Saint-Gobain sees 2024 double-digit operating margin despite difficult market

By Gaelle Sheehan

(Reuters) -French construction materials group Saint-Gobain on Thursday said it is aiming for a double-digit operating margin in 2024 despite a difficult market that dragged its 2023 annual sales down 6.4%.

"In Western Europe, renovations will continue to show resilience, while new construction will remain difficult but will gradually reach a low point country by country, in a market that remains structurally healthy given its construction needs," CEO Benoit Bazin said in a statement.

In a call with journalists, Bazin added that there is a "structural unmet need for housing" in Western Europe, North America and Asia, which could reverse the new-construction division's downward curb.

The company's performance was hit by the business in Northern Europe, which represented 26% of its sales. Sales in the region were down 5.9% in 2023, with a "sharp slowdown in new construction", it said. The division was mainly hit by interest rates and inflation.

Bazin expects the renovation business to drive growth in the long term. In Western Europe, renovations are Saint-Gobain's biggest market, with "energy renovation to decarbonise countries" being at the heart of the issue, as "30% to 40% of (their) emissions come from buildings", he said.

The European Parliament targets a 40% emissions reduction across EU countries in areas like construction and agriculture by 2030.

Saint-Gobain posted annual sales of 47.94 billion euros ($51.77 billion), compared with 51.2 billion euros in 2022, weighed by a 2.3% negative currency effect and weak volumes. Analysts had expected sales to drop 6.1% to 48.08 billion euros, in a company-provided poll.

In 2023, sales volumes were down 5.5%, which was a bigger drop than expected. Broker Stifel had expected a 4.9% fall in 2023 volumes.

The company will propose a 2.10 euro dividend for 2023.

($1 = 0.9261 euros)

(Reporting by Gaëlle Sheehan; editing by Mark Heinrich, Jane Merriman and Leslie Adler)