Saint-Gobain has developed a plan of action to endure the hardships felt by the global economic downturn, according to a report of the company’s activity thus far in 2012
Saint-Gobain has developed a plan of action to endure the hardships felt by the global economic downturn, according to a report of the company’s activity thus far in 2012. The Paris-based company says with flat glass sales decreasing by 6.4%, its operating margin fell from 9.5% in 2011 to 2.1% and innovative materials sales declined by 3.1%. Company officials say for the second half of 2012, they plan to focus on sales prices, step up cost-cutting program, and scale back capital spending and financial investments compared to the second half of 2011, while maintaining a tight rein on operating working capital.
According to Saint-Gobain, the 2012 second quarter “was hit by a deterioration in the economic climate in Western Europe” and economic hardships felt in Asia and neighboring regions have adversely affected the company – especially its flat glass segment. The decrease of flat glass sales is attributed to a contraction in automotive production in Western Europe, the collapse of the solar market, a fall in prices (especially float glass) and a steep rise in raw material and energy costs. Sales prices overall declined by 2.3%, according to the company, stemming from weak residential construction and automotive markets in Western Europe. However, North American residential construction positively impacted the company. Chairman and CEO Pierre-André de Chalendar said, “Besides the impact of one less working day and of very average weather conditions in Europe, trading for the group in the second quarter was also affected by the general slowdown in the economic environment in Western Europe – which the continued upturn in U.S. construction markets could not wholly offset.”