Compagnie St-Gobain COD 1st Quarter Results

  Compagnie St-Gobain (COD) - 1st Quarter Results

RNS Number : 5877P
Compagnie de Saint-Gobain
25 October 2012




                                      



 
  





Paris, October 25, 2012



 





Sales for the first nine months of 2012: up 2.9% to €32.5 billion



Organic growth: -1.8%, of which -3.8% in Q3







Highlights:



· Sales prices: up 1.9% over 9 months and 1.5% in Q3
· Sales volumes: down 3.7%over 9 months and 5.3% in Q3

· Q2 business trends confirmed in Q3, but negative impact of fewer trading
days than in 2011 and of very strong 3Q 2011 comparatives for construction  in 
North America
· Swift implementation of new cost cutting measures









Pierre-André  de   Chalendar,  Chairman   and  Chief   Executive  Officer   of 
Saint-Gobain, commented:



"Saint-Gobain's trading performance in the third quarter confirms the  general 
economic  slowdown  observed  in  Western   Europe  since  May,  as  well   as 
difficulties in the Group's  main markets in Asia  and emerging countries.  In 
the US,  exceptionally  strong  third-quarter 2011  comparatives  (boosted  by 
severe storms)  significantly curtailed  the positive  impact of  the  ongoing 
improvement in residential construction in the quarter. Against this backdrop,
we maintained our focus on sales prices with the aim of passing on the rise in
raw material and energy costs over the year as a whole.

Given the continuing  slowdown in most  of its markets  in a highly  uncertain 
macroeconomic environment, the Group continues to firmly roll out its new cost
cutting measures and cash management programs. Thanks to the strong commitment
of our teams, we  are maintaining our objectives  overall, although we  expect 
the sequential decline in our second-half operating income to be slightly more
significant than anticipated at the end of July."

















Saint-Gobain delivered a  2.9% rise  in sales over  the first  nine months  of 
2012, up to €32,541 million versus €31,629 million in the same period one year
earlier.



The currency impact  was a positive  2.0%, mainly reflecting  gains in the  US 
dollar and pound sterling  against the euro. Changes  in Group structure  also 
had a  positive  2.7%  impact,  resulting mainly  from  sales  contributed  by 
companies acquired over the last 12 months (Brossette, Build Center and  Solar 
Gard in particular).



On a like-for-like basis (constant Group structure and exchange rates),  sales 
retreated 1.8%, with volumes down 3.7% and prices up 1.9%.



Consolidated sales for the third quarter  came in at €10,951 million, up  1.8% 
on third-quarter 2011 (€10,754 million).  This reflects a positive 2.8%  Group 
structure impact, a positive 2.8% currency effect, and negative organic growth
of 3.8%, with a decline of 5.3% in volumes and a rise of 1.5% in prices.



Overall, trading in the  third quarter confirms the  slowdown observed in  the 
three months to June 30 (negative organic growth of 2.3%, with prices up  1.9% 
and volumes  down  4.2%). With  the  exception of  Verallia,  which  delivered 
another resilient performance (3.2% organic growth in the third quarter),  all 
of the Group's Business Sectors and Divisions saw sales volumes decline in the
three months  to September  30, reflecting  the gradual  deterioration in  the 
global economic environment since May. This situation was exacerbated by fewer
trading days than in 2011  (a loss of one day  over the quarter, of which  two 
days in  September,  resulting  in  a negative  8.8%  impact  on  the  Group's 
September sales), which chiefly affected Building Distribution sales and, to a
lesser extent, sales  for Interior Solutions.  Based on a  constant number  of 
trading days, the Group's negative organic growth would have been 2.8%  rather 
than 3.8% for the third quarter.

Among the  main geographic  areas  in which  the  Group operates,  only  North 
America remained upbeat, spurred by  ongoing improvements in the  construction 
market. This was despite  the very tough  third-quarter 2011 comparatives  for 
this market (renovation activity in the prior-year period had been boosted  by 
severe storms). Against  this backdrop,  sales prices were  up in  all of  the 
Group's Business Sectors and Divisions.









































The table below presents sales trends by Business Sector and major  geographic 
area:



                                                             

                   Sales for Sales for % change on % change on a % change on a
                   the first the first  an actual   comparable   like-for-like
                     nine      nine     structure    structure       basis
                   months of months of    basis        basis
                     2011      2012                                    
                                                        
                     (€m)      (€m)                              
                                                   
                                 
                                                   
BUSINESS SECTOR                                                    

                                                                  

Innovative           7,230     7,182      -0.7%        -2.6%         -4.5%
Materials (1)
                     4,121     3,860      -6.3%        -6.7%      -6.8%
Flat Glass
                     3,133     3,340      +6.6%        +2.6%         -1.7%
High-Performance
Materials                                                          

                    8,703     8,904      +2.3%       +1.0%         -1.7%

Construction         4,122     4,334      +5.1%        +3.0%         +0.6%
Products  (1)
                     4,620     4,609      -0.2%     -0.8%        -3.8%
Interior Solutions
                                                                   
Exterior Solutions
                    13,763    14,379      +4.5%        -0.1%         -1.4%

                                                                   
Building
Distribution         2,718    2,855     +5.0%        +6.1%         +3.1%

                                                                  

Packaging            (785)    (779)    ------       -------       -------
(Verallia)
                                                                   

                    31,629    32,541      +2.9%        +0.2%         -1.8%
Internal sales and
other                                                              

                                                                  

GROUP                                                              

                                                                  

                                                                  

                    8,922     9,024      +1.1%        -2.7%         -2.7%

GEOGRAPHIC AREA     13,497   13,542     +0.3%        -2.0%         -4.0%

                    4,214     4,782     +13.5%       +11.4%         +1.7%

France               6,466     6,524      +0.9%        -0.9%         -0.3%

Other      Western                                                 
Europe
                    (1,470)  (1,331)    -----        -----         -----
North America
                                                                   
Emerging countries
and Asia/Pacific    31,629           +2.9%        +0.2%         -1.8%
                             32,541
                                                       

Internal sales



GROUP



(1) Including inter-division eliminations.







Like-for-like performance of Group Business Sectors





Innovative Materials sales  were down  4.5% over the  nine-month period  after 
declining 7.2% in the third quarter.Trading conditions in Flat Glass  remained 
challenging, while  HPM  also  saw  business stall  over  the  third  quarter, 
prompted  by  a  slowdown  in  industrial  production  and  capital  spending, 
especially in  Western  Europe. On  a  positive  note, sales  prices  for  the 
Business Sector  continued to  climb  in the  three  months to  September  30, 
despite the strong basis for comparison.



· In line with the six months to June 30, Flat Glass saw sales slide  6.8% 
in the first nine months of the year  (and 7.0% in the third quarter), hit  by 
the contraction in its  main markets (automotive  and construction in  Western 
Europe, solar  power) and  by  sluggish sales  volumes  in Asia  and  emerging 
countries. In contrast,  after falling  in the six  months to  June 30,  sales 
prices stabilized in the third quarter but do not yet reflect the first  float 
glass price  increases  implemented  after  July.  Consequently,  despite  the 
vigorous cost cutting  measures taken, the  Division's nine-month  performance 
continued to be heavily impacted by the hike in the cost of raw materials  and 
energy.



·  After  robust  trading  in  the   first  six  months  of  2012,   HPM's 
third-quarter performance was dented  by the slowdown  in the global  economic 
environment. This was exacerbated  by strong third-quarter 2011  comparatives. 
HPM sales therefore  slipped 1.7% over  the nine months  to September 30  (and 
7.8% in  the third  quarter), reflecting  the decline  in volumes  in  Western 
Europe and emerging countries, as well as in North America to a lesser extent.
However, the Group's cost cutting measures and upbeat sales prices should help
limit the impact of this slowdown on the Division's second-half performance.



Construction Products (CP)sales fell 1.7% over the nine months to September 30
and 4.3% in the  third quarter, owing  to a drop in  sales volumes in  Western 
Europe and -  in the third  quarter -  the impact of  very tough  year-on-year 
comparatives (third-quarter 2011 had been boosted by severe storms in the US).
Sales prices remained upbeat for all businesses and geographic areas.



· Interior Solutions reported timid organic growth in both the first  nine 
months of 2012 (up  0.6%) and the  third quarter (up  0.3%), spurred by  sales 
price rises,  mainly in  US  plasterboard early  in  the year.  Sales  volumes 
retreated in Western Europe, chiefly as a result of fewer trading days than in
2011, but  continued to  recover  in the  United States  on  the back  of  the 
construction market  upturn.  Sales volumes  in  Asia and  emerging  countries 
remained upbeat.



· Exterior Solutions like-for-like sales  declined 3.8% in the first  nine 
months of 2012 and 8.5% in the third quarter, hit by both a sharp fall in Pipe
sales and by very strong third-quarter 2011 comparatives for Exterior Products
(severe storms in early-2011  gave a one-off boost  to roofing repairs in  the 
US).  This  temporarily  offsets  the  favorable  impact  of  the  rebound  in 
construction. The Industrial Mortars business delivered further robust organic
growth in  Asia  and  emerging  countries  for  the  third  quarter,  but  its 
performance was hit by  the worsening economic crisis  in Western Europe.  For 
the division as a whole, the  benefits of cost cutting measures are  beginning 
to filter  through  and  sales  price momentum  remains  positive  across  the 
Division (particularly  Industrial Mortars),  although  these does  not  fully 
offset the impact of  spiraling raw material and  energy costs over the  first 
nine months.





Building Distribution like-for-like sales were  down 1.4% over the first  nine 
months of 2012 (and 3.0% in  the third quarter). Germany, Scandinavia and  the 
US continued to grow  over the nine-month period  but stabilized in the  third 
quarter, while  France held  up well  and  gained market  share in  a  slacker 
trading environment.  The Business  Sector's other  countries reported  softer 
trading over  the nine  months to  September 30  and especially  in the  third 
quarter, due chiefly to  fewer trading days  than in 2011 (a  loss of one  day 
over the quarter, of which two days in September, resulting in a negative 8.2%
impact on September sales).  Based on a constant  number of trading days,  the 
Business Sector would have delivered negative  organic growth of 1.8% for  the 
third quarter.  Against this  deteriorating  economic backdrop,  the  Business 
Sector continues to roll  out measures focused  on sales momentum,  protecting 
trading margins thanks to upbeat sales prices, and maintaining a tight rein on
costs.



Packaging (Verallia) delivered 3.1% organic growth over the first nine  months 
of the year (3.2% in the third quarter). This performance was chiefly  fuelled 
by sales price increases resulting - particularly in the third quarter -  from 
the mechanisms  adopted to  pass  on energy  costs  to prices.  Sales  volumes 
remained upbeat in  France, the US  and Brazil,  but were down  in most  other 
countries, and particularly in Southern and Eastern Europe.











Like-for-like analysis by geographic area



In line with first-half 2012 trends, trading in Western Europe and in Asia and
emerging countries slowed further in  the third quarter, while North  American 
operations continued to benefit from the ongoing recovery in the  construction 
market.



- In Franceand other Western Europe countries, organic growth came in at  a 
negative 2.7% and  4.0%, respectively, over  the nine months  to September  30 
(negative organic  growth  of  2.4%  and  5.7%,  respectively,  in  the  third 
quarter). This downturn resulted chiefly  from difficulties in Flat Glass  and 
Pipe, but also reflects softening industrial and construction markets in  most 
European countries, particularly over the past three months.



- North America posted1.7% organic growth over the nine months to  September 
30, following a 4.1% drop in sales in the third quarter. This was  essentially 
due to exceptionally strong trading by US Exterior Products in the comparative
third-quarter 2011 period  - boosted by  severe storms early  in 2011 -  which 
offset the benefits of the ongoing improvement in the construction market over
the three months  to September 30.  While Verallia continued  to enjoy  robust 
activity, HPM sales volumes were hit by the slowdown in industrial markets.



- Trading  inAsia and  emerging  countries continued  on a  downward  trend, 
shrinking 0.3% over  the nine months  to September  30 and 2.8%  in the  third 
quarter, and is not as yet showing any tangible signs of improvement.



Update on asbestos claims in the United States



Some 3,000 claims were filed against  CertainTeed in the first nine months  of 
2012, in  line with  the same  period one  year earlier.  Taking into  account 
around 8,000  claims  settled  or  transferred  to  inactive  dockets  in  the 
nine-month period (versus 7,000 in the  first nine months of 2011), the  total 
number of outstanding claims  continued to fall, down  to 47,000 at  September 
30, 2012 versus 52,000 at December 31, 2011.





Outlook and objectives for full-year 2012



After a  difficult third  quarter  hit by  the  gradual deterioration  in  the 
economic environment - particularly in Europe  - since May, the Group  expects 
the slowdown observed over the past  three months to continue into the  fourth 
quarter, with  the  global  economic  climate  remaining  highly  fragile  and 
unsettled:





- in  Western Europe,  industrial markets  (especially automotive)  should 
continue to contract. New-build and renovation markets should also continue to
slow, but with stark contrasts persisting from one country to the next;



- in  North  America, industrial  markets  should lose  further  momentum, 
squeezed by  the decline  in industrial  production and  capital spending.  In 
contrast, the upturn in residential construction markets should continue;



-  in  Asia  and  emerging  countries,  trading  should  stabilize  before 
gradually picking up;



- lastly,  household  consumption  markets should  hold  firm  across  all 
regions except Southern Europe.



Against this backdrop, trading for the Group in the fourth quarter is expected
to remain subdued, despite more favorable  basis for comparison and number  of 
trading days than in the third quarter.



Consequently, given the considerable uncertainties currently facing the global
economy, the Group will continue to firmly implement its action plan, by:



- maintaining its priority focus on sales prices with the aim of achieving
a moderate price increase over  the year as a whole,  in an effort to pass  on 
the rise in raw material and energy costs;



- firmly pursuing new  cost cutting measures,  with additional savings  of 
€160 million  in the  second half,  representing total  cost savings  of  €500 
million over the  year as a  whole and a  full-year impact (in  2013) of  €750 
million (calculated on the 2011 cost  base). This cost cutting program,  which 
aims to curtail the impact of a limited decline in volumes over the full year,
will remain primarily focused on Europe;



- keeping a tight rein on operating working capital;



- maintaining a strict cash management policy in order to maintain a  high 
level of free cash  flow and a strong  balance sheet. Capital expenditure  and 
financial investments in the second half will therefore be reduced compared to
the same year-ago period, by €200 million and €350 million, respectively.





Overall, the  Group is  maintaining its  objectives, although  the  sequential 
decline in second-half  operating income should  be slightly more  significant 
than anticipated at the end of July.





Forthcoming results announcement



Results for  2012: February  20, 2013,  after close  of trading  on the  Paris 
Bourse.





                                                                 

              Analyst/Investor relations                   Press relations

                                                                 
                                                                     

Florence Triou-Teixeira                        +33   1 Sophie Chevallon +33 1
                                               47   62 Susanne          47 62
Vivien Dardel                                  45 19   Trabitzch       30 48

Alexandra                                      +33   1                  +33 1
Baubigeat         47   62                  47 62
                                               44 29                    43 25

                                               +33   1 
                                               47   62 
                                               30 93

                                                  



                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


QRFPGGACUUPPGQA -0- Oct/25/2012 16:48 GMT
 
Press spacebar to pause and continue. Press esc to stop.