Saint-Gobain: south-east Europe sales seen up 15-20%

Saint-Gobain will aim for a 15-20% increase in sales in Bulgaria, Romania and Turkey in 2008 supported by the strong growth of the construction markets in the three countries, a senior company officia…

Saint-Gobain will aim for a 15-20% increase in sales in Bulgaria, Romania and Turkey in 2008 supported by the strong growth of the construction markets in the three countries, a senior company official said. “Basically we think the market is growing 10% to 15% annually, so if we just follow the market growth, we should grow by 10% to 15% but our aim is to go faster, with something between 15% and 20% globally and in the region”, the Saint-Gobain regional manager for Bulgaria, Romania and Turkey, Olivier Lluansi, said in a recent interview. In 2007, the French concern opened a EUR 100 million flat glass plant and a EUR 35 million insulation production line in Romania. As well as Romania, the company has plants in Bulgaria, which joined the EU alongside Romania in 2007, and in Turkey. The company, which sells its products throughout south-east Europe, has projected EUR 350 million (USD 539.6 million) in sales in the three states for 2007, up 15%. “Basically, in 2007 we have met the forecast which confirms our assumptions for the growth of the construction markets in those three countries”, Mr. Lluansi said. The construction sectors in the three countries have been on the rise in the past few years with growth in Bulgaria and Romania particularly helped by their EU entry as investors poured money into property projects in the two countries, attracted by prospects of rising yields after EU accession. The group sees its highest sales growth in 2008 in Romania and Bulgaria, said Mr. Lluansi. “I think that for 2008 the leader country could be those two [countries] with a little advantage maybe for Bulgaria,” Mr. Lluansi added without giving figures. Regarding 2009 performance, Mr. Lluansi expects that developments in the world“s economy in the wake of the recent global credit market crisis could affect the construction markets in south-eastern Europe, making forecasts more uncertain. The internal growth of the construction sector in the region will be sufficient but there is a question mark because of “some difficulties that could start influencing the local market”, Mr. Lluansi said without elaborating. To secure growth, the concern is planning new investments and is looking for acquisitions. “Yes, we have new investment plans but nothing public yet. We have different solutions [] which could be brownfield or greenfield investments or acquisitions”, said Mr. Lluansi but declined to elaborate. Most of the products manufactured by the units in Bulgaria and Romania are for local sale and some of are exported elsewhere in south-eastern Europe. Saint-Gobain is considering strengthening its position in the region but currently has no plans for new plants. “We have some plans [for expanding in the region] but again, we saw the situation in Serbia and when you invest, you invest for several years so you need the preconditions which are the political stability”, Mr. Lluansi said. “My opinion is that there is a huge potential once the political stability will be reached, we just wait for the signs for that, so to go deeper in these markets”, he added. International investors have been growing increasingly cautious about Serbia due to prospects of worsening political instability after the ethnically divided province of Kosovo declared independence in February 2008. The move has intensified tensions within the ruling coalition in Serbia, putting the prospects of strengthening ties with the EU at risk. Saint-Gobain operates in 54 countries worldwide, employing over 207,000. Group sales rose 4.4% to EUR 43.4 billion in 2007. Net profit excluding capital gains or losses was EUR 2.1 billion, 24.2% higher than in 2006.