(AOF) – Saint-Gobain said it expected a double-digit operating margin in the first half. The building materials specialist explains that since the beginning of the year he has continued “to demonstrate his resilience by consolidating his very good level of operational performance”.
In a context of moderate market slowdown, which reflects a contrasting situation between the marked decline in new construction and the good general resilience of renovation, the group confirmed that it is aiming for an operating margin of between 9% and 11% in 2023. , in line with the objective of the “Grow & Impact” strategic plan.
The results for the first half of 2023 will be published on Wednesday July 26, 2023, after market close.
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Key points
– World leader in housing materials, created in 1665;
– Turnover of €51.2 billion divided into 5 branches, Northern Europe for 24%, Southern Europe & Africa (including France) for 30%, Americas for 18% and High performance ;
– Business model based on a complete portfolio of brands and a solution-based approach: productivity gains for construction professionals, well-being for the end user and tailor-made performance & innovation for the industrial client;
– Split capital (8.3% for employees), Pierre-André de Chalendar, chairing the 14-member board of directors, Benoît Bazin as general manager;
– Solid balance sheet with net debt of €8.2 billion, ie 1.2 leverage and 35% of equity, and free cash flow of €3.8 billion.
Challenges
– “Grow & Impact” strategic plan launched in October 2021:
– growth superior to the markets
– offer of integrated, differentiated solutions for the decarbonization of construction,
– industrial investments of around €1.5 billion;.
– Innovation strategy with 3 principles, anticipation of standards, integration of digital in production and customer journeys and sustainable growth:
– structured by 20 platforms shared by the industrial and construction client businesses: smart materials, robotization, lightening of materials, reduction of the carbon footprint in manufacturing processes, etc.,
– customer experience with 90% of sales covered by PIM, “digital pricing” accelerating sales;
– internally, Open program in the form of a “Digital journey”, Datala, partnerships with start-ups led by NOVA, etc.,
– externally, partnerships with research or industrial centers, such as Ecocem, participation in EAGLE, WOOL2LOOP, etc. projects, and co-development with customers;
– Environmental strategy integrated into the product offer, 72% of the portfolio contributing to the reduction of CO2 emissions, aiming for total neutrality by 2050, validated by the SBTi and endowed with intermediate objectives for 2030 vs 2017:
– 33% reduction in CO2 emissions vs 2017, with zero carbon production in 2022 of glazing in France and plaster in Sweden,
– research in solid oxygen fuel cells,
– circular economy avoiding the extraction of solid raw materials,
– launch of green loans;
– Optimization of the group’s profile through disposals and acquisitions (Chryso and GPC, Panofrance and Rockwool, India, Kaycan, Urumix, etc.), resulting in a strengthening in North America and emerging countries as well as in construction chemicals ( 10% of sales).
Challenges
– Decline in the cyclical nature of activity, less dependent on the construction sector;
– Inflation of raw materials, transport and energy, for a cost of €3 billion in 2022 more than offset by increases in selling prices and by hedging energy costs;
– Use of funds from the disposal of UK construction activities;
– Towards a moderate market slowdown in 2023;
– After a record net profit, 2023 objective of higher sales growth than the market and an operating margin of 9 to 11%;
– 2022 dividend up 23% and share buyback.
Learn more about the Building Materials sector
Lack of visibility
The National Union of Quarry and Building Materials Industries (Unicem) indicates that, after an initial downturn in the second quarter, activity continued to deteriorate in the third quarter and recorded a drop as much for aggregates (-1.3 %) than on ready-mixed concrete (-0.9%). Over the first nine months of the year, the decline was 2% for the materials business as a whole. Only tiles and bricks manage to show slight increases in activity.
The general outlook is deteriorating and recruitment difficulties and rising costs are the main sources of concern. Furthermore, Unicem underlines the difficulties in implementing the projects. The production of materials could decline this year by 3% for ready-mixed concrete (BPE) and 4% for aggregates.