Strong Second Half Helps Saint-Gobain’s Financial Results for 2018
According to Saint-Gobain, all business sectors delivered significant price increases amid continued raw material and energy inflation.
Saint-Gobain recently reported 2018 sales of €41.8 billion (approximately $47.4 billion), an increase of 2.4% on a reported basis and up 4.4% like-for-like, compared to 2017. Organic growth was driven both by prices (up 3%), accelerating in the second half (up 3.5%), and by volumes (up 1.4%), progressing in all regions. All business sectors reportedly delivered significant price increases amid continued raw material and energy inflation.
“As expected, our results for the second half show a significant improvement, benefiting from broadly supportive markets, a strong pricing dynamic and the settlement of industrial issues that had weighed on the group’s profitability in the first half,” said Pierre-André de Chalendar, chairman and CEO. “For 2019, in the context of a market which, despite some uncertainties, should be favorable overall, we are targeting a further like-for-like increase in operating income.
“As part of the acceleration of our portfolio rotation program announced at the end of July and the reorganization presented in late November, the group has launched a divestment program representing sales of more than €3 billion [~ $3.4 billion] by the end of 2019. The divestment process for the Distribution business in Germany is well under way. The new strategic review currently in progress will lead to an additional dynamic of divestments and acquisitions.”
According to Benoit Bazin, chief operating officer, “The new organization is being swiftly put into place, and the teams are fully committed to unlocking additional growth and profitability. It is leading us to assess our positioning country by country and to focus the group’s strengths by optimizing the allocation of its resources in its core industrial and distribution businesses, with solid competitive positions, strong synergies and a profitable growth outlook. We therefore have full confidence in our program to achieve €250 million [~ $283.8 million] of additional savings by 2021.”
Sales in the Innovative Materials business sector for 2018 climbed 4.8% like-for-like over the year and 3.6% in the second half. The operating margin for the sector remained stable over the year at 12.4%, standing at 12.5% in the second half.
Flat Glass like-for-like sales increased 2.8% over the year (up 2.1% in the second half). Automotive glass advanced in line with the division over the year, buoyed by growth in Latin America despite a significant downturn in European and Chinese markets in the fourth quarter. Recent industrial and innovation investments continue to ramp up. Sales linked to the construction market in Europe, Asia and emerging countries progressed, driven by prices. Following the restart of production at the three float glass facilities under repair in 2018 (Poland, Romania and Egypt), India started up its fifth float line in the second half of the year. The operating margin rallied sharply in the second half at 9.8% (after 8% in the first half), in a context of improved industrial performance and price increases. Over the year, the operating margin was 8.9% vs. 10.1% in 2017.
High-Performance Materials (HPM) sales rose 7.2% on a like-for-like basis (up 5.2% in the second half), driven by all businesses and all regions, especially Asia and emerging countries. Saint-Gobain reports that its strategy of allocating capital to niche technologies and fast-growing markets is paying off. Despite a higher comparison basis in the second half, HPM continued to deliver growth. The operating margin increased sharply to 16.3% from 15.1% in 2017 on the back of good volumes, particularly in Ceramics in the first half.
Additional details are available at www.saint-gobain.com.