Global glass and building materials group Saint-Gobain welcomed “satisfactory” sales growth in the 1Q of 2004, despite the negative impact of currency effects.
The Group announced on 27 April 2004 th…
Global glass and building materials group Saint-Gobain welcomed “satisfactory” sales growth in the 1Q of 2004, despite the negative impact of currency effects. The Group announced on 27 April 2004 that its consolidated sales for the 1Q of 2004 were EUR 7,233 million, compared with EUR 6,986 million for the same period in 2003, representing an increase of 3.5% on an actual structure basis, and 1.3% based on a comparable structure. At constant exchange rates (based on average exchange rates for the 1Q of 2003), sales were up 7.4% on an actual structure basis and 5.1% on a comparable structure. The Group attributed the increase to a significant 5.1% rise in sales volumes in most of its geographic areas, while sales prices held firm. According the Group, “this performance demonstrates Saint-Gobain“s ability to reap the benefits of the economic recovery currently taking hold, particularly in industrial production and capital spending.” The group reported growth in the 1Q of 2004 across all areas except the Pipe Division, whose figures were on a par with the previous year. The Group“s new businesses (Building Materials Distribution, Ceramics & Plastics and Abrasives), contributed particularly strong performances and “are the main growth drivers, as anticipated at the beginning of the year.” Saint-Gobain Group reported that the Glass Sector posted “moderate like-for-like sales growth. Business was brisk for Insulation, Containers and Flat Glass for the automotive industry, in their principal markets. However, Flat Glass for the European construction industry and Reinforcements were once again hit by downward pressure on sales prices, despite a significant upturn in sales volumes.” The Group“s strongest like-for-like growth (+6.8%) came at High-Performance Materials. The recovery in manufacturing industry and capital spending which began at the end of 2003 in the United States, continued during the 1Q of 2004 and started to accelerate. The Group expects that “this favorable trend should be sustained”, based on the current level of orders for the sector. According to the Group, the Housing Products Sector also posted “very strong sales”. “Building Materials continued to benefit from the buoyant residential construction market in the United States, while the Building Materials Distribution Division recorded the Group“s highest organic growth rate (+7.5%), thanks to a significant increase in sales volumes for all of its brands, including in Germany”. Only at the Pipe Division did like-for-like sales remain flat, reflecting the completion at the end of March 2004 of deliveries under the Abu Dhabi contract.” On a geographic basis, the Group achieved strong like-for-like growth in France and the United States. A moderate upturn was noted in other Western European countries, with a slight recovery in Germany. Markets remained “extremely buoyant” in emerging countries, particularly in Asia and Eastern Europe, and double digit growth was achieved in these regions. About 5,000 new asbestos claims were filed against US insulation and building products manufacturer Certain Teed during 1Q 2004, including 700 in the State of Mississippi, a fourfold decrease on the number of new claims in the same period of 2003 (22,000, including 8,000 in Mississippi). At the same time, 5,000 claims were settled during the period. At 31 March 2004 some 108,000 claims remained to be settled, unchanged from the position at 31 December 2003. The average cost per claim for settlements in the last twelve months was USD 2,500, up, as expected, on the 2003 average figure of USD 2,100. Proposals in the Republican-led US Senate to create a national asbestos trust fund did not achieve the number of votes required to proceed. Mediation is now under way between Republican and Democrat leaders to reach an agreement among the interested parties, particularly on the size of the fund. For the full year, Saint-Gobain confirmed its target of 4% to 5% growth in operating income at constant exchange rates, and of maintaining strong free cash flow levels.