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UPDATE 1-Saint-Gobain raises H1 profits despite currency drag
July 30, 2014 / 5:56 PM / in 3 years

UPDATE 1-Saint-Gobain raises H1 profits despite currency drag

* Confirms goal to improve operating profit this year

* H1 sales of 20.44 bln, in line with consensus

* Still aims to sell rest of Verallia, no timing details-CEO (Adds details, recasts)

PARIS, July 30 (Reuters) - French building materials producer and distributor Saint-Gobain reaffirmed its aim of improving its profitability this year after posting 4.1 percent organic sales growth in the first half, driven by demand in the United States and Asia.

Revenue was 20.44 billion euros ($27.35 billion) in the six months, slightly lower than analysts’ expectations of 20.69 billion euros, according to a Reuters poll. The strong euro reduced the value of overseas sales and cut 3.2 percentage points off revenue growth in the period.

Saint-Gobain, founded in 1665 to make mirrors for the royal court of Versailles, has since broadened its range and supplies materials used in roofing and insulation as well as glass panes for windows and car windscreens as well as competing in the builders’ merchants business with firms such as Britain’s Wolseley and Travis Perkins.

Operating profit rose 3 percent to 1.33 billion euros in the first half.

“After a first quarter boosted by favourable weather conditions in Europe, the second quarter confirmed the slight uptrend in our markets first seen in second-half 2013 across all of our regions. Only France remains down,” Chief Executive Pierre-Andre de Chalendar said in a statement on Wednesday.

Net income in the period more than doubled from a year ago to 671 million euros because of a boost from the April sale of the U.S. operations of its Verallia glass packaging unit.

Chalendar said on a call with reporters that the company still intended to seek a sale of the rest of Verallia. “We still have it in mind to sell this activity, but a specific decision has not been made as of today,” he said.

Saint-Gobain has long wanted to sell or spin off the unit but in 2011 cancelled a public share offer just two days before Verallia’s shares were due to start trading, citing adverse market conditions because of the financial crisis.

Saint-Gobain has since tried to gradually offload the unit, first selling its U.S. operations to Ardagh, and deciding later on how to dispose of the European arm.

The group, which makes 70 percent of its sales in Europe, was hit in recent years by the economic slowdown, which depressed construction and renovation markets as well as demand for its products for cars and solar panels.

It is now betting on cost savings, innovation and a recovery in the United States to lift its operating profit this year.

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

It renewed the cost-cutting pledge on Wednesday, saying it aimed for 450 million euros of cuts this year having secured savings of 240 million euros in the first half. (1 US dollar = 0.7474 euros) (Reporting by Leila Abboud and Natalie Huet; Editing by Greg Mahlich)

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