Saint-Gobain announces a 16% decline in its net income in the 1st half

"There is a new construction crisis in Europe caused by the rise in rates and the difficulties of access to financing (...) Today, the banks no longer want to lend", lamented the group's managing director. Benoit Bazin, during a conference call presenting the results of the first half.

During the first six months of the year, the group specializing in plasterboard and glass wool for insulation suffered double-digit sales declines in key markets such as Germany, Sweden or France. "Northern Europe is suffering," he said.

The group considers itself protected by the fact that new construction represents only 12% of its worldwide turnover and says it expects a "fairly strong recovery" in construction in Europe "within 12-18 months" in view of the expressed housing needs.

Of these 12%, "we think it will continue to deteriorate", he nevertheless underlined, "we will have to be vigilant".

In Southern Europe, of which France is part of the Saint-Gobain region, 70% of materials sales relate to the renovation markets, a booming sector in the face of energy and climate constraints, supported by state aid in many countries.

In France, for which the boss of Saint-Gobain had called for a "Marshall plan for renovation", Mr. Bazin was pleased to see that public aid devoted to the subject (My Prime Renov ') had increased from 2 to 4 billion euros between 2021 and 2024.

"Silly to Ban"

Speaking in the consultation launched by the French government to find solutions to lower the threshold of CO2 emissions in the building sector, he considered "completely stupid to ban gas boilers".

"What is needed is to lower the energy bill of buildings", he argued, and therefore better insulate their envelope to reduce heating costs in winter and air conditioning in summer.

Financially, in the first half, the slowdown in new construction resulted in a 2,1% shift in the group's total turnover, to 24,9 billion euros.

The Northern Europe region, which includes Germany and Sweden, but not France, suffered the sharpest decline (-3,7%). "This is where we are suffering the most from the slowdown in new construction," noted Mr. Bazin. Nevertheless, the group improved its operating margin in this area, to 8,6% against 8,2%.

Net income fell 16% to 1,45 billion euros.

Mr. Bazin welcomed a "record level of performance" in a "difficult macroeconomic environment". In particular, Saint-Gobain achieved "record" operating income, at 2,813 billion euros, up 2,1% at comparable exchange rates compared to the first half of 1.

"It is around 200 million euros above the analyst and market consensus," he said.

The operating margin for the first half is also "at a historic high", with 11,3%, or 0,8 points above the market consensus.

"Free Credit"

For the year, the group raised its operating margin forecast which should now be "in double digits" (instead of a margin of between 9 and 11% initially forecast), and "for the third consecutive year" .

The group explains its results in particular by a "geographical positioning very different from what it was four to five years ago": "more than 60% of our operating profit is now achieved in dynamic areas with high potential, in North America, Asia and in emerging countries" where consumption is supported by "demographic growth and rapid urbanization", explained Mr. Bazin.

These results "are not super-profits", he argued, recalling that the group, in France, "makes more than one and a half billion euros in free credit to craftsmen" in the construction industry, his clients.

“When the banks make loans at 5%, Saint-Gobain gives zero credit to craftsmen” who have to repay their PGEs and can no longer obtain financing from banks, he noted.