Saint Gobain eyes 2014 upturn after profit drop

PARIS Wed Feb 19, 2014 2:02pm EST

PARIS (Reuters) - Saint-Gobain (SGOB.PA) said cost savings, innovation and a recovery in the United States would help operating profit to rebound this year after adverse currency effects and a weak economy in Europe hit 2013 sales and profits.

Europe's biggest supplier of construction materials said on Wednesday it expected an uptick in construction markets this year, driven by improved conditions in the UK, Germany and the United States.

The company had said in November it was aiming for 800 million euros in cost savings in 2014-2015 and to spend 4 billion euros on acquisitions through 2018 to focus on high-growth, high-margin products.

Full-year net income fell 14.1 percent to 595 million euros ($818.33 million). Sales were stable on a like-for-like basis but fell 2.7 percent to 42.02 billion euros after taking into account adverse exchange rates effects, mainly from a strong euro and weaker emerging market currencies, particularly in Latin America.

Operating profit fell 3.5 percent to 2.76 billion euros, but Saint-Gobain said it aimed to improve it this year, in part through 450 million euros in cost savings. These reached 600 million euros last year.

"In 2014, trends for our different markets should improve even though the climate is likely to remain uncertain, and we expect a clear like-for-like improvement in operating income," Chief Executive Pierre-Andre de Chalendar said in a statement.

The company, founded in 1665 to make mirrors for the royal court of Versailles, supplies materials used in roofing and insulation, as well as glass panes for windows and windshields.

Saint-Gobain is striving to refocus on innovative products that aim to make buildings more energy efficient and comfortable, such as electronically tintable glass and greener insulation materials. At the same time, the group is exiting lower-margin activities such as its Verallia glass packaging unit, which makes Nutella jars and Dom Perignon bottles.

A $1.7 billion deal to sell Verallia's North American business to Irish packaging group Ardagh ARDGR.UL has been on standby for months due to U.S. antitrust concerns. Saint-Gobain said it aimed to finalize the deal by the end of April.

($1 = 0.7271 euros)

(Reporting by Lionel Laurent and Natalie Huet; Editing by Andrew Callus and Jane Merriman)

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