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Saint-Gobain targets profit growth

French glassmaker Saint-Gobain said that net attributable profit rose 11.5% in 1999 and set a target for profit growth of at least 10% this year.
The company said full-year profits had climbed to Eur…

French glassmaker Saint-Gobain said that net attributable profit rose 11.5% in 1999 and set a target for profit growth of at least 10% this year. The company said full-year profits had climbed to Euros 1.22 billion (US$ 1.22 billion) last year from 1 billion in 1998, adding those results took into account the consolidation of Essilor and flat glass producer Branche Vitrage as of January 1, 1999. The figures also took into account capital gains from the partial unwinding of its cross-shareholding with French conglomerate Vivendi. Saint-Gobain owns 32% of French eyeware maker Essilor, while Branche Vitrage is the company“s flat glass producer. The company also posted earnings per share up 15.4% at Euros 14.02, and a sales rise to Euros 22.96 billion from 17.82 billion in 1998. “These satisfactory performances, slightly above the targets the group set for 1999, are the fruit of a strategy of development and improvement in profitability which the group has been following in its three divisions: glass, high performance materials and housing materials,” the company said in a statement. Saint-Gobain had earlier forecast 15% EPS growth based on growth in net profit of 10%, and a capital reduction of 5% due to a share buy-back programme. Analysts said the results matched market expectations. “The results are in line with forecasts,” said Isabelle Schneider, an analyst in Paris. But most equity researchers declined to comment on the results before an analysts“ meeting. One however said he was surprised at the forecast for net profit growth of “at least 10%” the company was posting for 2000. “They are saying it will be more or less the same as this year. The market may be a bit disappointed,” an analyst said. Saint-Gobain said efforts to lower costs and boost profitability paid off in its glass division, while its high performance and plastics division was boosted by the Essilor consolidation. “On a comparable basis, the division shows a slight decline compared with 1998 due to a slowdown in the industrial ceramics branch,” the company said in a statement. Without Essilor, that division would have declined 2.1% on a like-for-like basis, the statement said. Saint Gobain“s housing materials division, comprising construction materials, distribution and pipes, registered turnover growth of 2.6% despite a sharp slowdown in its pipe activities. That figure was helped by a sturdy building market in France and the US, the company said. It added that 33.5% of sales took place in France and 33.8% in the rest of Europe, while Asia and the United States accounted for 32.7%.

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