TIDMCOD
RNS Number : 1770O
Compagnie de Saint-Gobain
06 October 2021
PRESS RELEASE
Paris, October 6, 2021, 8:00am
SAINT-GOBAIN CAPITAL MARKETS DAY
AND NEW STRATEGIC PLAN "GROW & IMPACT"
-- Saint-Gobain is launching "Grow & Impact", its new
strategic plan designed to accelerate the Group's profitable
growth
-- The Group is very well positioned on the structural growth
markets of light and sustainable construction
-- Thanks to its comprehensive range of solutions and its
performance-driven local operating model, Saint-Gobain should
outperform its underlying markets which are accelerating
-- Saint-Gobain is a key player in the fight against climate
change, aiming to maximize the positive impact that the Group
brings to its customers while minimizing its own environmental
footprint:
- Sustainable solutions represent 72% of Group sales
- Solutions sold by the Group in one year result in the
avoidance of around 1,300 million tons of CO(2) emissions over
their lifespan
-- The Group is setting new annual financial targets for
2021-2025 [1] on average including accelerated profit and cash flow
generation and attractive value creation for its shareholders :
- Organic sales growth of 3-5% [2]
- Operating margin of 9-11%
- Free cash flow conversion ratio above 50%
- ROCE of 12-15%
- Annual dividend payout ratio representing 30-50% of recurring net income
- EUR2 billion share buyback program over the 2021-2025 period
Today at 2:00pm CET Saint-Gobain is hosting a meeting for
investors and analysts to present the Group's strategy and targets
for 2021-2025.
Benoit Bazin, Chief Executive Officer of Saint-Gobain,
commented:
"Together with the Executive Committee, I am pleased to launch a
new chapter for Saint-Gobain. Our vision is to become the worldwide
leader in light and sustainable construction. In a world moving
towards net-zero carbon, Saint-Gobain aims to provide a full range
of solutions that address three major issues of our time:
drastically reducing the 40% of CO(2) emissions linked to
construction, protecting natural resources, and facing the
challenge of rapid urbanization in emerging countries.
Today we are launching a new strategic plan, "Grow &
Impact", with the ambition to significantly accelerate our
profitable growth and the value creation for our shareholders. The
Group will build on the success of its new local organization and
its "multi-national" culture driven by performance and by proximity
to its customers, in order to benefit fully from strong growth on
its underlying markets.
By capitalizing on innovation and the power of data to enrich
our range of solutions, "Grow & Impact" will enable us to
outperform our underlying markets and maximize our positive impact
in numerous areas: the environment with our decarbonization
solutions for construction and industry, well-being and customer
satisfaction, value creation for our shareholders and employee
engagement, and addressing the concerns of all our
stakeholders."
Update on raw material and energy cost inflation
Amid the current context of accelerating inflation in energy
costs, Saint-Gobain is now expecting energy and raw material cost
inflation of around EUR1.5 billion in 2021 compared to 2020 (versus
its previous estimation for the full-year of EUR1.1 billion made at
the end of July), of which EUR1.1 billion in second-half 2021
alone. This increase in inflation mainly concerns the cost of
energy in Europe, where the Group is currently hedged for natural
gas and electricity at 50% for fourth-quarter 2021, 65% for 2022
and 25% for 2023, at levels slightly above 2020.
To offset this inflation over full-year 2021 in its industrial
businesses, the Group needs a positive price impact of around 6%
over the full year and of 8% in the second half.
In light of its proactive strategy in this regard and the price
increases implemented over the past few months, the Group estimates
for the third quarter of 2021 a positive price effect of around 8%
and a positive volume effect of around 1% compared to 2020 (and up
around 3% compared to third-quarter 2019). The Group's underlying
markets continued to see good momentum, despite a high comparison
basis in 2020 for the summer period in Europe, when craftsmen took
few holidays owing to the coronavirus pandemic. In the current
energy price context, and thanks to the new price increases
announced over the past few weeks in most countries in Europe and
in the US, Saint-Gobain is confident that it will be able to offset
raw material and energy cost inflation over full-year 2021.
Accordingly, Saint-Gobain is confidently reiterating its targets
as announced at the publication of the half-year results at
end-July 2021: for full-year 2021, the Group is targeting a very
strong increase in operating income to a new all-time high, with
like-for-like operating income in second-half 2021 close to the
previous record of second-half 2020.
New strategic plan: "Grow & Impact"
Saint-Gobain is very well positioned on the structural growth
markets of light and sustainable construction
120 countries representing over 70% of global GDP have committed
to carbon neutrality. To achieve this, sustainable construction is
essential, given that the construction industry is the primary
cause of CO(2) emissions, accounting for 40% of emissions around
the globe. Saint-Gobain's solutions for renovation, the building
envelope and light construction can tackle at least two-thirds of
these emissions. Light construction - where the wood, concrete or
metal frame is the only load-bearing element of the building -
requires the use of light materials like plasterboard and maximizes
the need for glass and insulation, thereby responding to the
growing demand for housing thanks to modular construction for
example, and contributing to the decarbonization of buildings and
to easier dismantling and reutilization.
The Group is attractively positioned on the renovation and light
construction markets, where growth is expected to be structurally
faster in a post-Covid economy.
Local renovation markets (around 50% of Group sales) benefit
from structural tailwinds which could double their growth rate:
stimulus plans for energy-efficient renovation of public and
private buildings, upward revision of energy performance standards
and changes in building use (working from home, a return to
single-family homes).
The shift to light construction (around 40% of Group sales)
responds to the challenges of decarbonization (time and
productivity gains on site) and of resource scarcity (up to 50%
reduction in raw materials usage vs. traditional building methods),
and brings well-being and comfort benefits for occupants.
Lastly, rapid developments in the need for decarbonization among
our global industrial customers require accelerated innovation in
decarbonization technologies for the construction industry
(especially cement and concrete), green mobility (glazing solutions
adapted to the challenges of electric mobility) and in specialty
materials for the decarbonization of industrial processes (e.g.,
high performance glass refractories).
Saint-Gobain is well-positioned to play a leading role in the
fast-changing construction markets
The world of construction is at a tipping point, with the need
for new solutions. The Group is ideally placed to lead these
developments and benefit from growth on its underlying markets
thanks to its set of solutions meeting the specific needs of its
customers along two key axes: sustainability and performance.
Saint-Gobain is able to offer a comprehensive range of
end-to-end solutions , whether in cross-sell and dedicated
channels, services along the value-chain (logistics & kitting,
intermediation, aftermarket sales, unmanned stores, recycling,
digital solutions and services, etc.) or systems (offsite
manufacturing, light fa ç ades, partition systems, ETICS - external
thermal insulation composite systems, smart glazing, etc.).
Its broad geographical reach provides it with critical scale (#1
in renovation in Europe and #1 in construction in North America and
certain major emerging countries such as India or Brazil), and
enables broad international deployment (manufacturing in 70
countries, adapting to local customers' needs and climates).
The Group is present across the full value chain , which allows
it to influence all its stakeholders from architects to
end-customers, and to build local ecosystems, especially via its
distribution network close to hundreds of thousands of
craftsmen.
Saint-Gobain's innovation is focused on customers , combining
numerous technological platforms in the construction and industrial
markets. This has enabled the Group to be named a Clarivate Top 100
Global Innovator for the 10(th) consecutive year. Leveraging ever
more digital data from its multiple customer interactions along the
value chain also allows it to maximize the impact of its
solutions.
ESG at the core of Saint-Gobain's business model
The Group's solutions sold across the globe in one year result
in around 1,300 million tons of avoided CO(2) emissions over their
lifespan, around 40 times the Group's own total carbon footprint in
2020 (scopes 1, 2 and 3) or more than 100 times its scope 1 and 2
footprint. Saint-Gobain is therefore a key player in the fight
against climate change, maximizing its positive impact for its
customers whilst minimizing its own footprint as part of its
commitment to be carbon neutral by 2050.
Solutions bringing a sustainability benefit represent 72% of
Saint-Gobain's sales . These solutions benefit either the planet -
in terms of CO(2) and energy savings, resources and circularity -
or people - in terms of health and safety and well-being: visual,
acoustic, thermal and air quality comfort. [3]
Furthermore, Saint-Gobain is able to measure the impact of its
solutions in use: numerous use cases - some of which will be
presented in detail today - illustrate and quantify the benefits
for our customers and end-users. In addition to the positive impact
brought by its solutions, Saint-Gobain demonstrates its leadership
and accountability across the board on ESG considerations.
ESG is embedded into management processes. It is taken into
account in short-term incentive plans (at 10%) and long-term
incentive plans (at 20%, up from 15% previously); committees
focused on Corporate Social Responsibility themes have been created
within the Executive Committee and Board of Directors; diversity is
a key priority (25% women managers in the Group, 38% women on the
Executive Committee).
To reach its target of carbon neutrality by 2050, the Group has
defined a 2030 roadmap targeting a reduction in CO(2) emissions of
33% for scopes 1 and 2, and of 16% for scope 3, both in absolute
terms versus 2017. There has been a significant acceleration in the
ESG roadmaps in each country where Saint-Gobain is present: EUR100
million is allocated each year to capital expenditure and R&D
focused on reducing CO(2) emissions. In investment decisions, the
internal carbon price has been increased to EUR75 per ton for
capital expenditure (versus EUR50 previously), and is EUR150 per
ton for R&D projects.
A new composite Sustainability Progress Indicator has been
defined to track the Group's progress towards carbon neutrality .
The indicator consists of four components: scope 1 and 2 CO(2)
emissions, virgin raw materials avoided, non-recovered waste and
industrial water withdrawal. The current score is 65 from a
starting point of 50 in 2017; the 2030 target is 100.
The Group makes a significant contribution to the acceleration
of the industry's ESG agenda in collaborating with governmental and
non-governmental organizations, building ecosystem partnerships and
exchanging with start-ups.
A new model of business governance at Saint-Gobain, close to its
markets and with a resolutely "multi-national" culture
Thanks to the success of "Transform & Grow", Saint-Gobain's
local business model is now well-established. The new organization
has enabled a profound cultural shift, with teams' accountability
and performance as well as customer satisfaction being placed at
the core. Our new strategic plan "Grow & Impact" is therefore
built on solid foundations, accelerating the Group's profitable
growth whilst maximizing the positive impact it brings to all of
its stakeholders.
The Group's organization and culture have been fundamentally
transformed , with a simplified organization ("one-boss" principle)
and 90% of CEOs native to their country, resulting in an employee
engagement rate of 82%.
New remuneration schemes (bonuses 100% aligned to country or
market performance) are aligned with performance: focus on cash,
ROCE, EBITDA and ESG impact (CO(2) , diversity and safety).
Investment priorities have been clearly defined , with a focus
on renovation in Europe and on North American and emerging markets.
The Group scope will continue to be reviewed regularly, based on
performance and strategic alignment for divestments, and strict
capital allocation criteria for value-creating acquisitions.
Saint-Gobain targets attractive value creation for its
shareholders
The unique positioning on structurally faster-growing markets,
the comprehensive solutions offer and a performance-accountable
organization will allow the Group to accelerate its growth and
outperform its markets, and disciplined capital allocation will
also ensure a step-up in value creation for shareholders. As a
result, Saint-Gobain is today presenting its annual financial
targets for 2021-2025 on average, assuming no major economic
slowdown:
Accelerated profit and cash generation
- Organic sales growth of 3-5%
- Operating margin of 9-11%
- Free cash flow conversion ratio above 50%
Disciplined capital allocation
- ROCE of 12-15%
- Net debt to EBITDA ratio of 1.5-2.0x
Attractive shareholder returns policy
- Annual dividend payout ratio representing 30-50% of recurring net income, paid in cash
- EUR2 billion share buyback program between 2021 and 2025,
equivalent to more than 30 million net share count reduction based
on the recent Saint-Gobain share price
The Capital Markets Day will be held both physically and
virtually via an immersive platform, already available. The
presentation will start at 2:00pm CET and include a Q&A session
for analysts and investors. Documentation and webcasts will be
available on the Saint-Gobain website at the beginning of the
presentation at 2:00pm CET:
https://www.saint-gobain.com/en/finance/investor-days. The webcast
replay will be available on October 7, via the same link above.
ABOUT SAINT-GOBAIN
Saint-Gobain designs, manufactures and distributes materials and
solutions for the construction, mobility, healthcare and other
industrial application markets. Developed through a continuous
innovation process, they can be found everywhere in our living
places and daily life, providing well-being, performance and
safety, while addressing the challenges of sustainable
construction, resource efficiency and the fight against climate
change. This strategy of responsible growth is guided by the
Saint-Gobain purpose, "MAKING THE WORLD A BETTER HOME", which
responds to the shared ambition of all the women and men in the
Group to act every day to make the world a more beautiful and
sustainable place to live in.
EUR38.1 billion in sales in 2020
More than 167,000 employees, located in 70 countries
Committed to achieving Carbon Neutrality by 2050
For more information about Saint-Gobain,
visit www.saint-gobain.com and follow us on Twitter @saintgobain
Analyst/Investor relations Press relations
+33 1 88 54 +33 1 88 54
29 77 26 83
+33 1 88 54 Patricia Marie +33 1 88 54
Vivien Dardel 19 09 Bénédicte 14 75
Floriana Michalowska +33 1 88 54 Debusschere +33 1 88 54
Christelle Gannage 15 49 Susanne Trabitzsch 27 96
----------------------- -------------- --------------------- --------------
You can also listen in live to the Capital Markets Day via
conference call by dialing:
France: +33 1 70 70 07 81
US: +1 646 741 3167
UK: +44 84 4481 9752
Event code: 2251919
Glossary
- Indicators of organic growth and like-for-like changes in
sales/operating income reflect the Group's underlying performance
excluding the impact of:
-- changes in Group structure, by calculating indicators for the
year under review based on the scope of consolidation of the
previous period (Group structure impact);
-- changes in foreign exchange rates, by calculating indicators
for the year under review and those for the previous year based on
identical foreign exchange rates for the previous period (currency
impact);
-- changes in applicable accounting policies.
- Free cash flow = EBITDA less depreciation of right-of-use
assets, plus net financial expense, plus income tax, less capital
expenditure excluding additional capacity investments, plus change
in working capital requirement over a 12-month period.
- EBITDA = operating income plus operating depreciation and
amortization less non-operating costs.
- ESG : Environment, Social, Governance.
- Capital expenditure = investments in tangible and intangible
assets.
- Operating margin = operating income divided by sales.
- Share buybacks: net of offsetting employee share creation.
- Recurring net income = net attributable income excluding
capital gains and losses on disposals, asset write-downs and
material non-recurring provisions.
- ROCE (Return on Capital Employed) = annualized operating
income adjusted for changes in the scope of consolidation (based on
12 months' of operating income for acquired companies and with no
operating income taken into account for divested companies),
expressed as a percentage of total assets at period-end.
- Free cash flow conversion ratio = free cash flow divided by
EBITDA less depreciation of right-of-use assets.
All indicators contained in this press release (not defined
above or in the footnotes) are explained in the Universal
Registration Document including the annual financial report,
available by clicking here:
https://www.saint-gobain.com/en/finance/information-reglementee/universal-registration-document-including-annual-financial-report
.
EBITDA Note 4
Net debt Note 9
Non-operating costs Note 4
Operating income Note 4
Net financial expense Note 9
Recurring net income Note 4
Working capital requirement Note 4
Important disclaimer- forward-looking statements :
This press release contains forward-looking statements with
respect to Saint-Gobain's financial condition, results, business,
strategy, plans and outlook. Forward-looking statements are
generally identified by the use of the words "expect",
"anticipate", "believe", "intend", "estimate", "plan" and similar
expressions. Although Saint-Gobain believes that the expectations
reflected in such forward looking statements are based on
reasonable assumptions as at the time of publishing this document,
investors are cautioned that these statements are not guarantees of
its future performance. Actual results may differ materially from
the forward-looking statements as a result of a number of known and
unknown risks, uncertainties and other factors, many of which are
difficult to predict and are generally beyond the control of
Saint-Gobain, including but not limited to the risks described in
Saint-Gobain's Universal Registration Document available on its
website (www.saint-gobain.com). Accordingly, readers of this
document are cautioned against relying on these forward-looking
statements. These forward-looking statements are made as of the
date of this press release. Saint-Gobain disclaims any intention or
obligation to complete, update or revise these forward-looking
statements, whether as a result of new information, future events
or otherwise. This press release does not constitute any offer to
purchase or exchange, nor any solicitation of an offer to sell or
exchange securities of Saint-Gobain.
This press release includes information pertaining to
Saint-Gobain's markets and competitive positions therein. Such
information is based on market data and Saint-Gobain's actual
revenues in those markets for the relevant periods. Saint-Gobain
obtained this market information from various third-party sources
(industry publications, surveys, and forecasts) and its own
internal estimates. No representation or warranty, express or
implied, is made by Saint-Gobain or its managers, corporate
officers, employees, shareholders, contractors, representatives or
advisors as to the accuracy or completeness of the information or
opinions contained in this press release that have not been
independently verified.
[1] Assuming no major economic slowdown
[2] Including 2021 organic growth normalized versus 2019
[3] Analysis carried out across all product families across the
Group and audited by an independent third-party.
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END
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