French group, Saint-Gobain, has reported a 5.4% decline in first-half net profits for the current year, from FFr 2.17 billion to FFr 2.05 billion (US$ 398 million), due to a strong US performance whic…
French group, Saint-Gobain, has reported a 5.4% decline in first-half net profits for the current year, from FFr 2.17 billion to FFr 2.05 billion (US$ 398 million), due to a strong US performance which helped offset a downturn in European markets. Profits fell despite a 14.5% increase in sales, from FFr 35 billion to FFr 40 billion, which the group attributed to its acquisitions in the ceramics, abrasives and glass packaging sectors. Operating profits climbed 6% in absolute terms, from FFr 4.04 billion to FFr 4.28 billion, but fell from 11.5% to 10.7% of turnover. The group said its sector-by-sector analysis showed a fall in profitability in its glazing and insulation units. However, packaging, reinforcing fibres, building materials, and industrial ceramics and abrasives were showing a noticeable improvement. Sales rose more than 10% in the UK and in North and South America, but were “average” in France and Spain, and lower in Germany and the Benelux countries. Net debt rose sharply from FFr 2.25 billion to FFr 6.77 billion, including a rise of FFr 2.8 billion since the end of December 1995. Saint-Gobain also expects to see strong sales growth in Asia, which reached FFr 2.9 billion in 1995, chairman Jean-Louis Beffa said. “I maintain the sales target of FFr 5 billion from Asia in 2000 and FFr 20 billion in 2005 [and] I am convinced we can double our sales in Japan in three years,” he added. Within 10 years, the group“s turnover will be split in quarters from between France, Europe, North America and Mexico, and Asia and Latin America. Present operations should generate extra sales of FFr 1.65 billion from South America, FFr 650 million from Central America, FFr 1 billion from eastern Europe, FFr 300 million in north Asia, FFr 70 million from south-east Asia, FFr 900 million from China and FFr 700 million from India, Beffa said. He noted the weakness of business in south-east Asia, adding that the company should focus on Malaysia, Indonesia and Thailand. “Asia is our growth area for the long term,” he said. Furthermore, as part of its policy to rationalise its 19 research units scattered across the world, Saint-Gobain is planning to create a European research and development centre in Avignon, France.