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UPDATE 2-St Gobain keeps positive H2 outlook despite weak Q3
October 22, 2009 / 4:19 PM / 8 years ago

UPDATE 2-St Gobain keeps positive H2 outlook despite weak Q3

* Q3 sales down 13.9 pct

* Expects improvement in Q4

* Keeps outlook for better H2

(Adds fund manager comment)

By Sudip Kar-Gupta

PARIS, Oct 22 (Reuters) - Saint Gobain (SGOB.PA), the world’s biggest building materials group, kept its outlook for a better second half of the year despite a slump in third-quarter sales due to depressed construction activity.

Sales fell 13.9 percent from last year to 9.72 billion euros ($14.55 billion) as the global economic slowdown affected turnover in most of St Gobain’s main markets.

A Reuters poll of six analysts showed an average sales forecast of 9.75 billion euros.

Construction companies around the world have been hit by the financial crisis.

U.S. building products maker USG Corp (USG.N) posting a quarterly loss earlier this week and French rival Lafarge LAFP.PA will post its third quarter figures next month. [ID:nN21483417].

St Gobain said it expected an improvement during the fourth quarter and reiterated that the company should benefit from a previously announced cost-cutting programme.

“The group can therefore confirm that operating income and recurring net income for second-half 2009 will outperform first-half figures,” the French group said in a statement.

Agilis Gestion fund manager Arnaud Scarpaci said investors should sell St Gobain shares for now. Scarpaci does not own any St Gobain shares but he holds a St Gobain bond with a 4.68 percent yield.

“The euro at 1.50 against the dollar could impact the company, along with a rise in raw material costs. It’s best to take profits on the stock,” said Scarpaci.

St Gobain shares closed down 2.3 percent at 35.87 euros, giving the company a market capitalisation of around 18.4 billion euros.

The stock has risen around 18 percent so far this year, having fallen 50 percent last year. St Gobain’s shares have underperformed a 31 percent rise in the DJ Stoxx European construction sector .SXOP.

French investment group Wendel (MWDP.PA) owns 17.5 percent of St Gobain’s capital. ($1=.6679 Euro) (Editing by Marcel Michelson and Karen Foster)

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