TIDMCOD
RNS Number : 4014E
Compagnie de Saint-Gobain
27 October 2022
The worldwide leader
in light & sustainable construction
Strong rise in sales in third-quarter 2022
-- Sales: +19.6%
-- Dynamic organic growth: +13.4%, up double-digit in all segments
-- Value-added solutions generating a positive price-cost spread at the Group level
-- 2022 outlook confirmed
Like-for-like sales rose by 14.5% in the nine-month period to
September 30, 2022 and by 13.4% in the third quarter of 2022 versus
third-quarter 2021. This good performance reflects the Group's
position as worldwide leader in light and sustainable construction
thanks to its unique range of innovative solutions offering
sustainability and performance, rolled out as part of the "Grow
& Impact" plan. It also reflects good momentum in our segments,
which all reported double-digit organic growth, driven in
particular by High Performance Solutions, Asia-Pacific and North
America. Renovation in Europe remained resilient, while new
construction slowed. Each country CEO is adapting in real time and
looking for opportunities to outperform their market.
Thanks to the added value of Saint-Gobain's solutions and its
local organization close to its customers, prices increased 15.0%
in the third quarter (15.3% in the first half), generating a
positive price-cost spread at Group level for the quarter and over
the nine-month period, amid continued high raw material and energy
cost inflation.
The Group's volumes were down slightly, decreasing 0.8% over the
nine-month period and 1.6% in the third quarter, with a negative
working day effect of around 0.5% (more pronounced in Southern
Europe) in the third quarter.
On a reported basis, sales were up strongly by 16.6% to
EUR38,402 million over the nine-month period and by 19.6% in the
third quarter alone, with a positive currency impact of 4.0% over
the nine-month period and of 5.4% in the third quarter. The Group
structure impact, which reduced sales by 1.9% over the nine-month
period, added 0.8% to sales in the third quarter. This reflects the
ongoing optimization of the Group's profile, in terms of both
divestments (mainly distribution in the Netherlands, specialist
distribution in the UK, Glassolutions in Germany, Austria, Denmark
and the UK, and pipe in China) and acquisitions, which primarily
included Chryso and Impac in Mexico in construction chemicals,
Kaycan in exterior products in North America, which was
consolidated as of August 1, 2022 (the small US distribution
business was sold in mid-October 2022), and Panofrance, a French
specialist in modular timber solutions.
GCP Applied Technologies (GCP) in construction chemicals was
consolidated with effect from October 1, 2022. The new organization
has been put in place, with Thierry Bernard, former Chryso CEO,
appointed CEO of Construction Chemicals within High Performance
Solutions, which includes both Chryso and GCP (except the North
American waterproofing membranes business which is included within
the North America Region owing to strong synergies with
CertainTeed's roofing and siding activities). The GCP integration
process which has been in preparation since the beginning of the
year has started well.
The third quarter also saw the Group complete a EUR1.5 billion
bond issue in three tranches (at 3, 6 and 10 years) on August 2,
illustrating Saint-Gobain's ability to take advantage of a low
interest-rate window to extend the average maturity of its debt
with an average coupon of approximately 2.1%, and further
strengthen its liquidity. Its EUR500 million, 10-year
sustainability-linked bond tranche reflects the position of
sustainable growth at the heart of Saint-Gobain's business model
and demonstrates the relevance of its ESG roadmap.
Update on inflation and the energy situation
Amid rising inflation, Saint-Gobain now expects its energy and
raw material costs to increase by slightly over EUR3 billion in
2022 compared to 2021. This inflation concerns raw materials,
freight and energy, especially in Europe. The Group has hedged
around 80% of its natural gas and electricity purchasing needs for
2022 and around 60% for 2023. Saint-Gobain's total energy bill is
expected to represent almost EUR2.5 billion in 2022.
Saint-Gobain has once again shown its capacity to proactively
manage inflation in energy and raw material costs amid strong
volatility, allowing it to be confident that it will be able to
offset the increase in these costs in 2022 at the Group level and
begin 2023 in a position of strength.
Given the current strongly inflationary environment, the Group
continues to proactively put in place measures to support its
customers wherever possible, in terms of advance information,
understanding and visibility on pricing movements, extended
quotation validity, granting optimal credit conditions, and
ensuring the necessary inventory for a good level of service and
supply.
For its main gas-consuming manufacturing businesses in Europe,
the Group has made rapid progress in rolling out continuity plans
and ensuring the flexibility of production to operate with less or
alternative energy:
- Glass: Saint-Gobain has 13 float lines in Europe and is
putting in place production continuity plans. Four plants are
already able to operate using fuel or diesel; four are currently
being prepared for a possible conversion by the end of 2022 and two
additional in 2023;
- Insulation: more than half of the 25 plants in Europe have an
electricity-powered furnace; additional investments are being
undertaken to use alternative energies (e.g., for the four plants
in Germany by the end of 2022);
- Plasterboard, construction chemicals and other production
lines are extremely flexible.
Segment performance (like-for-like sales)
Northern Europe: good sales growth driven by prices
Sales in Northern Europe were up by 14.1% over the nine-month
period and by 11.9% in the third quarter amid strong inflation,
leading to a sequential increase in prices against a high
comparison basis in 2021. Volumes decreased slightly against the
backdrop of a slowdown in new construction. Renovation remained at
a good level, given government stimulus measures and stricter
energy performance regulations.
Nordic countries outperformed thanks to their successful
presence across the entire construction value chain and to a
renovation market supported by energy efficiency projects, despite
a slowdown in certain projects in new construction. In Sweden,
Saint-Gobain delivered the world's first zero-carbon plasterboard
production at its Balsta plant powered by biogas and 100% green
electricity. The UK delivered a satisfactory performance driven by
prices in a declining market. The country has been very active in
optimizing its portfolio, with almost EUR700 million in sales
divested (specialty distribution and Glassolutions) since the
summer of 2021. Germany benefited from its solid positions in
energy efficiency renovation; it is making swift progress in
ensuring its production facilities are more flexible and able to
use alternative energy sources. A comprehensive, prefab façade
solution has been launched on the market as "pre.formance", a
solution for quick and minimally invasive renovation. Eastern
Europe benefited from supportive markets, reporting market share
gains in its main countries. A renewable electricity supply
agreement has been signed in Poland which will cover around 45% of
Saint-Gobain Poland's electricity needs from 2025.
At the end of September, the Group signed a strategic
partnership with Megasol - Europe's leading supplier of building
integrated photovoltaics, thereby extending its range of
sustainable solutions in a fast-growing segment.
Southern Europe - Middle East & Africa: good sales growth
thanks to a resilient renovation market
Sales in Southern Europe - Middle East & Africa were up by
12.7% over the nine-month period and by 10.5% in the third quarter
which saw a strongly inflationary environment, leading to a
sequential increase in prices against a high comparison basis in
2021. Volumes were down slightly (with a negative working day
effect of 2%) as the new construction market slowed. Renovation
remained more resilient on the back of demand driven by government
stimulus measures, quicker payback for energy renovation projects
owing to high energy costs, and stricter regulations.
France continued to benefit from structurally more resilient
renovation - thanks notably to a favorable regulatory environment
and household stimulus packages such as MaPrimeRénov' and energy
saving certificates (CEE). Trade professionals are still seeing
full order books and the Group continues to benefit from its
comprehensive range of innovative and sustainable solutions across
the entire value chain. In the third quarter, Saint-Gobain began to
roll out ORAÉ(R) , a low-carbon glass providing superior energy
performance, which has been particularly popular among property
developers. To support this initiative, the Group launched
"Saint-Gobain Glass Recycling" which is designed to recycle glass
at the end of its life in a closed loop. Firmly committed to
accelerating the transition to a circular economy, Saint-Gobain has
also produced and marketed Placo(R) Infini 13, the first
plasterboard made from over 50% recycled gypsum.
Spain and Italy continued to outperform the market, particularly
in light and sustainable construction solutions, and capitalized on
sales synergies thanks to a comprehensive range of renovation
solutions. Benelux benefited from its comprehensive range of
solutions for individual and multi-family housing renovation.
Middle East and Africa continued to see robust growth, benefiting
from the opening of new plants and dynamic markets, particularly in
Egypt.
Americas: strong sales growth driven by North America
The Americas delivered 15.9% organic growth over the nine-month
period and 14.2% in the third quarter, thanks to a good level of
prices and despite the start of a slowdown in new construction due
to a sharp rise in interest rates.
- North America maintained its good sales momentum in the third
quarter (up 16.9%) and over the nine-month period (up 17.1%),
driven by the development of a comprehensive range of light
construction solutions. The new construction market slowed but
remained at a good level. The third quarter also saw the addition
of Kaycan to the Region, with excellent results. Good progress is
being made in terms of the integration of Kaycan and of GCP's
specialty building materials business (waterproofing membranes,
representing around USD 250 million in annual sales) which serves
CertainTeed's local customers in North America. After a renewable
wind farm energy supply agreement executed in 2021, the Group has
signed a new contract based on solar energy: together these
agreements will cover over 60% of Saint-Gobain's electricity needs
in North America by the end of 2024.
- Latin America reported 12.7% growth over the nine-month period
and 7.7% in the third quarter, amid uncertainty in Brazil. Dynamic
growth in the Region's other countries was driven by increased
sales prices, new capacity (Chile, Argentina, Brazil, Peru and
Mexico), and targeted acquisitions in construction chemicals,
especially in waterproofing (Impac in Mexico and Brasprefer in
Brazil).
Asia-Pacific: strong sales growth driven by India and South-East
Asia
Asia-Pacific reported 28.7% organic growth over the nine-month
period and 26.9% in the third quarter, driven by India and
South-East Asia.
India delivered another excellent performance thanks to market
share gains and an integrated and innovative range of solutions
which are rolled out to new customers. A total of 75 "MyHome by
Saint-Gobain" showrooms were deployed in just one year in the
country. Despite the health situation, China saw moderate growth
driven by prices, benefiting from its distinctive positioning on
the fast-growing light construction market, which helped offset the
construction market slowdown. In the third quarter South-East Asia
saw a strong growth dynamic and outperformed the market -
particularly in Vietnam and Malaysia - supported by a diversified
offering, especially in construction chemicals.
High Performance Solutions (HPS): strong acceleration in sales
growth in the third quarter
HPS sales were up by 14.8% over the nine-month period and by
19.4% in the third quarter, driven by an acceleration in prices and
volumes thanks to resilient main markets and the recovery of
European automotive.
- Businesses serving global construction customers reported
record sales and outperformed the market with 25.1% growth in the
third quarter (22.5% for the nine-month period). They continue to
benefit from upbeat trends in textile solutions for external
thermal insulation systems (ETICS) thanks to good momentum in
sustainable construction. The very strong trends in Chryso sales
continued, driven by decarbonization in the construction sector. In
early October, Saint-Gobain and Ecocem signed a partnership
agreement to accelerate the commercialization of new low-carbon
cement and concrete technology benefiting from Chryso's expertise
in innovative high performance additives.
- The Mobility business saw sales progress 27.8% in the third
quarter (12.7% for the nine-month period), supported both by a
catch-up in sales prices thanks to the high priority given to price
renegotiations with customers, and by a rebound in volumes against
a weak 2021 comparison basis in Europe. The business continued to
enjoy upbeat momentum in the Americas, India and China. Thanks to
its very strong positioning and technological lead in solutions for
electric vehicles - which account for an increasing proportion of
sales - and to its high value-added solutions, the Mobility
business continues to outperform the automotive market.
- Businesses serving Industry progressed 12.8% in the third
quarter (14.9% for the nine-month period), supported by activities
relating to investment cycles such as ceramics, which benefit from
innovation in specialty materials and new decarbonization
technologies for our customers.
Outlook and strategic priorities
As part of the rollout of the strategic priorities of its "Grow
& Impact" plan, Saint-Gobain is focused on consolidating its
strong operating performance and on adapting to the specific market
trends in each of its countries : leveraging the structural margin
improvements made over the last three years, increasing the
flexibility of energy sources in Europe, and with each country CEO
optimizing their P&L in real time in order to react swiftly and
effectively to market developments.
In a more uncertain geopolitical and macroeconomic environment,
the Group continues to outperform its underlying markets thanks to
the pertinence of its strategic positioning to respond to the
energy and decarbonization challenges and its optimized
organization and business profile.
Saint-Gobain expects the following trends for its segments in
fourth-quarter 2022: resilience in renovation in Europe while new
construction markets are slowing down; the Americas should hold
firm; solid growth in Asia-Pacific and good momentum in High
Performance Solutions supported by innovation.
Saint-Gobain confirms that it is targeting a further increase in operating income
in 2022 compared to 2021 at constant exchange rates
Financial calendar
A conference call will be held at 6:30pm (Paris time) on October
27, 2022.
Please register using the following link in order to receive
your individual pin code by email:
https://event-registration.arkadin.com/633ac2f8cd0c1747a74a9cdf
Please then dial the following number, five to ten minutes
before the time indicated:
+33 1 72 72 74 74 or +44 20 3009 2476, followed by your
individual pin code.
- 2022 Results: February 23, 2023, after close of trading on the
Paris Bourse.
Glossary :
- Indicators of organic growth and like-for-like changes in
sales/operating income reflect the underlying performance excluding
the impact of:
-- changes in Group structure, by calculating indicators for the
year under review based on the scope of consolidation of the
previous year (Group structure impact). Note that in light of
Turkey's classification as a hyperinflationary economy, this
country, which represents less than 1% of Group sales, is excluded
from the like-for-like analysis as from July 1, 2022;
-- changes in foreign exchange rates, by calculating the
indicators for the year under review and those for the previous
year based on identical foreign exchange rates for the previous
year (currency impact);
-- changes in applicable accounting policies.
- Operating income = see Note 5 to the consolidated interim
financial statements at June 30, 2022, available by clicking here:
https://www.saint-gobain.com/fr/finance/information-reglementee/rapport-financier-semestriel
- Operating margin = operating income divided by sales
- ESG : Environment, Social, Governance
Important disclaimer - forward-looking statements :
This press release contains forward-looking statements with
respect to Saint-Gobain's financial condition, results, business,
strategy, plans and outlook. Forward-looking statements are
generally identified by the use of the words "expect",
"anticipate", "believe", "intend", "estimate", "plan" and similar
expressions. Although Saint-Gobain believes that the expectations
reflected in such forward-looking statements are based on
reasonable assumptions as at the time of publishing this document,
investors are cautioned that these statements are not guarantees of
its future performance. Actual results may differ materially from
the forward-looking statements as a result of a number of known and
unknown risks, uncertainties and other factors, many of which are
difficult to predict and are generally beyond the control of
Saint-Gobain, particularly the risks described in the "Risk
Factors" section of Saint-Gobain's 2021 Universal Registration
Document and in the "Main risks and uncertainties" section of
Saint-Gobain's Half-year financial report 2022 available on its
website ( www.saint-gobain.com ). Accordingly, readers of this
document are cautioned against relying on these forward-looking
statements. These forward-looking statements are made as of the
date of this document. Saint-Gobain disclaims any intention or
obligation to complete, update or revise these forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by applicable laws and
regulations.
This press release does not constitute any offer to purchase or
exchange, nor any solicitation of an offer to sell or exchange
securities of Saint-Gobain .
For further information, please visit www.saint-gobain.com .
Appendix 1: Sales by Segment
Q3 2021 Q3 2022 Actual Comparable Like-for-like
sales sales structure structure change
(in EURm) (in EURm) basis basis
----------- ----------- ----------- ----------- --------------
Northern Europe 3,816 4,157 +8.9% +13.0% +11.9%
Southern Europe -
ME & Africa 3,150 3,491 +10.8% +10.5% +10.5%
Americas 1,808 2,514 +39.0% +32.2% +14.2%
Asia-Pacific 447 588 +31.5% +37.7% +26.9%
High Performance Solutions 1,815 2,485 +36.9% +28.7% +19.4%
Internal sales and
misc. -234 -314 --- --- ---
Group Total 10,802 12,921 +19.6% +18.8% +13.4%
----------- -----------
9m 2021 9m 2022 Actual Comparable Like-for-like
sales sales structure structure change
(in EURm) (in EURm) basis basis
----------- ----------- ----------- ----------- --------------
Northern Europe 11,234 12,556 +11.8% +15.3% +14.1%
Southern Europe -
ME & Africa 10,607 11,317 +6.7% +12.0% +12.7%
Americas 5,068 6,791 +34.0% +30.6% +15.9%
Asia-Pacific 1,322 1,601 +21.1% +37.9% +28.7%
High Performance Solutions 5,494 7,085 +29.0% +21.8% +14.8%
Internal sales and
misc. -792 -948 --- --- ---
Group Total 32,933 38,402 +16.6% +18.5% +14.5%
----------- -----------
Appendix 2: Contribution of price and volumes to organic sales
growth by Segment
Q3 2022 Like-for-like Prices Volumes
change
Northern Europe +11.9% +15.5% -3.6%
Southern Europe -
ME & Africa +10.5% +14.9% -4.4%
Americas +14.2% +18.1% -3.9%
Asia-Pacific +26.9% +17.2% +9.7%
High Performance Solutions +19.4% +11.5% +7.9%
-------------- ------- --------
Group Total +13.4% +15.0% -1.6%
-------------- ------- --------
9-month 2022 Like-for-like Prices Volumes
change
Northern Europe +14.1% +16.3% -2.2%
Southern Europe -
ME & Africa +12.7% +16.5% -3.8%
Americas +15.9% +17.3% -1.4%
Asia-Pacific +28.7% +17.9% +10.8%
High Performance Solutions +14.8% +8.5% +6.3%
-------------- ------- --------
Group Total +14.5% +15.3% -0.8%
-------------- ------- --------
Appendix 3: Breakdown of organic sales growth and external
sales
Q3 2022 Like-for-like % Group
change
Northern Europe +11.9% 31.4%
Nordics +8.8% 12.4%
United Kingdom - Ireland +9.7% 8.8%
Germany - Austria +22.8% 3.3%
Southern Europe - ME
& Africa +10.5% 26.2%
France +8.0% 20.1%
Spain - Italy +24.2% 3.4%
Americas +14.2% 19.1%
North America +16.9% 13.6%
Latin America +7.7% 5.5%
Asia-Pacific +26.9% 4.3%
High Performance Solutions +19.4% 19.0%
Construction and industry +14.6% 12.2%
Mobility +27.8% 6.8%
Group Total +13.4% 100.0%
9-month 2022 Like-for-like % Group
change
Northern Europe +14.1% 31.8%
Nordics +11.7% 12.9%
United Kingdom - Ireland +11.6% 9.0%
Germany - Austria +19.1% 3.3%
Southern Europe - ME
& Africa +12.7% 28.6%
France +9.5% 22.3%
Spain - Italy +24.7% 3.5%
Americas +15.9% 17.4%
North America +17.1% 12.4%
Latin America +12.7% 5.0%
Asia-Pacific +28.7% 4.0%
High Performance Solutions +14.8% 18.2%
Construction and industry +16.0% 11.9%
Mobility +12.7% 6.3%
Group Total +14.5% 100.0%
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