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Like-for-like (comparable group structure and exchange rates), consolidated sales were down 2.4%. Volumes slipped 1.7% while sales prices edged down 0.7%, compared to the strong 2.3% rise in the first quarter of 2009. This slight drop in like-for-like consolidated sales conceals starkly contrasting performances across business sectors and geographical areas.
Trading was very upbeat in the group’s activities linked to industrial output (representing the bulk of sales for the Innovative Materials Sector), which saw double-digit organic growth over the quarter. In addition, all group businesses in Asia and Latin America, which confirmed their return to growth, delivered a 22% rise in sales over the three months to March 31. Businesses related to household consumption (Packaging Sector) continued to hold up very well, reporting like-for-like sales almost identical to the previous year.
Businesses exposed to construction markets in Europe and North America continued to face tough conditions, amplified by a very cold winter in the first two months of the year. For the group’s businesses in general, March, which benefited from a return to “normal” weather conditions in the Northern hemisphere and an extra working day compared with 2009, saw a sharp improvement in trading compared to the first two months of the year.
Innovative Materials reported double-digit organic growth of 10.4% over the quarter, buoyed by the rebound in markets linked to industrial output in North America and to a lesser extent in Western Europe, as well as the sharp rise in sales in emerging countries and Asia (which represent 35% of the sector’s sales).
Flat Glass reported 9.6% organic growth. The strong rally in the global automotive market and robust momentum in Asia and emerging countries (which account for over 39% of the sector’s sales) more than offset sluggish construction markets across Western Europe. Despite the slight rise in prices for commodity products (float glass) in Europe compared with the first quarter of 2009, sales prices across the sector were still down, mainly due to the time-lag in passing float glass price increases onto processed products.
High-Performance Materials (HPM) posted an 11.9% increase in sales, fueled chiefly by the sharp rally in industrial output in Asia and North and South America, and the more modest industrial output gains in Europe. This more than offset the slowdown (in terms of volumes and prices) in businesses linked to capital expenditure.
Construction Products (CP) sales fell 3.3%, reflecting the impact of very poor weather conditions in the Northern hemisphere over the first two months of the year. Interior Solutions sales for the first quarter were dampened by slack construction markets across Europe and the U.S., which vigorous demand in Asia and Latin America failed to offset. In this context, sales prices were slightly down on average compared to the same year-ago period, particularly in the U.S., despite an upward trend at the end of the quarter.
Exterior Solutions sales climbed 1.9% on the back of vigorous growth in Asia (particularly for Pipe) and Latin America, as well as brisk trading in U.S. Exterior Products, bolstered by the rebuilding of inventory levels by distributors. Sales prices remained upbeat, reflecting the rising trend in commodity and energy costs.
After persistently tough conditions in the three months to March 31, the group’s expectations for the next few quarters includes consolidation of the relative improvement in residential construction observed in March in North America and Western Europe, although trading should continue to vary widely from one country to the next (upturn in the UK and U.S., further decline in Southern Europe). Industrial markets should continue to trend upward in the short term, while household consumption should remain upbeat.
In addition, the group anticipates additional growth gains throughout 2010 in Asia and emerging countries, particularly in Latin America. In Eastern Europe, however, trading is expected to remain difficult over the next few months, although somewhat better than in the first three months of the year.
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