Saint-Gobain Steps Up Cost Cuts as Profit Misses Estimates
(Updates with new targets in fourth paragraph.)
Feb. 20 (Bloomberg) -- Cie. de Saint-Gobain SA, Europe’s biggest supplier of building materials, said it will step up cost cuts this year after 2012 earnings missed analysts’ estimates amid Europe’s economic woes.
The company will slash costs by 580 million euros ($774 million) in 2013 after 520 million euros last year, Saint- Gobain, based in Courbevoie near Paris, said in a statement today. Net income fell 40 percent to 766 million euros last year. The average estimate of analysts surveyed by Bloomberg was for a profit of 1.07 billion euros.
Chief Executive Officer Pierre-Andre de Chalendar decided in July to step up cost cuts, reduce investment and put new acquisitions on hold to adjust to the European car and construction slump that has hit sales and prices of flat glass. Last month, the company agreed to sell its U.S. glass-bottle business for $1.7 billion to strengthen its balance sheet and focus expansion plans on building products.
Saint-Gobain said today it will present new medium- and long-term targets in the second half of 2013. Targets set in 2010 for 2015 sales and earnings can’t be reached as they were made with an economic scenario that hasn’t materialized because of the slump, the CEO said.
“For 2013, we’re expecting a pickup in our earnings before interest, taxes, depreciation and amortization in the second half after a low point in the second half of 2012 or in the first half of 2013,” the CEO said.
Moody’s Investors Service and Standard & Poor’s, which rate Saint-Gobain at Baa2 and BBB respectively, have said they may downgrade the French company.
In 2012, the company’s Ebitda fell 16 percent to 2.88 billion euros as revenue rose 2.6 percent to 43.2 billion euros.
Saint-Gobain will propose to pay a dividend of 1.24 euros per share this year, unchanged from last year.
The company’s shares have fallen 2.5 percent this year, giving it a market value of 16.7 billion euros.
--Editors: Simon Thiel, Kim McLaughlin