July 26, 2012 / 5:48 PM / in 5 years

UPDATE 1-Saint-Gobain to cut costs after H1 slump

* Cost-cuts of 500 mln eur in 2012, 750 mln in full year

* Sees H2 operating income slightly lower than H1

* No plans for significant site closures in France

* Net profit down 34 pct to 506 mln euros (Adds details, CEO comments from conference call)

PARIS, July 26 (Reuters) - Building materials group Saint-Gobain announced a fresh cost-cutting plan to save 750 million euros in the next year as it reported declining first-half earnings hit by worsening markets in Western Europe.

The company, which in June warned that a weaker flat glass a sales would dent first-half results, also said operating profit would fall slightly lower in the second half.

To cope, Saint-Gobain will step up cost savings, scale back capital spending, freeze new acquisitions and i ncrease p rices s o as to pass on hi gher raw material and energy costs to customers.

“In view of the deterioration in the economic climate since the beginning of 2012, we are now expecting for the year as a whole a measured rise in our sales prices, a limited decline in our volumes, and second-half operating income to be moderately down on our first-half performance,” Chief Executive Pierre-Andre de Chalendar said in a statement.

Saint-Gobain is aiming to save 500 million euros ($615.00 million) by the end of this year.

Chalendar told reporters that the company , which employs 195,000 staff worldwide, including 50,000 in France, would c ut staff through attrition or other means in certain countries de pending on the severity of the downturn.

But there are no current plans for significant site closures in France, where large groups like Peugeot, Sanofi and Alcatel-Lucent ar e planning to sl ash jobs amid toughening markets.

Net profit in the first six months of 2012 slumped 34 percent to 506 million euros, while operating profit declined 12 percent to 1.51 billion, slightly below Thomson Reuters I/B/E/S consensus of 1.535 billion euros.

Sales in the period rose 3.4 percent to 21.66 billion, l ifted by the weaker euro.

Sales of flat g lass - a key activity of Saint-Gobain, founded in 1665 to produce mirrors for the royal court of Versailles - slid 6.5 percent due to shrinking auto production in Europe, the collapse of the solar panel market and a steep rise in raw material and energy costs.

Shares in Saint-Gobain, which have lost around 8 percent of their value since the start of the year, closed 4 .4 percent higher at 27 .48 eu ros. I t s ma rket capitalisation st ood at ro u ghly 14. 4 bil lion.

$1 = 0.8130 euros Reporting by Elena Berton; Additional reporting by Aleksandre Boksenbaum-Granier in Paris; Editing by Christian Plumb

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