Saint-Gobain First-Half Profit Falls 28%, Targets Reiterated
Net income decreased 28 percent to 332 million euros ($438 million), Saint-Gobain, based in Courbevoie near Paris, said in a statement today. Operating income fell 16 percent to 1.26 billion euros. Analysts polled by Bloomberg had expected 1.21 billion euros, according to the average of seven estimates.
The company reiterated its 2013 target for a recovery in operating income in the second half as an upturn in U.S. construction partly counters a slowdown in Europe, made worse by the extended wintry weather. The company aims to make an 160 million euros in savings in the second half of the year.
“The continued upturn in U.S. construction markets and a return to growth for our businesses in emerging countries failed to offset the general slowdown in the European economic environment, exacerbated by a negative calendar impact and very poor weather,” Chief Executive Officer Pierre-Andre de Chalendar said. “In this tough market climate, we pressed ahead with our cost cutting efforts while successfully pursuing our price-focused policy.”
Chalendar is cutting costs and investments and selling businesses to adjust to the European car and construction slump that has hurt demand for flat glass and building materials and put the company’s credit rating under pressure. Moody’s Investors Service and Standard & Poor’s, which rate Saint-Gobain at Baa2 and BBB respectively, have said they may downgrade the company.
On July 1, the U.S. Federal Trade Commission challenged the proposed sale of Saint-Gobain’s U.S. container division to Ardagh Group SA’s for $1.7 billion, saying the deal would reduce competition in the U.S. market for beer and liquor bottles. Ardagh and Saint-Gobain said they will defend the deal and work with the agency to resolve its concerns.
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