Saint-Gobain Sales Drop on Euro’s Gains Against Other Currencies
Cie. de Saint-Gobain SA, Europe’s biggest supplier of building materials, reported a decline in third-quarter sales because of the euro’s rally against other currencies.
Sales dropped 1.4 percent to 10.8 billion euros ($14.9 billion), Saint-Gobain, based in Courbevoie near Paris, said in a statement today. Analysts polled by Bloomberg had also expected 10.8 billion euros. Excluding exchange rate fluctuations, acquisitions and disposals, sales gained 3.1 percent, helped by demand in Asia, a rebound in North America and “fledgling improvement” in western Europe.
Saint-Gobain joins companies such as Unilever, the British-Dutch maker of Magnum ice cream, and Paris-based water company Suez Environnement in saying that the euro exchange rate dented quarterly results. Europe’s common currency has climbed 6.7 percent against a basket of its nine major peers this year, more than the others, as the euro region emerged from a record-long recession, Bloomberg Correlation-Weighted Currency Indexes show. Today, the euro climbed to an almost two-year high of $1.3822.
Saint-Gobain Chief Executive Officer Pierre-Andre de Chalendar has been cutting costs 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.
In the fourth quarter, the company predicts the positive organic trend of the third quarter to continue. Saint-Gobain said construction business will continue to rally in the U.K. and Germany, while its business in Asia is forecast to deliver “robust organic growth.”
The company reiterated its target for a recovery in operating income in the second half of 2013, and its goal to make 580 million euros in savings in the full year.
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