Saint-Gobain’s profits down

By Steve Skinner20 February 2009

Saint-Gobain saw sales increase +1% to €43,8 billion in 2008, up from € 43,4 billion in 2007, however, operating profits fell by -11% to € 3,6 billion, down from the € 4,1 billion reported in 2007.

Sales for the Group's construction products sector increased +1,4% year-on-year despite a -3,3% decline in the fourth quarter brought about by poor markets for its Interior Solutions buseinesses in both North America and Western Europe.

The Group's Exterior Solutions sector recorded +10,8% growth in 2008 thanks to a sharp rise in prices and strong year-long demand in the pipe and industrial mortars markets.

The Building Distribution sector was hit by the downturn in European construction markets (especially the UK and Spain) and reported a -1,9% decrease in sales over 2007. In the fourth quarter alone, sales dropped -7,7%.

A company statement said that organic growth in 2008 of 0,3% reflected the stark contrast between a satisfactory performance over the first nine months of the year and a sharp downturn in the fourth quarter.

The statement confirmed that the last few months of 2008 were affected by the deepening financial crisis, which compounded the decline in the construction sector in most developed countries and also began to take hold in emerging economies.

Outlook

Saint-Gobain expects 2009 to be a challenging year, particularly in the first six months due to a higher year-on-year basis for comparision.

A company spokesperson said, "The Group stands to benefit fully as the impact of the economic stimulus packages and energy efficiency plans launched by Western governments begin to be felt in 2009. Owing to our worldwide leadership in energy efficient solutions for the construction industry and our exposure to the building renovation market in Europe, we expect our activities to counter the decline in new construction."

New shares

Saint-Gobain is to launch a rights issue for € 1,5 billion by creating 108 million new shares. The issue will be conducted by means of a free allotment of warrants to existing shareholders. The subscription period for the new shares will run from 23 February 2009 to 6 March 2009. During this period, the warrants will be listed and negotiable on the Euronext Paris.

Settlement and listing of the new shares on Euronext Paris and other markets is schedules for 23 March 2009.
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