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Saint-Gobain show first-quarter 2016 sales of €9,136 million; 1.8% organic growth

Pierre-André de Chalendar, Chairman and Chief Executive Officer of Saint-Gobain, commented on the figures, saying that volumes improved in all regions in the first quarter.

“Trading in France advanced with the exception of Pipe. Other Western European countries reported further growth. Trading in North America bounced back despite lackluster industrial markets. Emerging markets continued to perform well. Prices dipped slightly as expected, particularly in Western Europe and the US. In this setting, we are continuing to pursue our operational excellence program and confirm our objective of a further like-for-like improvement in operating income.”
Like-for-like (constant Group structure and exchange rates), consolidated sales rose 1.8%, lifted by improved volumes (up 2.3%) in all Business Sectors and regions, despite the slight dip in prices (down 0.5%) in a more deflationary environment. This price effect concerned Building Distribution in particular, especially in France, reflecting a lower cost of goods sold. It also concerned Interior Solutions in France and Germany along with construction in the US, which benefited from the drop in certain raw material and energy prices.
On a reported basis, sales came in at €9,136 million, with a significant 3.0% negative currency impact due mainly to the sharp depreciation in Latin American currencies against the euro, and to a lesser extent in pound sterling and Norwegian krone.
Changes in Group structure had a negative 0.7% impact, essentially reflecting disposals carried out to optimize the Building Distribution portfolio that were not offset by small acquisitions within the Group.
Innovative Materials sales climbed 4.3%.
Flat Glass continued to report brisk growth, at 4.9%. Automotive glass enjoyed strong gains in 
all regions despite Brazil. Construction activity returned to positive volumes in Western Europe and also benefited from a rise in float prices; it remained bullish in Asia and emerging countries excluding Brazil.
High-Performance Materials (HPM) returned to a good level of growth, at 3.6%, in the absence of the strong negative impact of proppants that had affected the whole of 2015. All HPM businesses advanced. 
Construction Products (CP) sales edged up 0.9%, hampered as expected by the ongoing sharp decline in Pipe.
Interior Solutions advanced 5.8% on the back of strong volume growth in all regions. Trading in
Western Europe was lifted by a recovery in volumes, including in France and Germany, amid a more deflationary economic environment. In North America, bullish construction markets drove volume growth, while prices remained under pressure. Asia and emerging countries confirmed their very strong performance.
Exterior Solutions sales fell 4.4%, hard hit by the contraction in Pipe in line with fourth-quarter 2015. The business was down in all regions, particularly due to the lack of major export contracts. Exterior Product volumes in the US advanced despite the absence of a winter promotional campaign as in 2015, while prices for the business were down with asphalt prices declining sharply. Mortars reported good growth led by Asia and emerging countries and by an improved performance in France.
Building Distribution was up 1.4%, lifted as expected by the volume upturn in France and ongoing positive trends in Nordic countries, the UK and Germany. The price effect was less, due to a fall in the costs of goods sold. The wider economic slowdown in Brazil continued to take its toll on trading.
Business in France stabilized (down 0.2%), hampered by the sharp decline in Pipe. Our sales performance reflects the recovery in construction market indicators despite the pressure on prices in a more deflationary environment.
In line with 2015 trends, other Western European countries confirmed their good growth levels (up 2.0%) in all of the Group’s major markets including Germany.
North America moved up 3.2%, powered mainly by construction, as industrial markets remained uncertain.
Asia and emerging countries delivered further sales growth, at 4.5%, despite the expected deterioration in Brazil and a downturn in business in China.
2016 outlook
The first quarter was in line with our expectations at the beginning of the year and confirms our outlook for 2016 as a whole:
–  Western Europe should be more vibrant with France stabilizing and despite pressure on sales prices.
–  North America should deliver gains led by volumes in construction markets and despite declining prices, while industrial market activity should hold firm in a climate that nevertheless remains uncertain.
–  Asia and emerging countries should deliver satisfactory organic growth overall, albeit dampened by the slowdown in Brazil. 
The Group reiterates the action priorities it defined in February:
–  keep a priority focus on sales prices in a still deflationary environment;
–  unlock additional savings of around €250 million (calculated on the 2015 cost base) thanks to its ongoing cost-cutting program;
–  pursue a capital expenditure program (around €1,400 million) focused primarily on growth capex outside Western Europe;
–  renew its commitment to investment in R&D in order to support its strategy of differentiated, high value-added solutions;
–  keep its priority focus on high free cash flow generation;
–  pursue its plan to acquire a controlling interest in Sika. 
In line with our February guidance, we are targeting a further like-for-like improvement in operating income in 2016.”

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