TIDMCOD
RNS Number : 7110K
Compagnie de Saint-Gobain
23 April 2020
PRESS RELEASE
Paris, April 23, 2020, 5:45pm
First-quarter 2020 sales
EUR9,363 million:
down 4.9% like-for-like
-- Volumes down 5.5% as a result of disruptions related to the
coronavirus pandemic, with very different situations from one
country to the next
-- Prices holding up well, up 0.6% in a slightly inflationary cost environment
-- Negative currency impact of 0.5% and negative Group structure
impact of 4.4%, reflecting disposals carried out in the context of
"Transform & Grow" and the consolidation of Continental
Building Products
-- No dividend distribution in respect of 2019
-- General Shareholders' Meeting to be held behind closed doors
on June 4, 2020 and streamed live on the Group's website
Pierre-André de Chalendar, Chairman and Chief Executive Officer
of Saint-Gobain, commented:
"In the unprecedented context of the coronavirus pandemic,
Saint-Gobain has reacted firmly and efficiently thanks to the new
organization by country and by market, taking decisions locally and
coordinating internationally. Our priorities are clear. First and
foremost, we want to protect the health and safety of the Group's
employees and other stakeholders across the globe. Secondly, we
have further strengthened our liquidity and cash with new financing
facilities, significantly cut planned investments and are strictly
monitoring working capital. In addition to this financial solidity,
the Group is adapting its production by reducing costs and using
the available government-backed measures, particularly in terms of
partial unemployment. Together with Benoit Bazin, Chief Operating
Officer, I would like to thank all of our teams for their
commitment and their responsiveness, and for leading by example. In
the current context, the Board of Directors has today decided not
to recommend any dividend distribution to the June 4, 2020
Shareholders' Meeting. Depending on how the situation evolves, it
will review the Group's shareholder return policy by the end of the
year.
Given the impact of the global economic crisis caused by the
coronavirus, the Group expects a challenging second quarter 2020
before a recovery in the second half. Due to the scale of the
current uncertainties and the very different patterns of recovery
from one country to the next, the Group is not currently in a
position to give an earnings outlook for 2020."
Sales Sales Change Change on Like-for-like
Q1 2019 Q1 2020 on an actual a comparable change
structure structure
basis basis
--------- --------- -------------- -------------- --------------
EUR million
High Performance Solutions 1,893 1,712 -9.6% -8.5% -8.4%
Northern Europe 3,660 3,219 -12.0% -0.9% -0.2%
Southern Europe - ME
& Africa 3,386 2,983 -11.9% -8.9% -8.9%
Americas 1,307 1,370 +4.8% -2.2% -0.5%
Asia-Pacific 426 337 -20.9% -11.6% -12.7%
Internal sales and
misc. -294 -258 --- --- ---
Group Total 10,378 9,363 -9.8% -5.4% -4.9%
--------- -------------- --------------
Sales were down 4.9% on a like-for-like basis. Despite a good
start to the year in the European Regions and in the Americas,
March saw the effects of the coronavirus spread beyond Asia-Pacific
to the rest of the world. Volumes contracted 5.5% while prices rose
0.6% amid low inflation in energy and raw material costs.
On a reported basis, sales totaled EUR9,363 million, with a
negative currency effect of 0.5% related mainly to the depreciation
of the Brazilian real and Nordic krona. Note that the depreciation
of these currencies was more pronounced in March alone (down 2.2%),
along with that of the pound sterling and other emerging country
currencies.
Changes in Group structure had a negative 4.4% impact on sales,
chiefly reflecting disposals carried out as part of "Transform
& Grow", with negative structure impacts of 11.1% in Northern
Europe (Distribution in Germany, Optimera in Denmark), 3.0% in
Southern Europe - Middle East & Africa (in France with DMTP and
K par K in distribution and expanded polystyrene, in the
Netherlands with Glassolutions) and 9.3% in Asia-Pacific (Hankuk
Glass Industries in South Korea). The structure impact also
reflects the consolidation of our strong positions (Continental
Building Products in North America as from February), and
acquisitions in new niche technologies and services (American
Seal), as well as in emerging countries (gypsum and mortars in
Latin America). In light of the hyperinflationary environment in
Argentina, this country which represents less than 1% of the
Group's consolidated sales, is excluded from the like-for-like
analysis.
Segment performance (like-for-like sales)
High Performance Solutions (HPS) sales fell 8.4%, hit by slowing
industrial markets and the initial impacts of the coronavirus,
particularly in the automotive market in March.
- Mobility continued to outperform the automotive market, thanks
mainly to its exposure to high value-added products and electric
vehicles. After a good start to the year, it reported a sharp
decline in sales in March following the gradual shutdown of
automotive manufacturing plants around the world. Only the Chinese
business saw its situation improve in March compared to the start
of the year.
- As from mid-March, Industry also saw a sharp slowdown in industrial markets in most regions.
- Activities serving the Construction Industry saw further
growth, including in March, buoyed by gains in market share and
upbeat trends in external thermal insulation solutions (ETICS).
- Life Sciences continued to enjoy a strong growth dynamic in
the pharmaceutical and medical sector, benefiting from recent
investments in additional capacity. The business is also engaged in
the fight against the coronavirus, prioritizing components for
critical medical devices (silicone membranes, flexible tubes,
filters, connectors and fixings) used in respirators, ventilators
and infusion pumps in particular.
Northern Europe stabilized over the quarter, slipping 0.2%,
thanks to a good start to the year in January and February and a
limited coronavirus impact in March, except in the UK during the
last week of the month.
Nordic countries reported good sales growth over the quarter,
including in March, particularly in Distribution which benefited
from good momentum in the renovation market. Germany and Eastern
Europe progressed over the quarter as well as in March, with local
construction activities relatively unscathed except glass towards
the end of the month, which is adapting its production in line with
the drop in demand. Only UK sales suffered over the quarter,
experiencing a sharp downturn at the end of the period with all
operations at a virtual standstill.
Southern Europe - Middle East & Africa reported an 8.9%
decrease in sales. After a good start to the year in
January-February, March was affected by the lockdown measures put
in place across much of the Region.
France delivered robust growth at the beginning of the year,
buoyed by a dynamic renovation market which benefited Distribution
and energy efficiency solutions. In March, France came to a
standstill for several days after lockdown measures were
introduced, before business partially resumed as from March 23.
Spain, Italy, the Middle East and Africa saw their operations
penalized to an increasing extent by the restrictions put in place
in March. Only the Netherlands reported quarterly and March sales
that remained relatively unaffected by the coronavirus.
Sales in the Americas remained virtually stable, slipping 0.5%,
thanks to a good start to the year in January and February. North
America benefited from stable volumes over the quarter and from
slightly higher prices in a dynamic construction market before the
impact of the coronavirus. Gypsum delivered double-digit
like-for-like volume growth over the quarter. The integration of
Continental Building Products is progressing well, in line with
expectations, and allows the Group to considerably strengthen its
geographic footprint. In March, most plants remained operational in
the US, with most states considering construction an essential
industry. Latin America had a good start to the year in
January-February, before disruptions hit construction markets in
March due to the quarantine measures introduced in various
countries and certain Brazilian states, where construction activity
was generally no longer permitted.
Asia-Pacific reported a 12.7% contraction in sales.
As the first country to be affected by the coronavirus, the
Group's operations in China hit a low in February, before resuming
all production in early March to meet the gradual increase in
demand observed throughout the month, which accelerated
significantly in the last few days of March. This rally allowed
local construction businesses to reach their prior-year levels as
from mid-April. Other Asian countries have seen varying degrees of
disruption, with very limited effects in Japan and South Korea and
increasingly more pronounced effects in South-East Asia. After two
months of double-digit growth supported by productivity solutions
(plaster and mortars), India was placed under total lockdown on
March 24, leading to the shutdown of industry.
Update on operations as of mid-April
Prioritizing the health and safety of all of our employees and
other stakeholders, the Group is working to achieve operational
continuity in each country by quickly adapting to changes in demand
depending on the health situation and on local government
decisions.
- High Performance Solutions (HPS) : automotive activities have
significantly adjusted their production and, with the exception of
China which has seen operations resume, are manufacturing only very
small volumes in light of plant shutdowns by their customers. These
activities are expected to gradually resume in line with the
recovery in automotive production. Adjustments were also made in
other activities serving industrial markets, although most sites
remain operational and continue to serve their customers. After
hitting a low point in the second quarter, all these industrial
activities should see a gradual recovery. Elsewhere, the
Construction Industry and Life Sciences businesses continue to show
further growth.
- Northern Europe : disruptions across the Region vary widely
from one country to the next. While Nordic countries, Germany and
Eastern Europe all reported a good level of trading in the first
quarter and remain, relatively speaking, little affected, the UK
has been at a virtual standstill since the end of March and is in
the process of starting up again.
- Southern Europe - Middle East & Africa : the Region has
seen substantial disruptions, although trends point to a gradual
resumption of business. After a shutdown of several days in France
in the week of March 23 so that new operating and health procedures
could be put in place, the majority of Distribution outlets have
reopened and reported a constant improvement in trading, up from
25% of 2019 levels at the end of March to more than 50% already by
mid-April, in line with industrial activities. Most of Italy
remains shut down, while operations have resumed in Spain.
Operations in the Netherlands remain relatively unaffected, while
the Middle East and Africa have been impacted in varying degrees.
After significant disruptions in the second quarter, construction
markets should show a substantial improvement.
- Americas : the situation across North America is mixed,
depending on each state, with business slowing in April but almost
all plants generally able to continue operating, with the
construction sector often considered an essential industry. Latin
America is trading at approximately 40% of its 2019 level, with the
situation varying widely depending on the business and type of
market; after coming to an abrupt halt at the end of March, the
construction sector is ramping up again in Brazil. After an overall
decline in the second quarter, markets should return to some degree
of normality.
- Asia-Pacific : after the gradual restart of all of its
production sites in China in March, construction sales in the
country accelerated and at mid-April had reached the level recorded
for the same period in 2019. India remains at a standstill. Other
Asian countries have seen varying degrees of disruption, which are
limited in Thailand and Vietnam. After a challenging second quarter
outside China, Asia-Pacific should show a substantial
improvement.
Measures put in place to address the coronavirus pandemic
Since the start of the pandemic, Saint-Gobain has taken all
necessary steps in real time to limit its impacts as far as
possible. The Group's new organization by country and by market,
put in place within the scope of "Transform & Grow", has given
it the agility and flexibility it needs to take decisions quickly
at the local level and to coordinate internationally by sharing the
experience of its different countries. The Group has the following
priorities:
Ensure employee health and safety:
Since the outbreak of the health crisis in China, the Group has
taken the necessary measures to protect the health of its employees
and other stakeholders, by putting in place strict hygiene measures
adapted to its different businesses, encouraging working from home
wherever possible and cooperating with the authorities in each
country where it is present.
Strengthen liquidity:
The Group has a very solid financial position in terms of cash
and financing. At March 31, 2020, the Group's cash and cash
equivalents represented an estimated EUR3.8 billion, before taking
into account the EUR1.5 billion bond issue at the end of March
(proceeds received on April 3). In light of the current
environment, the Group also recently reinforced its financing
sources:
- A EUR1.5 billion bond issue on March 26, consisting of EUR750
million with a 3 year maturity and a 1.75% coupon, and EUR750
million with a 7 1/2 year maturity and a 2.375% coupon;
- A syndicated credit line totaling EUR2.0 billion, including
EUR1.0 billion drawn for a bond repayment of the same amount at the
end of March, in addition to the confirmed and undrawn back-up
credit lines of EUR4.0 billion;
- Access to the new commercial paper Pandemic Emergency Purchase
Program (PEPP) launched by the European Central Bank on March 18,
2020.
Preserve cash:
- Swiftly adapting production (reduction of teams or stoppages)
to local demand on a site-by-site basis, thanks to permanent
contact with our customers;
- Reducing costs and discretionary spending and using the
appropriate local measures, in particular in terms of employment
and partial unemployment, in addition to the cost savings planned
for 2020 as part of "Transform & Grow";
- Focusing constantly on the price-cost spread, with strict pricing discipline;
- Reduction in capital expenditure in 2020 of more than EUR 500 million compared to 2019;
- Strict monitoring of working capital, with the aim of limiting
inventory levels and tracking inflows of customer payments on a
daily basis;
- Cancellation of the dividend: given the current context of the
coronavirus pandemic and the introduction of partial unemployment
measures, the Board of Directors has today decided not to recommend
any dividend distribution to the June 4, 2020 Shareholders'
Meeting. Although the Group recently further strengthened its
liquidity, the Board of Directors considered that this exceptional
decision was in the best interests of the Group and its
stakeholders, given the uncertainty as to the impact and duration
of the crisis, and the caution required at this time. Depending on
how the situation evolves, it will review the Group's shareholder
return policy by the end of the year.
Decision by Pierre-André de Chalendar, Benoit Bazin and the
Directors of the Board to reduce their compensation
Pierre-André de Chalendar, Chairman and Chief Executive Officer
of Saint-Gobain, and Benoit Bazin, Chief Operating Officer, wish to
show their solidarity with the efforts being made by the Group's
employees and stakeholders impacted by this unprecedented crisis.
Consequently, they have informed the Board of Directors of their
decision to waive 25% of their compensation to be paid in 2020 for
as long as the Group's employees are subject to partial employment
in the context of the emergency measures taken by the Government to
halt the spread of the coronavirus epidemic. Saint-Gobain will
donate the unpaid compensation to the Paris public hospitals
foundation (Fondation de l'Assistance Publique - Hôpitaux de Paris,
AP-HP).
In a similar move of solidarity, the Directors of the Board have
decided to join this effort by also waiving 25% of their
compensation for the same period. Saint-Gobain will donate the
unpaid compensation to charities, with the aim of supporting
fragile populations impacted by the coronavirus.
Outlook
Given the impact of the global economic crisis caused by the
coronavirus, the Group expects a challenging second quarter 2020
before a recovery in the second half. Due to the scale of the
current uncertainties and the very different patterns of recovery
from one country to the next, the Group is not currently in a
position to give an earnings outlook for 2020.
Saint-Gobain's medium and long-term outlook remains robust
thanks to its enhanced profile as part of "Transform & Grow"
and to its successful strategic choices. The strategy of
differentiation and innovation puts Saint-Gobain in the best
position to benefit from its three profitable growth drivers:
sustainability, productivity and well-being.
Financial calendar
- First-half 2020 results: July 30, 2020, after close of trading
on the Paris Bourse.
Analyst/Investor relations Press relations
+33 1 47 62 30
+33 1 47 62 44 10
29 +33 1 47 62 51
Vivien Dardel +33 1 47 62 35 Laurence Pernot 37
Floriana Michalowska 98 +33 1 47 62 Patricia Marie +33 1 47 62 43
Christelle Gannage 30 93 Susanne Trabitzsch 25
------------------------ ------------------ -------------------------------------------- -----------------
A conference call will be held at 6:30pm (Paris time) on April
23, 2020: +33 1 72 72 74 03, dial-in code: 53318217#
Glossary :
Indicators of organic growth and like-for-like changes in sales
reflect the Group's underlying performance excluding the impact
of:
-- changes in Group structure, by calculating indicators for the
year under review based on the scope of consolidation of the
previous year (Group structure impact);
-- changes in foreign exchange rates, by calculating the
indicators for the year under review and those for the previous
year based on identical foreign exchange rates for the previous
year (currency impact);
-- changes in applicable accounting policies.
Important disclaimer - forward-looking statements :
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 .
Appendix 1: Prices and Volumes on organic growth sales by
Segment
First-quarter 2020 Like-for-like Prices Volumes
change
High Performance Solutions -8.4% +1.5% -9.9%
Northern Europe -0.2% -0.2% +0.0%
Southern Europe - ME &
Africa -8.9% +0.9% -9.8%
Americas -0.5% +0.4% -0.9%
Asia-Pacific -12.7% -1.3% -11.4%
------- --------
Group Total -4.9% +0.6% -5.5%
------- --------
Appendix 2: Breakdown of organic sales growth and external
sales
First-quarter 2020 Like-for-like % Group
change
High Performance Solutions -8.4% 18%
Mobility -10.5% 8%
Other industries -7.0% 10%
Northern Europe -0.2% 34%
Nordics +4.2% 12%
United Kingdom - Ireland -8.7% 10%
Germany - Austria +1.0% 4%
Southern Europe - ME
& Africa -8.9% 31%
France -9.3% 23%
Spain - Italy -10.2% 4%
Americas -0.5% 14%
North America +0.3% 10%
Latin America -2.1% 4%
Asia-Pacific -12.7% 3%
Group Total -4.9% 100%
Appendix 3: Industry and Distribution Europe
Sales Sales Change Change on Like-for-like
Q1 2019 Q1 2020 on an a comparable change
actual structure
structure basis
basis
--------- --------- ----------- -------------- --------------
EUR million
Industry Europe 2,520 2,360 -6.3% -4.6% -4.6%
Distribution Europe 4,640 3,926 -15.4% -4.9% -4.3%
--------------------- --------- --------- ----------- -------------- --------------
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END
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