SAINT-GOBAIN (EPA:SGO) - Saint-Gobain launches the Transform & Grow Program
Transparency directive : regulatory news
26/11/2018 07:31
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PRESS RELEASE
November 26, 2018
SAINT-GOBAIN ACCELER ATES ITS TRANSFORM ATION BY LAUNCHING THE
"TRANSFORM & GROW PROGRAM"
ACCELERATION OF PORTFOLIO ROTATION NEW ORGANIZATIONAL STRUCTURE ENHANCED
OPERATING MARGIN
* Acceleration of portfolio rotation in line with our announced objective to
divest businesses representing sales of at least EUR3 billion, with 3
significant processes already launched together representing EUR2.3 billion
of full-year sales, and 17 acquisitions completed over the first nine months
of 2018 for EUR561 million
* New organizational structure with five reporting units to align the business
more closely to its markets, to increase agility and empowerment, to enhance
synergies through drastic simplification, and to foster growth
* Additional portfolio review to be performed within the framework of the new
organization
* Positive impact of the transformation program on operating margin of more
than 100 basis points: new organizational structure expected to deliver
EUR250 million savings in addition to the current cost savings program in
place; acceleration of portfolio rotation expected to improve operating
margin by c.40 basis points
* New management structure as of January 1, 2019: Benoit Bazin will become
Chief Operating Officer of the Group. He will in particular be in charge of
the transformation of Saint-Gobain and the management of the four regional
reporting units. Sreedhar N. will be appointed Chief Financial Officer
Pierre-André de Chalendar commented:
"Saint-Gobain is evolving in a fast changing market environment which can be a
source of substantial growth opportunities, provided we are sufficiently close
to our markets and sufficiently agile. We are launching an ambitious
transformation plan, 'Transform and Grow' based on two pillars, an in-depth
transformation of the Group's organizational structure and an accelerated
portfolio rotation program.
Much leaner, more integrated, with a strong entrepreneurial spirit and putting
digital at the heart, our new organizational structure will allow us to be more
aligned with our customers, more agile and more synergistic."
Benoit Bazin said:
" 'Transform and Grow' will allow us to unlock substantial additional growth
and profitability potential. It will put our teams in an ideal situation to
fully leverage our portfolio of solutions in each country and our market
synergies for the benefit of our customers. We are also setting ourselves
ambitious financial targets for this transformation, including EUR250 million
of additional savings thanks to a leaner and more efficient organization
contributing to an overall improvement of more than 100 basis points in our
operating margin by 2021."
The new Group organizational structure intends to align the Group more closely
with its end markets, taking into account the regional dimension of the
majority of our markets and the global nature of our most innovative
businesses. The new structure will consist of five reporting units, with four
regional businesses and a global High Performance Solutions unit:
* Northern Europe: Nordic countries, United Kingdom, Ireland, Switzerland,
Germany, Austria, Eastern Europe, Russia
* Southern Europe, Middle East and Africa: France, Benelux, Mediterranean,
Middle-East, Africa
* Americas: North America, Latin America
* Asia-Pacific
* High Performance Solutions: High-Performance Materials (HPM) and Sekurit
(automotive glass) businesses
These five reporting units will replace the current three business sectors and
fourteen delegations, allowing for a more agile Group leveraging new
opportunities from our digital program and with simplified decision making
processes which will enhance competitiveness. Tailoring our business models to
regional and market specificities will allow us to accelerate profitable
growth, and streamlined management structures will result in a leaner
organization. In addition, the new organizational structure will allow
increased synergies at local, market and global levels, to the benefit of
customers.
In line with our culture of social dialogue, the relevant representative bodies
will be consulted and informed.
In addition to the organizational review, the Group has accelerated its
portfolio rotation, and is on track to divest businesses representing sales of
at least EUR3 billion by the end of 2019 for around EUR1 billion in value,
resulting in a positive impact of around 40 basis points on the operating
margin; more than 10 companies of various sizes across all sectors are being
actively prepared for divestment and three significant processes have already
been launched:
* Divestment of the entities of the Xuzhou Pipe site in China Pipe for c.EUR200
million (2017 sales: c. EUR250 million)
* A divestment process has been launched for Building Distribution Germany
(2017 sales: c. EUR1.9 billion)
* A divestment process is underway for the silicon carbide business (part of
HPM, with 2017 sales: c. EUR120 million)
A further exhaustive review of the portfolio will be carried out by each of
the new business units in the new organization.
As a result of these strategic initiatives, in particular the new
organizational structure and the accelerated portfolio rotation program, the
Group expects a positive impact on operating margin of more than 100 basis
points:
* Acceleration of portfolio rotation expected to improve operating profit
margin by around 40 basis points
* New organizational structure expected to improve operating profit margin by
around 60 basis points thanks to new cost savings of EUR250 million by 2021
(EUR50 million in 2019, EUR120 million in 2020) in addition to our existing
EUR1.2 billion cost savings program for 2017-2020
A conference call will be held at 8:00am (Paris time) on November 26, 2018:
dial +33 1 72 72 74 03 followed by the code 32678726#. A presentation regarding
these announcements will shortly be available on Saint-Gobain's website at:
https://www.saint-gobain.com/en/finance/events-and- financial-results
NEW SENIOR MANAGEMENT TEAM
Pierre-André de Chalendar, Chairman and CEO
Benoit Bazin, Chief Operating Officer
Laurent Guillot, Senior Vice President, CEO High Performance Solutions
Patrick Dupin, Senior Vice President, CEO Northern Europe Region
Guillaume Texier, Senior Vice President, CEO Southern Europe, Middle East and
Africa Region
Thomas Kinisky, Senior Vice-President, Innovation and Chairman North America
Javier Gimeno, Senior Vice-President, CEO Asia-Pacific Region
Claire Pedini, Senior Vice-President, Human Resources and Digital
Transformation
Sreedhar N., Chief Financial Officer
Antoine Vignial, Corporate Secretary, in charge of Corporate Social
Responsibility
ABOUT SAINT-GOBAIN
Saint-Gobain designs, manufactures and distributes materials and solutions
which are key ingredients in the wellbeing of each of us and the future of all.
They can be found everywhere in our living places and our daily life: in
buildings, transportation, infrastructure and in many industrial applications.
They provide comfort, performance and safety while addressing the challenges
of sustainable construction, resource efficiency and climate change.
EUR40.8 billion in sales in 2017
Operates in 67 countries
More than 179,000 employees
www.saint-gobain.com
@saintgobain
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