Speaking at the annual general meeting of the French glass to building materials group, Saint-Gobain chairman Jean-Louis Beffa said operating profits for the first half of 2003 will be similar to the …
Speaking at the annual general meeting of the French glass to building materials group, Saint-Gobain chairman Jean-Louis Beffa said operating profits for the first half of 2003 will be similar to the EUR 1.292 billion posted by the group in the first half of 2002, on a comparable foreign currency basis. The strong rise of the dollar, accompanied by a “very strong increase” in the price of energy and raw materials consumed by the group, are putting pressure on earnings, Beffa said. He emphasised that he expects the company to post moderate growth in operating profit, and net profit excluding divestments, over the full year 2003. However, Beffa said overall, “2003 will be a more difficult economic situation than we had thought at the start of the year.” Higher energy and raw material costs are expected to hit US operations in 2003, mainly for bottling and building materials, and the company expects a reduction in new US construction orders in the second half of 2003. Beffa said he expects growth in emerging markets such as Brazil, but uncertainty remains over the full year outlook in Asia due to the effects of the SARS epidemic. Beffa said the company will continue to reduce debt in 2003, down from the EUR 7 billion on its books at the end of 2002, and will maintain significant levels of free cash flow. In Saint-Gobain“s Glass division, Beffa said he expects moderate growth in 2003 for flat glass earnings; insulation and reinforcement activities will maintain market share, while looking for growth. Ceramics and compositites should post a recovery for earnings this year, and the company is a targetting a return on investment (ROI) in the division of over 20-25% in the medium term, Beffa said. In the Housing unit, Beffa said the construction materials unit may pursue divestments, but the company will be cautious as it intends to concentrate on reducing total debt.