Advertisement

Saint-Gobain reports declining sales on volume drop, currency headwind

FILE PHOTO: The logo of Saint-Gobain is seen on a banner on a building construction site in the financial and business district of La Defense, outside Paris

By Gaelle Sheehan

(Reuters) - French construction materials group Saint-Gobain on Thursday reported a fall in third-quarter sales, roughly in line with expectations and weighed down by currency factors, acquisitions and divestitures, and weak volumes.

Third-quarter sales were down 10.5% year-on-year at 11.6 billion euros ($12.2 billion). Analysts had expected sales of 11.5 billion.

The company also reported a 5% decrease in volumes and a 3.9% currency effect, both in line with expectations.

In a call with journalists, Chief Executive Benoit Bazin linked the company's results to a "context of moderate slowdown" in its markets, "with a contrast between a marked fall in new construction and a generally resilient renovation sector".

Renovations represent around 50% of the company's total activities, Bazin said, and more than 60% in Europe.

Though this year may be difficult for construction companies, as the housing market bears the brunt of aggressive rate hikes by global central banks, Jefferies sees potential for volume growth, market outperformance and resilience of margins for Saint-Gobain, it said in a preview of the firm's third-quarter sales.

"Global carbon reduction ambitions should drive ahead of market growth for Saint Gobain to at least 2030", the broker said.

Midcap Partners also said the group's activities "will be underpinned by Europe's ambitions to reduce emissions".

The European Parliament targets 40% emissions reductions across EU countries in areas like construction and agriculture by 2030.

Saint-Gobain confirmed its outlook for the rest of the year.

Since the beginning of the quarter, Saint-Gobain has announced several acquisitions and divestitures in Europe and North America, mainly divesting distribution, glass processing activities and ceramics for the steel industry, in favour of construction chemicals, exterior products and insulation.

In total, the impact of these changes was to reduce sales by 3.5% during the quarter, less than the 4% analysts had anticipated.

($1 = 0.9501 euros)

(Reporting by Gaëlle Sheehan; editing by Mark Heinrich)