Saint Gobain Sales Slip, Sees Signs Of Recovery

Apr. 22, 2010 - French building-materials giant Compagnie de Saint-Gobain SA Thursday said first-quarter sales fell 0.5% as construction business in mature economies remained tough, but pointed to signs of recovery and confirmed its financial guidance for the year.
After a prolonged period in which Saint Gobain and its peers have faced weak demand against the grim economic backdrop, the company was the latest to see more positive signs, with emerging markets leading the way.
Saint Gobain, the world's biggest glass producer by sales, said sales for the three months to March 31 fell to EUR8.74 billion from EUR8.78 billion a year earlier, above an average estimate of EUR8.38 billion according to a Dow Jones Newswires poll of three analysts.
The slight drop in sales "conceals starkly contrasting performances across business sectors and geographical areas," Saint Gobain said in a statement.
In areas linked to industrial output and in Asia and Latin America, "trading was very upbeat," it said, while segments exposed to construction markets in Europe and North America "continued to face tough conditions, amplified by a very cold winter."
However, the company said there was a "relative improvement" in residential construction in March in North America and Western Europe, and expects a " consolidation" of that improvement over the next few quarters.
Still, trading is likely to vary considerably from market to market, the company said, adding that an upturn in the U.K. and the U.S. could contrast with "further decline in Southern Europe."
In emerging economies, and "particularly in Asia and Latin America," the company expects "further growth gains throughout 2010."
"In Eastern Europe, however, trading is expected to remain difficult over the next few months, although somewhat better than in the first three months of the year," Saint Gobain said.
Wednesday, industrial peer Schneider Electric SA, issued a similar message, saying there was robust growth in "new economies" but it expects demand in more mature markets to remain "relatively soft."
Exchange rates made a positive impact on first quarter sales, Saint Gobain said, pointing to sharp gains in Scandinavian and emerging-market currencies, particularly the Brazilian real, against the euro.
The company confirmed its targets for 2010, including for strong growth in full-year operating income, assuming constant exchange rates. Saint Gobain also reiterated a goal of achieving an extra EUR200 million of cost savings in 2010.
Saint Gobain's shares have gained 36% over the past 12 months, outperforming the overall CAC-40, amid brighter prospects for the construction business.
The shares closed Thursday in Paris down 1% at EUR36.88.