Saint-Gobain Cuts Profit Outlook as French Demand WeakensBy
Company trims 2015 capital expenditure by EU100 million
Saint-Gobain reaffirms plan to buy controlling stake in Sika
Cie. de Saint-Gobain SA, Europe’s biggest supplier of building materials, cut its full-year profit outlook and reduced investment plans on weak demand in France and slowing growth in Brazil.
Saint-Gobain expects to “at least maintain operating income on a like-for-like basis,” the Courbevoie, France-based company said in a statement Wednesday. In July, the company forecast an “improvement” in like-for-like operating income.
“The third quarter reflects a disappointing economic climate versus our expectations,” Chief Executive Officer Pierre-Andre de Chalendar said in the statement. He cited a contraction in France and “plunging” sales in the U.S. oil and gas industry as well as a slowdown in Brazil.
Third-quarter sales climbed 2.2 percent to 10 billion euros, Saint-Gobain said. The company trimmed 2015 investment to about 1.4 billion euros from a July forecast of 1.5 billion euros.
To boost business in faster-growing markets, Saint-Gobain is selling its European glass packaging unit Verallia and has signed a binding agreement to buy a 16 percent stake and 52 percent of the voting rights of Swiss adhesive and mortar maker Sika AG.
The 2.75-billion franc ($2.8 billion) Sika deal is mired in a legal battle pitting the Swiss seller and the French glass maker against Sika’s management and some minority investors, who are seeking to block the transaction or force Saint-Gobain to make a public offer for the rest of the company.
Saint-Gobain will “pursue its plan to acquire a controlling interest in Sika pending the decision in first instance of the Zug court expected during first-half 2016,” according to the statement.
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.