Saint-Gobain 2005 net profit up 2%

French glass and building materials giant Saint-Gobain announced full-year 2005 sales of EUR 35.110 billion, up 9.1% from 2004, taking into account the company“s acquisition late in 2005 of UK plaste…

French glass and building materials giant Saint-Gobain announced full-year 2005 sales of EUR 35.110 billion, up 9.1% from 2004, taking into account the company“s acquisition late in 2005 of UK plasterboard maker BPB. Excluding the impact of the acquisition, full-year revenues were up 8.4% at EUR 34.873 billion. Operating profit for 2005 was EUR 2.86 billion, up 4.3 %, including the impact of BPB, in line with analyst forecasts of EUR 2.8-2.9 billion. Net profit was EUR 1.264 million, up 2.0%, after the takeover. Cash flow from operations was up 4.9% at EUR 2.767 billion. Saint-Gobain said the result showed the “resilience and dynamics of its business model…with strong growth reported in Construction Products and Building Distribution Sectors in particular and ongoing expansion into emerging markets”. Following the results, the company predicted a 23-25% increase in operating income for 2006 at a constant exchange rate, and an 18-20% increase in net income, as well as “continuing strong levels of free cash flow”. By division, Saint-Gobain“s Constuction Products posted the highest growth, both in sales, (up 11.2% at EUR 6.694 billion) and operating income (up 13.3% at EUR 614 million). Saint-Gobain“s Building Distribution Sector posted a 13.2% increase in sales to EUR 15.45 billion, and a 16.5% rise in operating income to EUR 888 million. Sales from High Performance Materials were up 3.1% at 4.88 billion, while operating income stood at EUR 511 million, up 1.6%. The company said that while “vigorous manufacturing and industrial investment activity notably in the US” and a “recent upturn in volumes for re-enforcements, falling sale prices dented the division“s profitability”. Sales from Flat Glass products were up EUR 5.7% 4.68 billion, but operating income for this line was down 1.7%, which the company attributed to “certain non-recurring start-up costs reported in emerging markets”. Packaging also experienced a rise in sales of 3.3% to EUR 4.008 billion, but a decline in operating income of 16.1% due largely to the “spike in the cost of energy particularly natural gas in the US”. By geographic area, sales from France were up 6.2% at EUR 11.438 billion, and 10.1% higher at EUR 15.193 billion in other western European countries. Operating income in France was up 7.0% at EUR 889 million and up 13.4% in the rest of western Europe at EUR 1.09 billion. Sales for North America rose by 3.8% to EUR 5.956 billion, while sales in emerging countries and Asia were up 24.2% at EUR 4.443 billion. However, operating income in North America was down 6.7% at EUR 487 million, and down by 8.2% at EUR 394 million in emerging countries and Asia. Regarding the acquisition of BPB, the group incurred restructuring costs of EUR 23 million and a cost of EUR 13 million resulting from the termination of an IT project at BPB, but the company added that these costs were “intended to generate operating synergies from 2006”.