Cie. de Saint-Gobain SA Chief Executive Officer Pierre-Andre de Chalendar predicted first-half earnings will drop as European car sales decline and construction markets struggle to recover in southern Europe.
“The global economic environment could be tougher in 2012,” the CEO said at a shareholders meeting in Paris today. “First-half results will be lower than a year earlier because of a high comparison basis and an unfavorable development of results” in the glass business.
The CEO reiterated that organic revenue growth in 2012 should be “moderate,” mainly driven by rising prices. He also repeated that operating income and profitability “should prove resilient” and that the group will achieve a “high” level of free cash flow.”
Cie. de Saint-Gobain SA, Europe’s biggest supplier of building materials, predicts western European car sales will continue to drop in 2012, while other industrial markets should keep a “decent level of activity,” de Chalendar said. European residential construction markets should remain “somewhat resilient,” with strong disparities among countries, he said.
Saint-Gobain, based in Courbevoie near the French capital, fell 5.1 percent to 27.82 euros in Paris.
“After a first quarter that was somewhat decent, signs in recent weeks aren’t very positive” for the economy, de Chalendar said.
First-quarter figures show that Spain is in difficulties because of the economic crisis, de Chalendar said. Spain accounts for about 4 percent of revenue, including packaging, which is “little” affected, he said.
The company will continue to adjust operations in the most difficult areas and businesses, the CEO said.
Growth should gradually pick up in the second half in Asia and emerging markets after a lackluster start to the year, de Chalendar said. The U.S. construction market should confirm its progressive recovery in the second half, he said.
Saint-Gobain, which cancelled the sale of a minority stake of its Verallia packaging unit a year ago as stock market slumped, will resume the process when markets are more favorable, the CEO said today.
“It’s out of the question” to sell Verallia “in bad conditions,” the CEO said. The company will proceed with the share sale when conditions are appropriate, “and I doubt that it will be the case in 2012.”
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