Saint-Gobain Sales Essentially Flat in 2018 First Quarter
On a like-for-like basis, Saint-Gobain’s sales grew by 1.6%, while prices continued to increase (up 2.1%) against a higher comparison basis.
Saint-Gobain recently reported its financial results for the first quarter of 2018. On a like-for-like basis, sales grew by 1.6%, while prices continued to increase (up 2.1%) against a higher comparison basis. Volumes declined 0.5%, hit by a negative calendar impact of around 2% and by harsh weather conditions, especially in Europe and in March. North America, Asia and emerging countries enjoyed further good growth momentum.
On a reported basis, sales totaled €9.8 billion (approximately $11.6 billion), with a strong negative 4.7% currency impact notably due to the depreciation of the U.S. dollar, Brazilian real, Nordic krona, and other Asian and emerging country currencies against the euro. The group structure impact added 1.3% to sales growth and mainly reflects the consolidation of companies in Asia and emerging countries (KIMMCO, Tumelero, Megaflex, Isoroc Poland), in new niche technologies and services (TekBond, Maris, Scotframe), and to consolidate positions (Glava, Biolink, Kirson, Wattex, SimTek, bolt-on acquisitions in Building Distribution).
“In the first quarter, the group demonstrated its ability to raise sales prices amid ongoing raw material and energy cost inflation,” said Pierre-André de Chalendar, chairman and CEO. “Weather conditions and fewer working days distort the interpretation of our performance at the start of the year. Underlying trends nevertheless confirm the improvement of our markets in most of our countries in Europe, particularly France, as well as good momentum in North America and emerging countries. As announced, the group has continued to step up its capital expenditure since the beginning of the year, along with its active strategy of small and mid-sized acquisitions (nine acquisitions to date for around €300 million (~ $355.9 million). For 2018 as a whole, we confirm our objective of a further like-for-like increase in operating income.”
Sales in the Innovative Materials segment rose 3.7% in the 2018 first quarter. Flat Glass delivered 0.9% growth, hit by the negative calendar impact and unfavorable weather conditions in Europe, which led to delays in construction projects, as well as float glass plant repairs. Asia and emerging countries advanced in the construction sector, including in Brazil. As expected in Europe, the rise in prices was driven by transformed glass; float prices were up slightly. In markets that continue to grow, the automotive business stabilized, temporarily impacted by the step-up in capex and innovation.
High-Performance Materials (HPM) continued to report buoyant growth at 7.3%, led by Ceramics in particular. This performance was driven by all geographies, with a strong dynamic in the U.S., as well as in Asia and emerging countries.
Construction Products (CP) delivered 3.2% sales growth despite a negative calendar impact. The price effect continued its strong rise, except for Exterior Products in the U.S. Interior Solutions sales climbed 4.6%, driven by Asia and emerging countries. Trading in Western Europe was partly affected by weather conditions, although the underlying growth trends were good except in the UK. North America posted further growth, led by prices. Overall, the business continued to show the good pricing dynamic of the fourth quarter.
Exterior Solutions sales rose 1.6% in the first quarter of 2018. Exterior Products in North America were up slightly against a high comparison basis, with first quarter 2017 boosted by distributor stockpiling; the price effect stabilized. The Pipe business successfully increased prices, while volumes remained difficult despite some signs of an improvement in the export market. Mortars reported slight growth hit particularly by bad weather in Europe, while Asia and emerging countries continued to enjoy bullish growth overall.
France (up 1.3%) confirmed its improvement (excluding the calendar impact), despite the harsh weather conditions. Sales were buoyed by dynamic new-build activity and by progress in renovation. Other Western European countries (down 1.1%) were also impacted by a negative calendar impact and by particularly severe winter weather in Germany, the Nordic countries, and the UK. Snow and freezing conditions delayed construction projects and affected delivery times. However, underlying trends reportedly remain well-oriented in the company’s main countries (with the exception of the UK, which saw a further decline in volumes partly offset by a supportive price environment).
North America posted 4.6% growth, led by ongoing good momentum in industrial markets. The construction market continued to trend well, with an increase in pricing, particularly in Interior Solutions. Asia and emerging countries continued to expand, delivering robust 6.8% organic growth. All regions drove this growth, including Brazil.
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