European building materials industry hit by weak U.S. market

Saint-Gobain and CRH affected Financial analysts from Fitch Ratings in New York say they expect the European building industry to see modest growth through the end of 2007, according to a Sept. 10 article from AFX News Ltd. However, the residential building slowdown in the United States will have negative effects on the U.S. divisions of the European companies. The strong U.S. nonresidential market will limit the negative effects of the slowdown but not enough to stave off declines, according to the article. Officials from French glassmaker Saint-Gobain said the company is already seeing declines from its North American segment, according to the company’s July 26 earnings report. Operating income for the company tumbled 42.5 percent in North America during the first half, compared to increases of 15.1 percent in France, 33.2 percent for the rest of Western Europe and 65.8 percent for Asia and emerging markets. Overall sales for Saint-Gobain fell 18 percent in North America in the first half for Saint-Gobain, compared to increases of 5.5 percent for France, 11.6 percent for the rest of Western Europe and 19.1 percent for Asia and emerging countries, according to the release. “The group expects its markets in Europe, Asia and emerging countries to remain robust in the second half of the year. Despite the fact that no swift turnaround seems likely in the U.S. construction market, the global trading environment should remain largely favorable,” Saint-Gobain officials said in the report. Another European building materials company, CRH, the Ireland-based parent of Oldcastle Glass in Santa Monica, Calif., also saw declines in its American market, according to the first-half earnings report released Aug. 28. Sales revenue slipped 1 percent, and operating profits fell 22 percent. CRH’s North American glass operations performed fairly strong, despite the residential downturn, because of Oldcastle Glass’ nonresidential focus, according to the report. Read the full AFX article here.Share this article: