Saint Gobain sees strong sales growth

French conglomerate Saint-Gobain, parent company of British Gypsum, Isover, builders merchant Jewson, and plumbers merchant Graham has seen first-half sales rise by nearly 7%.

Saint Gobain sees strong sales growth

Sales for the first half of the year were euro20,875m, with operating profits 19% up at euro 1,720m.

Pierre-André de Chalendar, chairman and chief executive officer of Saint-Gobain, said: “Saint-Gobain’s strong sales growth in the first half of the year confirmed the recovery in sales volumes observed in 2010 and our successful focus on sales prices. Based on significantly lower costs, this performance helped drive a double-digit rise in our earnings and curb the impact of soaring raw material and energy costs.

We expect the underlying trends observed since the beginning of the year to continue in the six months to December 31. Leveraging our strong balance sheet, we will continue to adopt a resolute, tempered development strategy.

“Capital expenditure and acquisitions will be stepped up and focused primarily on our three priorities: Asia and emerging countries, high value-added solutions for the Habitat market, and bolt-on and consolidating acquisitions in Building Distribution and Construction Products, following the example of the Build Center and Brossette acquisitions unveiled early this week.

“Overall for the year as a whole,we are confident about our ability to achieve our 2011 targets of robust organic growth and a double-digit rise in operating income.”

The group reposrts that all business sectors reported robust organic growth in the first half of 2011. Profitability improved in Innovative Materials and Building Distribution, but dipped slightly in Construction Products and Packaging, thanks to a hike in raw material and energy costs. .

Building Distribution rebounded strongly over the first half, posting 7.3%organic growth(of which 4.5% in the second quarter), spurred by a strong rise in sales volumes in France, Germany, the Netherlands and Scandinavia during the first six months of the year. In contrast, trading was more uneven in the UK and Eastern Europe, and remains very tough in southern Europe. The overall trading upturn, combined with sharp cost reductions over the past few years, led to a strong rise in the operating margin, up to 3.6% from 2.4%.

France and the other Western European countries saw organic growth for the first half of 6.2% and 6.3%, respectively (3.9% and 3.2%, respectively, in the second quarter). During the second quarter, the rebound in businesses related to residential construction over the three months to March 31 continued apace, particularly in Building Distribution and Interior Solutions, despite a slowdown in the UK and persistent difficulties in southern Europe.

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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