Saint-Gobain: strong recovery in trading in Q3 2020

Saint-Gobain has published a new press release on its Sales for the first nine months of 2020.

Highlights

• Strong rally in organic growth, at 3.2% in Q3 (negative 7.2% for the nine-month period and negative 12.3% for H1)

• Clear improvement in volumes in all segments, up 2.3% in Q3 (down 7.8% for the nine-month period)

• Prices up 0.9% in Q3 (up 0.6% for the nine-month period)

• Targets revised upwards with an increase in like-for-like operating income expected in H2 2020 versus H2 2019, excluding a major new impact from the recent deterioration in the health situation

• 9 million shares bought back in the second half to date of the 12 million shares target, allowing the Group to reach at end-2020 the medium-term objective of a reduction in the number of its shares outstanding fixed at 530 million, from 542 million at December 31, 2019

Sales for the third quarter were up 3.2% like-for-like, with a clear improvement in all segments after the 12.3% decrease in the first half, helping to limit the decline for the nine-month period to 7.2%. After hitting a low in April when they stood at 60% of 2019 levels, Group sales rallied steadily, returning to normal levels in most countries in the third quarter, which saw a 2.3% rise in volumes and a 0.9% increase in prices in a slightly deflationary environment for industrial businesses.

On a reported basis, sales for the nine months to September 30 were 27,891 million EUR, with a negative currency effect of 2.1% over the nine-month period and of 3.7% in the third quarter, mainly reflecting the depreciation of the Brazilian real, other emerging country currencies and the Norwegian krone. The deterioration in the third quarter results from the depreciation of emerging country currencies as well as the US dollar.

Changes in Group structure had a negative impact on sales of 4.8% over the nine-month period and of 5.7% in the third quarter, resulting from disposals carried out as part of “Transform & Grow”, with negative structure impacts over the nine-month period of 12.4% in Northern Europe (Distribution and Glassolutions in Germany; Optimera in Denmark), 3.4% in Southern Europe – Middle East & Africa (in France with DMTP and K par K in Distribution and with the expanded polystyrene business; in the Netherlands with Glassolutions) and 9.1% in Asia-Pacific (Hankuk Glass Industries in South Korea). The structure impact also reflects acquisitions carried out to consolidate our strong positions (Continental Building Products in North America as from February), the addition of new niche technologies and services (HTMS), and expansion in emerging countries (gypsum and mortars in Latin America). Note that in light of the hyperinflationary environment in Argentina, this country which represents less than 1% of the Group’s consolidated sales, is excluded from the like-for-like analysis.

Saint-Gobain continues to enhance its profitable growth profile as part of “Transform & Grow”, thanks to the optimization of its portfolio and the success of the cost savings program, with the Group meeting its 250 million EUR target at the end of 2020, a year earlier than planned. Thanks to these two drivers, the structural improvement of more than 100 basis points in the Group’s operating margin1 compared to 2018 (7.7%) should materialize in 2021 assuming volumes return to 2018 levels.