Saint-Gobain Sees 2.6% Organic Growth in 2016
On a like-for-like basis, Saint-Gobain's 2016 sales were up 2.6%, driven by volume growth in all of the group’s business sectors and regions.
Saint-Gobain recently reported 2016 sales of €39.1 billion (approximately $41.3 billion), including a significant 2.9% negative currency impact due namely to the depreciation of the pound sterling (and to a lesser extent Latin American currencies) against the euro. The negative 1% group structure impact reflects the time-lag between the impact of disposals made to optimize the Building Distribution portfolio in late 2015/early 2016 and the acquisitions carried out mostly at the end of the period.
On a like-for-like basis, sales were up 2.6%, driven by volume growth in all of the group’s business sectors and regions. Based on a constant number of working days (negative calendar effect in the second half), volumes continued to increase in the six months to December 31 at the same pace as the first half. Prices stabilized over the year, gaining 0.6% in the second half amid an uptick in inflation.
Sales in the Innovative Materials business sector climbed 4.5% like-for-like over the year, in line with the first half. The operating margin for the business sector widened to 11.2% from 10.5%, driven by the rebound in Flat Glass and a good performance from High-Performance Materials (HPM).
Flat Glass like-for-like sales increased 6.5% over the year, in line with the first half, led by both construction and automotive in Asia and emerging countries. In Western Europe, construction volumes and prices both improved, benefiting from higher float prices and, as from the second half, from a rise in the price of downstream glass; automotive glass stabilized at a good level.
HPM sales rose 2.2% on a like-for-like basis. Despite the decline in industrial markets in the U.S., all HPM businesses advanced in the second half, led by Asia and emerging countries. Plastics also benefited from robust momentum in Europe. Ceramics stabilized over the year, with a less favorable mix in the second half. Textile Solutions were buoyed by the sharp rise in Roofing volumes in the U.S.
In line with the group’s expectations, France stabilized over the year (slipping 0.1% like-for-like). Trading edged down 0.7% in the second half, hit by an unfavorable calendar impact. The decline in Pipe was offset by an improvement in the new-build market, while renovation stabilized at a low level in a still deflationary environment.
Other Western European countries saw like-for-like sales growth of 3.6%, with 2.9% growth in the second half (impacted by a negative calendar impact). This reflects upbeat market conditions in all of the group’s main countries, including in the second half. Only Germany posted a slowdown in growth in the six months to December 31, related in particular to Interior Solutions.
North America reported 2% like-for-like sales growth, buoyed by volumes in both Exterior Products and Interior Solutions, mainly in the first half. Industrial markets were down slightly. Prices continued to have a negative impact, although this eased in the second half.
Asia and emerging countries continued to advance, reporting 6.1% organic growth (7.3% in the second half). Trading remained robust in all regions, despite the slowdown in Brazil.
“Saint-Gobain showed strong progress in its 2016 results,” said Pierre-André de Chalendar, chairman and CEO. “We saw the benefits of our optimization efforts and of our development in emerging markets, in a more supportive economic environment than 2015. As expected, France stabilized over the year as new-build activities recovered. All other regions enjoyed good momentum. The group also benefited from its focus on pricing against a backdrop of lower energy and raw material costs.
“In 2017, Saint-Gobain will maintain focus on its operational and strategic priorities. We expect both costs and prices to begin to rise again. The economic environment should be positive overall, although uncertainties remain in some of our markets. In this context, we are targeting a further like-for-like increase in operating income in 2017.”
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