SAINT-GOBAIN (EPA:SGO) - Saint-Gobain: First-quarter 2020 sales
Transparency directive : regulatory news
23/04/2020 17:44
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PRESS RELEASEParis, 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."
EUR million Sales Q1 Sales Q1 Change on an
2019 2020 actual structure
basis
High Performance Solutions 1,893 1,712 -9.6%
Northern Europe 3,660 3,219 -12.0%
Southern Europe -
ME & Africa 3,386 2,983 -11.9%
Americas 1,307 1,370 +4.8%
Asia-Pacific 426 337 -20.9%
Internal sales and misc. -294 -258 ---
Group Total 10,378 9,363 -9.8%
Change on a comparable Like-for-like
structure basis change
-8.5% -8.4%
-0.9% -0.2%
-8.9% -8.9%
-2.2% -0.5%
-11.6% -12.7%
--- ---
-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 71/2 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 EUR500 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
Vivien Dardel +33 1 47 62 44 29
Floriana Michalowska +33 1 47 62 35 98
Christelle Gannage +33 1 47 62 30 93
Press relations
Laurence Pernot +33 1 47 62 30 10
Patricia Marie +33 1 47 62 51 37
Susanne Trabitzsch +33 1 47 62 43 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
EUR million Sales Q1 Sales Q1 Change on an
2019 2020 actual structure
basis
Industry Europe 2,520 2,360 -6.3%
Distribution Europe 4,640 3,926 -15.4%
Change on a comparable Like-for-like
structure basis change
-4.6% -4.6%
-4.9% -4.3%
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