By Anna Peverieri
(Reuters) -French construction materials group Saint-Gobain reported third-quarter volumes slightly above analyst expectations on Tuesday as resilience in building renovation offset weakness in Europe and a decline in new construction.
The company, which designs, manufactures and distributes materials for the building and industrial market, said its third quarter volumes were down by 1.5% year-on-year, compared with the 1.6% decline analysts expected.
Saint-Gobain confirmed its outlook for the rest of the year and said it expected a further increase in operating margins in 2024.
WHY IT’S IMPORTANT
Investors are scrutinising the sector for signs of recovery after a challenging year marked by rising raw material costs, interest rates, geopolitical tensions and inflation.
KEY QUOTES
“New constructions represent around 12% of the company’s total activities in Europe,” Chief Executive Benoit Bazin said on a call with journalists.
“In Europe, overall, we have likely moved past the lowest point,” he said, adding that France has not fully reached this stage.
Bazin said that countries with a prevalence of variable rate loans, like the ones in northern Europe, were likely to experience a faster recovery.
CONTEXT
Saint Gobain’s main competitor French infrastructure group Vinci reported third-quarter revenue below expectations last week and voiced concerns over a corporate income tax rise the French parliament is considering.
It said it could cost it 400 million euros ($432 million).
Swiss industrial and construction chemicals company Sika reported an increase in its third-quarter sales last week, boosted by a large number of infrastructure projects.
BY THE NUMBERS
Saint-Gobain reported third quarter sales at 11.6 billion euros, in line with analyst expectations, buoyed by recent acquisitions, but affected by the weakness of the new construction market, especially in France.
Since the beginning of the year, it has announced several strategic acquisitions, focusing on enhancing its portfolio in construction chemicals, metal building products, and surface finishes.
Sales in Europe, Middle East & Africa were down 4.5% in the third quarter, the company said in a statement.
In the region, it said renovation was resilient and accounted for around 60% of sales. In the Asia-Pacific region, the group saw a 0.9% decrease in like-for-like sales in the third quarter, with a rise in volumes driven by India.
($1 = 0.9257 euros)
(Reporting by Anna Peverieri; editing by Barbara Lewis and Emelia Sithole-Matarise)
