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France's Saint-Gobain sees energy, raw materials soaring this year

Skyscraper office properties in the La Defense business district in Paris

By Dina Kartit

(Reuters) -Saint-Gobain sees its energy and raw material costs soaring by slightly more than 3 billion euros this year because of rising inflation, the French construction materials group said on Thursday.

The group expects the bill for energy alone for the year to amount to almost 2.5 billion euros.

"If the material cost comes down we need to also then adapt and adjust ourselves in the market to make sure that we don't stand out as the only one who is looking for the price," Finance Chief Sreedhar Natarajan said in a call with analysts.

"It's very important to keep in mind that the focus is going to be on a price cost spread and that's where we will continue to remain."

The group said it had hedged around 80% of its natural gas and electricity needs for 2022, however, and about 60% for the next year, adding it was confident in its ability to offset the cost increases this year.

"We will remain very vigilant and opportunistic at the end of the day. We need to see how we can optimize the cost as we go forward," said Sreedhar.

The group said it made rapid progress in rolling out continuity plans and ensuring production flexibility to operate with less or alternative energy for its main gas-consuming manufacturing businesses in Europe.

Saint-Gobain quarterly revenue rose 19.6% year-on-year to 12.9 billion euros ($12.88 billion), beating the 12.7 billion euros average estimate from a company-provided consensus, thanks to double-digit organic growth in all segments, driven in particular by high performance solutions, Asia-Pacific and North America.

The group confirmed its guidance for 2022, confident it will deliver a record year in operating income with a double digit margin.

"Our medium and long term drivers are strong with a clear need for light and sustainable construction (...) There has never been such a perfect alignment between climate change and energy savings," Chief Executive Officer Benoit Bazin said in the call.

($1 = 1.0014 euros)

(Reporting by Dina Kartit; Editing by David Evans)