Saint-Gobain has released its full year 2010 financial results and reported strong growth of operating income.
The firm reported strong growth in operating income up 33.7%, with second-half operating income significantly outperforming (up 15.7%) the first-half figure. There was ongoing fall in net debt, with EUR1.4bn of net debt paid down over 12 months, gearing ratio cut to 39% of equity.
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Pierre-André de Chalendar, Chairman and Chief Executive Officer of Saint-Gobain, commented:
“In 2010, in a global economy still recovering from the crisis, our sales volumes got back on an upward trend and our priority focus on sales prices paid off. We delivered a sharp upswing in our results, driven in particular by the significant cost savings achieved over the past few years.
“Overall in 2011, we expect to see more upbeat trading conditions in our key markets (particularly new-build and renovation markets in Europe). Nevertheless, we will see a sharp rise in raw material and energy costs that we will endeavor to limit by pursuing our priority focus on raising sales prices. Against this backdrop, Saint-Gobain is targeting robust organic growth and double-digit growth in operating income for 2011.
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“Leveraging its financial strength, the Group will resolutely adopt a tempered development policy to boost this return to growth. It will step up its capital expenditure and financial investments, targeting emerging countries and high value-added Habitat solutions. Given an increase in its capital expenditure of EUR500 million in 2011, Saint-Gobain is targeting free cash flow of EUR1.3 billion.”
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By GlobalDataAgainst the backdrop of a global economy still recovering from the crisis, the Group returned to growth in 2010, reporting a 1.9% increase in like-for-like sales (comparable Group structure and exchange rates). It said this performance was driven by robust momentum in emerging countries and Asia and by vigorous trading in industrial markets.
Overall, the Group reported 1.9% organic growth for 2010, breaking down as 1.0% growth in the first half (positive volume and price impacts of 0.9% and 0.1%, respectively), and 2.8% growth in the second half (with both volumes and prices up 1.4%). Despite severe weather conditions in Europe at the end of the year, organic growth accelerated between the third and fourth quarters, from 2.3% to 3.3%. Sales prices held firm over the year in all Business Sectors, offsetting the rise in the cost of raw materials and energy at Group level.
Against this backdrop, Saint-Gobain resolutely implemented all of its action plan priorities and outperformed each of its targets, with sales prices increasing by 1.4% in the second half and by 0.8% over the year. Cost were slashed by EUR600 million, driving a sharp 40.7% increase in operating income, which came in 15.7% higher in the second half than in the six months to June 30, 2010. The Group’s operating margin widened sharply, up to 7.8% of sales from 5.9% in 2009. In the second half, the operating margin came in at 8.1%, outperforming its second-half 2008 level (7.6%), even though sales volumes remained 9.4% below their level in the second half of 2008.
The Group generated EUR1.5 billion in free cash flow and further reduced net debt by EUR1.4 billion, thereby reinforcing its cash resources and strong financial structure.
