SGO Cie de SaintGobain

   By Nathan Allen 
 

Shares in Compagnie de Saint-Gobain SA (SGO.FR) rose sharply early Friday after and said it would step up its strategic overhaul while reporting first-half results.

Net income rose 61% to 1.22 billion euros ($1.43 billion) largely due to the sale of part of its stake in Sika AG (SIKA.EB), which netted the company around EUR754 million.

The French building-materials producer said it now plans to sell off underperforming assets with annual sales of EUR3 billion by the end of 2019, which should strengthen group margins by around 0.4%.

At 0749 GMT Saint-Gobain was trading 3.8% higher at EUR38.56, having earlier risen more than 5%.

The results weren't entirely positive, though. Net debt grew more than expected, to EUR9.29 billion, analysts at Davy Research noted, adding that there was a 1.9% margin contraction at Saint-Gobain's flat-glass division.

Local-currency sales growth of 4.9% was "robust," but the translation into 1.7% like-for-like growth in earnings before interest and taxes was fairly underwhelming, according to Deutsche Bank analyst Glynis Johnson.

Nevertheless, the company met consensus and left its guidance unchanged, which is reassuring--and investors are most likely to focus on the "eye-catching" disposals program, she said.

Write to Nathan Allen at nathan.allen@dowjones.com

(END) Dow Jones Newswires

July 27, 2018 04:18 ET (08:18 GMT)

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