Saint-Gobain posts record sales in quarter, flags rising costs

The Saint-Gobain logo is seen on the company headquarters building at the La Defense business district in Courbevoie, outside Paris, France, February 19, 2018. REUTERS/Gonzalo Fuentes/File Photo

April 28 (Reuters) - French construction materials group Saint-Gobain (SGOB.PA) on Thursday posted record first-quarter sales but flagged the higher impact of energy and raw material costs in 2022 amid a challenging geopolitical situation and supply chain issues.

Saint-Gobain, which manufactures and distributes materials in sectors ranging from automotive to health, security, and food and beverages, also confirmed its previous target of earning a higher 2022 operating income versus 2021 at comparable exchange rates, amid good momentum in its main markets.

The group said, however, it expects accelerating inflation to raise its energy and raw material costs by around 2.5 billion euros in 2022 compared to 2021, when its bill amounted to 1.5 billion euros, or 3% of sales.

"This inflation concerns in particular energy costs, especially in Europe where the Group has hedged around 80% of its natural gas and electricity purchases for 2022 as a whole," it added in its quarterly earnings statement.

The company's sales of 12 billion euros ($12.60 billion) for the three months through March, up 16.4% on a like-for-like basis from a year earlier, were driven by renovation in Europe and construction in the Americas and Asia.

Saint-Gobain said it had drawn up various plans to continue its operations in "sensitive to Russian gas supplies" Germany, Poland and the Czech Republic, if Russia were to stop the flows completely.

It hopes to limit the possible impact to around 2% of group sales, Chief Financial Officer Sreedhar Natarajan said in a conference call.

The group reiterated it has no manufacturing operations in Russia and had cancelled all its investment projects in the country.

($1 = 0.9527 euros)

Reporting by Dagmarah Mackos and Dina Kartit; Editing by Edmund Blair and Bernadette Baum

Our Standards: The Thomson Reuters Trust Principles.