Earnings Release • Oct 24, 2019
Earnings Release
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Paris, October 24, 2019, at 5:45pm
| €m | 9-month 2018 sales |
9-month 2019 sales |
Change on an actual structure basis |
Change on a comparable structure basis |
Like-for-like change |
|---|---|---|---|---|---|
| High Performance Solutions | 5,500 | 5,721 | +4.0% | +3.0% | +0.9% |
| Northern Europe | 11,414 | 11,755 | +3.0% | +2.5% | +3.0% |
| Southern Europe - ME & Africa | 9,836 | 10,241 | +4.1% | +4.1% | +4.2% |
| Americas | 3,900 | 4,233 | +8.5% | +7.6% | +3.8% |
| Asia-Pacific | 1,377 | 1,388 | +0.8% | +8.6% | +5.8% |
| Internal sales and misc. | -897 | -867 | --- | --- | --- |
| Group Total | 31,130 | 32,471 | +4.3% | +4.1% | +3.4% |
| €m | Sales Q3 2018 |
Sales Q3 2019 |
Change on an actual structure basis |
Change on a comparable structure basis |
Like-for-like change |
|---|---|---|---|---|---|
| High Performance Solutions | 1,794 | 1,859 | +3.6% | +3.1% | +0.8% |
| Northern Europe | 3,955 | 4,029 | +1.9% | +1.3% | +1.9% |
| Southern Europe - ME & Africa | 3,107 | 3,230 | +4.0% | +4.0% | +3.7% |
| Americas | 1,309 | 1,459 | +11.5% | +10.7% | +6.1% |
| Asia-Pacific | 465 | 493 | +6.0% | +8.6% | +4.7% |
| Internal sales and misc. | -287 | -276 | --- | --- | --- |
| Group Total | 10,343 | 10,794 | +4.4% | +4.1% | +3.1% |
Consolidated sales for the first nine months of 2019 were €32,471 million compared to €31,130 million for the first nine months of 2018.
The currency impact was positive at 0.7% over the nine-month period and 1.0% in the third quarter, resulting mainly from the appreciation of the US dollar against the euro, despite the depreciation of the Nordic krona.
The Group structure impact added 0.2% to growth over the nine-month period and 0.3% in the third quarter, reflecting the integration of acquisitions in new niche technologies and services (Kaimann in technical insulation), in Asia and emerging countries (Join Leader in adhesives), and to consolidate our strong positions (Hunter Douglas in specialty ceilings). The acceleration in our divestment program is only partially reflected in the nine-month period given the deconsolidation dates, in particular for the Pipe business in Xuzhou, China, the silicon carbide business, glazing installation operations in the UK and glass processing in Sweden and Norway. After the recent finalization of new divestments, the Group is deconsolidating its Distribution business in Germany, Optimera in Denmark and K par K in France for the fourth quarter of 2019.
Like-for-like sales rose 3.4% over the nine-month period and 3.1% in the third quarter. Despite a less supportive market overall, volumes were up 1.4% in the nine-month period, including a rise of 1.7% in the third quarter with a positive 1.5% calendar impact. Prices contributed 2.0% to growth over the nine-month period and 1.4% in the third quarter in a less inflationary environment for raw material and energy costs and with a higher prior-year comparison basis.
The acceleration in the Group's transformation within the scope of its new organization continues apace:
High Performance Solutions (HPS) sales rose 0.9% over the nine-month period and 0.8% in the third quarter in hesitant industrial markets.
Northern Europe advanced 3.0% over the nine-month period and 1.9% in the third quarter with a favorable calendar effect. Distribution progressed, along with the industrial businesses and especially Gypsum, while Building Glass stabilized.
Sales in Nordic countries continued to rise, particularly in Distribution, benefiting from their exposure to the renovation market, albeit at a slower pace than in the first half of the year. The UK contracted amid a difficult economic environment, particularly in Distribution in the third quarter. Sales in Germany were up slightly despite a slowdown in volumes in the quarter; Eastern Europe continued to advance.
Southern Europe - Middle East & Africa increased 4.2% over the nine-month period and 3.7% in the third quarter with a favorable calendar impact. Distribution continued to drive growth; industrial businesses progressed, particularly Insulation, Gypsum and Mortars, along with Building Glass to a lesser extent. Pipe continued its successful efforts to improve competitiveness in a difficult export market.
France had a good quarter, buoyed by a construction market where renovation remained supportive and despite a lower contribution from new construction; Distribution continued to grow, along with Insulation which reported further double-digit growth on the back of strong demand for energyefficiency renovation. Other European countries posted further growth, led by Spain. The Middle East and Africa declined once again, particularly in Turkey in a very tough environment.
The Americas posted 3.8% organic growth over the nine-month period, including 6.1% in the third quarter.
North America rallied in the quarter on a weaker comparison basis in terms of volumes but a much more difficult basis for comparison in terms of pricing. Exterior Products posted strong volume-driven growth, while prices decreased after the sharp rise in the prior-year period. The pricing environment was favorable in Insulation, but remained challenging in Gypsum, while volumes improved slightly overall. After a good first half, Latin America saw a significant slowdown in the quarter with weak overall growth, particularly in Brazil in Building Glass in a more uncertain macroeconomic environment.
Asia-Pacific delivered 5.8% organic growth over the nine-month period and 4.7% in the third quarter, led by Gypsum and Mortars in particular. Glass declined owing to lower plant utilization rates given the contraction in the automotive market.
India posted robust growth, especially in Gypsum which continued to deliver double-digit growth and in Building Glass to a lesser extent. Regarding other Asian countries, China recorded a good quarter, notably benefiting from the start-up of a new plaster plant in the first half and strong growth in Mortars. South-East Asia was driven by higher volumes but continued to face a fiercely competitive environment putting pressure on sales prices.
The Group expects the following trends for the fourth quarter:
The Group's action priorities as defined in February remain:
Indicators of organic growth and like-for-like changes in sales/operating income reflect the Group's underlying performance excluding the impact of:
Operating income: see Note 4 to the financial statements in the interim financial report, available by clicking here: https://www.saintgobain.com/en/finance/regulated-information/half-yearly-financial-report
EBITDA = operating income plus operating depreciation and amortization, less non-operating costs excluding Sika
Free cash flow = EBITDA less depreciation of right-of-use assets, plus net financial expense excluding Sika, plus income tax, less investments in property, plant and equipment and intangible assets excluding additional capacity investments, plus changes in working capital requirement.
| Analyst/Investor relations | Press relations | |||
|---|---|---|---|---|
| Vivien Dardel | +33 1 47 62 44 29 | Laurence Pernot | +33 1 47 62 30 10 | |
| Floriana Michalowska | +33 1 47 62 35 98 | Patricia Marie | +33 1 47 62 51 37 | |
| Christelle Gannage | +33 1 47 62 30 93 | Susanne Trabitzsch | +33 1 47 62 43 25 |
A conference call will be held at 6:30pm (Paris time) on October 24, 2019: dial +33 (0) 1 72 72 74 03 followed by the code 32825992#.
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, including but not limited to the risks described in Saint-Gobain's registration document 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.
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
| 9-month 2019 | Like-for-like change |
Price effect | Volume effect |
|---|---|---|---|
| High Performance Solutions | +0.9% | +1.9% | -1.0% |
| Northern Europe | +3.0% | +1.8% | +1.2% |
| Southern Europe - ME & Africa | +4.2% | +1.9% | +2.3% |
| Americas | +3.8% | +3.5% | +0.3% |
| Asia-Pacific | +5.8% | -0.2% | +6.0% |
| Group Total | +3.4% | +2.0% | +1.4% |
| 9-month 2019 | Like-for-like change |
% Group |
|---|---|---|
| High Performance Solutions | +0.9% | 17% |
| Mobility | +0.6% | 7% |
| Other industries | +1.2% | 10% |
| Northern Europe | +3.0% | 35% |
| Nordics | +5.4% | 12% |
| UK | +0.7% | 10% |
| Germany | +2.0% | 8% |
| Southern Europe - ME & Africa | +4.2% | 31% |
| France | +3.9% | 23% |
| Spain-Italy | +9.4% | 4% |
| Americas | +3.8% | 13% |
| North America | +2.6% | 9% |
| Latin America | +6.2% | 4% |
| Asia-Pacific | +5.8% | 4% |
| Group Total | +3.4% | 100% |
| €m | 9-month 2018 sales |
9-month 2019 sales |
Change on an actual structure basis |
Change on a comparable structure basis |
Like-for-like change |
|---|---|---|---|---|---|
| Industry Europe | 7,461 | 7,664 | +2.7% | +2.9% | +3.1% |
| Distribution Europe | 14,096 | 14,675 | +4.1% | +3.7% | +4.0% |
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