Products of Canada and GCP's waterproofing membranes) and by 4.0%
in the third quarter. The price effect gradually lessened due to
the high comparison basis but rose sequentially thanks to the price
increase in the roofing business this summer. Volumes were stable
over the nine-month period but have returned to growth since the
second quarter. The Group saw further market share gains thanks to
its comprehensive, differentiated range of interior and exterior
light construction solutions. The new construction market has
stabilized since the start of the year. The integration of GCP and
Kaycan is progressing well, helping us to achieve the expected
synergies. We finalized the Building Products of Canada acquisition
more quickly than expected, as of September 1, 2023, allowing
Saint-Gobain to reinforce its unique industry-leading position in
Canada, with a comprehensive range of interior and exterior
solutions. In light of the favorable growth outlook, investments in
additional capacity are continuing in North America. In September
2023, the Group signed a new renewable electricity supply
agreement, its third since 2021: these three agreements will allow
it to cover more than 70% of its electricity requirements in North
America by the end of 2024 and to achieve a 70% reduction in its
scope 2 emissions (versus 2017).
- Latin America was down by 5.5% over the nine-month period and
by 10.7% in the third quarter. Brazil continues to weigh on sales
in a difficult macroeconomic environment, although the Central
Bank's interest rate cut as from early August, along with inflation
coming under control and the announcement of the "New Growth
Acceleration Program" - incorporating a large construction sector
component with financing for social housing - point to an
improvement as from the end of the year. Mexico continued to
benefit from the successful integration of Impac in construction
chemicals (waterproofing) and its comprehensive solutions offer.
The other countries in the Region were driven by an increase in
sales prices, an enriched offer and mix, and a geographic footprint
and product range extended by bolt-on acquisitions.
Asia-Pacific: good sales momentum
The Asia-Pacific Region reported organic growth at 5.1% over the
nine-month period and at 3.0% in the third quarter, with good
momentum in volumes and a high comparison basis for prices.
India posted another strong performance and captured market
share on the back of its global solutions-based approach, its
integrated and innovative range of solutions, the successful
integration of recent acquisitions in insulation (Rockwool India
Pvt Ltd. and U.P. Twiga) and the start-up of new capacity. Through
its sustainable construction solutions, Saint-Gobain continues to
play a pioneering role in promoting low-carbon buildings in the
country. China enjoyed further good growth momentum despite a more
difficult market, on the back of market share gains in light
construction and renovation with the successful start-up of new
capacity in the center of the country. South-East Asia stabilized
against a high comparison basis and in Malaysia benefited from an
enriched range of solutions, helping to strengthen its presence on
the light construction market.
High Performance Solutions (HPS): good resilience in sales
HPS sales progressed 3.5% over the nine-month period and fell
2.1% in the third quarter in slowing markets overall.
- Businesses serving global construction customers saw a 40%
rise in sales as reported, mainly due to the integration of GCP as
of October 1, 2022. The upbeat trends in Chryso and GCP sales
continued, spurred by the innovation drive for decarbonization in
the construction sector, notably with innovative solutions (for
example CO2ST(R) and EnviroMix(R) ) for developing cement and
concrete mixes with a much lighter carbon footprint. Chryso
reported further strong growth, up double-digit over the quarter,
led by emerging countries. GCP's margins rallied sharply in line
with its integration plan, thanks to the efficiency of the new
organization and to global supply chain and industrial
optimizations. By the end of the year, Chryso will finalize the
acquisition of Adfil (fibers for concrete reinforcement) helping to
reduce the concrete's carbon footprint. However, Adfors'
reinforcement solutions contracted amid the marked slowdown in new
construction in Europe.
- Mobility sales progressed, buoyed by both the continued
gradual catch-up in sales prices and by an outperformance linked to
its strong technological positioning on electric vehicles. The
growth dynamic slowed in Europe at the end of the period against a
higher comparison basis resulting from the sharp upturn in the same
prior-year period, but remained favorable in the Americas and
Asia.
- Businesses serving Industry held firm in slowing industrial
markets, mainly in Europe, thanks to sales prices and to demand for
cutting-edge materials and decarbonization technologies.
2023 outlook
In a difficult macroeconomic environment, Saint-Gobain continues
to demonstrate its resilience and its strong operating performance,
achieved year after year since 2019 thanks to its focused strategy
and its proactive commercial and industrial initiatives. The Group
continues to focus on developing sustainable and innovative
solutions with a positive impact, supported by strong innovation
and investments for growth.
2023 will therefore mark another successful year for
Saint-Gobain, with the continued implementation of its "Grow &
Impact" priorities.
The Group confirms its assumptions for its markets in 2023, with
contrasting trends: a marked decline in new construction in certain
regions but good resilience overall in renovation.
Amid a moderate market slowdown, Saint-Gobain is targeting for
full-year 2023 a new record operating margin, double-digit for the
third consecutive year.
Financial calendar
A conference call will be held at 6:30pm (Paris time) on October
26, 2023:
please dial +44 12 1281 8004 or +1 718 705 8796 or +33 1 70 91
87 04.
- Site visits for investors and analysts: November 13 and 14,
2023 in France (Paris region).
- 2023 results: February 29, 2024, after close of trading on the
Paris stock market.
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 (impact at
constant exchange rates);
-- changes in applicable accounting policies.
- Operating margin = operating income divided by sales.
- Share buyback: amount of shares bought back in 2023, as of
October 26, net of offsetting employee share creation
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 2022 Universal
Registration Document and the main risks and uncertainties
presented in the half-year 2023 financial report, both documents
being available on Saint-Gobain's 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
Appendix 1: Sales by Segment
9m 2022 9m 2023 Change on Change on Like-for-like
sales sales actual a comparable change
(in (in structure structure
EURm) EURm) basis basis
-------- -------- ----------- -------------- --------------
Northern Europe 12,556 9,696 -22.8% -8.9% -5.0%
Southern Europe - ME
& Africa 11,317 11,337 +0.2% +0.1% +1.0%
Americas 6,791 7,264 +7.0% +1.0% +2.2%
Asia-Pacific 1,601 1,587 -0.9% -2.0% +5.1%
High Performance Solutions 7,085 7,624 +7.6% +2.1% +3.5%
Internal sales and
misc -948 -988 --- --- ---
Group Total 38,402 36,520 -4.9% -2.2% +0.0%
----------- --------------
Q3 2022 Q3 2023 Change on Change on Like-for-like
sales sales actual a comparable change
(in (in structure structure
EURm) EURm) basis basis
-------- -------- ----------- -------------- --------------
Northern Europe 4,157 3,022 -27.3% -12.1% -7.6%
Southern Europe - ME
& Africa 3,491 3,361 -3.7% -3.8% -2.7%
Americas 2,514 2,480 -1.4% -4.9% +0.1%
Asia-Pacific 588 551 -6.3% -7.4% +3.0%
High Performance Solutions 2,485 2,461 -1.0% -5.7% -2.1%
Internal sales and
misc -314 -309 --- --- ---
Group Total 12,921 11,566 -10.5% -7.0% -3.1%
----------- --------------
Appendix 2: Contribution of prices and volumes to organic sales
growth by Segment
9-month 2023 Like-for-like Prices Volumes
change
Northern Europe -5.0% +6.4% -11.4%
Southern Europe - ME
& Africa +1.0% +7.7% -6.7%
Americas +2.2% +4.5% -2.3%
Asia-Pacific +5.1% +0.5% +4.6%
High Performance Solutions +3.5% +5.2% -1.7%
-------------- ------- --------
Group Total +0.0% +5.9% -5.9%
-------------- ------- --------
Q3 2023 Like-for-like Prices Volumes
change
Northern Europe -7.6% +1.5% -9.1%
Southern Europe - ME
& Africa -2.7% +3.6% -6.3%
Americas +0.1% +0.1% +0.0%
Asia-Pacific +3.0% -3.5% +6.5%
High Performance Solutions -2.1% +3.3% -5.4%
-------------- ------- --------
Group Total -3.1% +1.9% -5.0%
-------------- ------- --------
Appendix 3: Breakdown of organic sales growth and external
sales
9-month 2023, in % of Like-for-like % Group
total change
Northern Europe -5.0% 25.5%
Nordics -5.1% 11.7%
United Kingdom - Ireland +1.3% 4.7%
Germany - Austria -12.5% 2.9%
Southern Europe - ME
& Africa +1.0% 30.3%
France +0.2% 23.6%
Spain - Italy +0.8% 3.7%
Americas +2.2% 19.5%
North America +5.0% 14.5%
Latin America -5.5% 5.0%
Asia-Pacific +5.1% 4.1%
High Performance Solutions +3.5% 20.6%
Construction and industry -3.0% 13.0%
Mobility +15.2% 7.6%
Group Total +0.0% 100.0%
Q3 2023, in % of total Like-for-like % Group
change
Northern Europe -7.6% 25.2%
Nordics -7.7% 11.6%
United Kingdom - Ireland -2.4% 4.0%
Germany - Austria -18.7% 3.0%
Southern Europe - ME
& Africa -2.7% 28.3%
France -3.5% 21.8%
Spain - Italy -6.3% 3.6%
Americas +0.1% 21.0%
North America +4.0% 15.6%
Latin America -10.7% 5.4%
Asia-Pacific +3.0% 4.5%
High Performance Solutions -2.1% 21.0%
Construction and industry -7.0% 13.0%
Mobility +6.5% 8.0%
Group Total -3.1% 100.0%
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