Saint-Gobain: group 1Q 2003 sales up 2.6%

Glass and building products conglomerate Saint-Gobain Group posted net consolidated sales for 1Q 2003 of EUR 6,986 million, against EUR 7,296 million for the same period in 2002, a decline of 4.2% on …

Glass and building products conglomerate Saint-Gobain Group posted net consolidated sales for 1Q 2003 of EUR 6,986 million, against EUR 7,296 million for the same period in 2002, a decline of 4.2% on an actual structure basis, or 5.8% on a comparable structure basis. This reduction is blamed wholly on changes in currency values, which had an 8.2% negative impact during the period, and in particular on the sharp falls in the value of the US dollar and the Brazilian real. On a comparable structure and exchange rate basis (like-for-like), sales were up 2.6%. Sales volumes went up by 1.2%, while prices remained steady, rising by 1.4%. Most divisions in the group contributed to this performance, boosted by an expanding presence in emerging countries, and achieved at a time of difficult economic conditions. The Glass Sector posted the Group“s strongest like-for-like growth in the period, for the majority of its businesses. Strong sales for the Flat Glass Division in Brazil and the European automotive market compensated for the downturn in the European construction market. The Insulation Division enjoyed the benefits of the healthy US residential construction market, while volumes and prices for Containers were up, particularly in the US and Germany. Reinforcements faced downward price pressure and, despite a significant improvement in volumes, was the only division to report a slight decline in sales over the period. Following two years of sales contraction, the High-Performance Materials Sector showed the first signs of a recovery in its principal markets for Ceramics & Plastics as well as for Abrasives. Like-for-like growth in the Housing Products Sector was slightly under the Group average, due to the lower contribution, during the quarter, from the Building Materials Distribution Division. This was mainly due to the transfer of the Pipe Distribution operations to the the Building Materials Distribution Division as well as to a further downturn in the construction market in Germany and, to a lesser degree, a slowdown in the interior decoration market in France, which had a direct impact on Lapeyre“s sales. Performance in the Sector“s other divisions was lively, due to strong US residential construction market for the Building Materials Division and deliveries under the Abu Dhabi contract for the Pipe Division. By geographic area, moderate like-for-like growth was reported in France and the United States. In the rest of Europe performance was mixed, with the downturn continuing in Germany, but Spain, Italy and the United Kingdom reporting strong performances. At the same time, demand was still buoyant in emerging countries, particularly in Latin America. Some 22,000 new asbestos claims were received by Certain Teed in the US in 1Q 2003, including 14,000 in the State of Mississippi. As announced at the beginning of 2003, there was a rush to file claims in Mississippi before the a new law more favorable to defendants came into force. Most of the claims received during the 1Q 2003 in Mississippi were filed before 1 January 2003, when the new law became fully applicable. Excluding this exceptional surge, the trend in the number of new claims filed does not show a general increase. At the same time, 9,000 claims were settled, and several thousand transferred to an inactive docket. As a result, approximately 114,000 claims were outstanding as of 31 March 2003. The average individual cost of settlement came to USD 2,100, level with the trend of the prior period. Over the months to come, the number of new claims filed in Mississippi should reduce significantly and newly introduced or expected amendments to legislation in other States could also have a positive impact on the future rate of new claims filed. Group outlook: The Group“s moderate organic growth in first-quarter 2003 is in line with the objectives announced for the year as a whole. Nevertheless, the Group is feeling the negative effect of currency swings and the increase in the cost of energy and certain raw materials. Uncertainty in the international economic situation makes it difficult to tell at this time whether these factors will be corrected by year end.