Despite Cyberattack, Saint-Gobain Reports First Half Sales Increase
A June 27 cyberattack is estimated to have had a negative impact of €220 million (approximately $261 million) on Saint-Gobain’s 2017 first half sales.
Saint-Gobain recently reported its results for the first half of 2017. Reported sales increased 4.4% year-on-year to €20.4 billion (approximately $24.2 billion), including a positive 0.1% currency impact resulting mainly from the depreciation of the euro against the Brazilian real and U.S. dollar, offset by the fall in pound sterling. The positive 0.8% group structure impact essentially reflects the consolidation of acquisitions made in Asia and emerging countries (Emix, Solcrom, Tumelero), in new niche technologies and services (H-Old, Isonat, France Pare-Brise), and to further strengthen the group’s positions in Building Distribution (particularly in Nordic countries).
On a like-for-like basis, sales increased 3.5%, driven both by prices (up 1.8%), which continued to rise in a more inflationary cost environment, and by volumes (up 1.7%). Volumes increased across all business sectors and regions, with a slightly negative calendar impact over the first half (around +3% in the first quarter and around -3.5% in the second).
On June 27, Saint-Gobain experienced a significant cyberattack, which led to information system downtime and supply chain disruptions. IT systems were quickly restored and all operations had returned to normal by July 10. All efforts were made to ensure the continuity of the business and, in particular, to keep any impact on customers to a minimum. The cyberattack is not expected to have any impact on commercial relations going forward.
The cyberattack is estimated to have had a negative impact of €220 million (~ $261 million) on 2017 first half sales and of €65 million (~ $77 million) on operating income. Over the full year, the negative impact is estimated at less than €250 million (~ $296 million) on sales and €80 million (~ $95 million) on operating income, with July including additional losses in some businesses in the first few days of the month, a claw-back of June sales, and costs associated with restarting operations. Overall, just over half the impact of the cyberattack concerned Building Distribution, while the rest concerned the group’s industrial businesses, particularly Construction Products. From a geographical perspective, Western European countries were the hardest hit, especially Nordic countries, Germany and France.
Innovative Materials sales increased 4.1% like-for-like in the 2017 first half, driven by Flat Glass. Upbeat trends continued in Flat Glass, which reported 5.6% organic growth over the first half. The automotive business enjoyed further good momentum, led by Asia and emerging countries; sales in Europe remained healthy. Construction markets benefited from an upturn in volumes in Western Europe and an increase in float prices; Asia and emerging countries posted further growth, despite Brazil remaining down. Organic growth combined with optimized operating leverage and a positive price-cost spread for raw materials and energy, drove a further rally in the operating margin, up to 9.9% from 8.8% in the 2016 first half.
High-Performance Materials (HPM) sales rose 2.5% on a like-for-like basis over the 2017 first half, spurred by volumes amid a measured rise in raw material and energy costs. All HPM businesses advanced in the first half, with a strong second quarter for Ceramics, in particular.
“The first half of 2017 confirmed the encouraging trends seen in 2016, particularly in France,” said Pierre-André de Chalendar, chairman and CEO. “Excluding the one-off impact of the cyberattack, the group grew at its fastest rate since the first half of 2011, translating into double-digit growth in operating income. The focus on sales prices paid off, allowing us to offset the rise in raw material and energy costs at group level. Overall, the results were in line with our expectations, and we can therefore confirm with confidence our 2017 objectives.”
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