• Record margin of 11.3% and record operating income of €2,813m despite a difficult environment
• Significant operating income growth in North America, Asia and emerging countries, which represent over 60% of the Group’s earnings
• Strong increase in free cash flow, up 30% at €2,192m
• Double-digit operating margin expected in full-year 2023 for the third consecutive year, demonstrating the Group’s resilience
Asia-Pacific: good sales momentum and a very good margin level
The Asia-Pacific Region reported 6.4% organic growth and a strong 12.5% operating margin (12.7% in first-half 2022).
India delivered a good performance against a high comparison basis in first-half 2022, on the back of market share gains, an integrated and innovative range of solutions, the successful integration of recent acquisitions in insulation (Rockwool India Pvt Ltd. and U.P. Twiga) and the start-up of new capacity, notably in glass. Saint-Gobain continues to play a pioneering role in promoting “green” buildings in the country by offering its sustainable construction solutions. Particularly noteworthy was the first-ever production of low-carbon glass in the country in June 2023, allowing a 40% reduction in CO2 emissions (scope 1 and 2) through the use of two-thirds recycled materials as well as green electricity used alongside natural gas.
After ongoing disruptions from Covid at the start of the year, China reported good growth. In the second quarter the Group unveiled its fourth plasterboard facility and fifth gypsum factory in the country, in Yuzhou (Henan province), to respond to strong demand for these light materials as a replacement for more traditional building materials: like the Group’s other gypsum plants in China, this new site uses carbon-free electricity.
South-East Asia saw sales progress owing to the continued diversification of its range of light solutions, and continued to strengthen its position on the light construction market in Malaysia with the acquisition of Hume.
A growth strategy built on sustainable solutions and innovation
Saint-Gobain continues to outperform its markets thanks to the pertinence of its strategic positioning at the heart of energy and decarbonization challenges, and to the strength of its local organization by country, which enables it to offer comprehensive solutions to its customers.
A comprehensive range of solutions accelerating growth
Saint-Gobain’s solutions for renovation, the building envelope and innovative new light construction methods drastically reduce CO2 emissions while increasing user wellbeing (thermal and acoustic comfort, light, air quality and hygiene). Each country CEO has adopted a specific local approach:
- In France, “Saint-Gobain Solutions” is organized by market and provides comprehensive offers for commercial buildings, educational and healthcare facilities, and multi-family housing (social housing associations, developers and condominiums).
As the leading player in the value chain, Saint-Gobain organized the first “Sustainable Construction Talks” in Paris on July 4, 2023 on the theme “Global and sustainable renovation: why and how to accelerate?”, which followed the publication in April of the first international Barometer on the transformation of construction. The Group also showcased its comprehensive range of solutions in three “white papers” published during the first half of the year on educational and healthcare facilities and on the renovation of multi-family housing.
Thanks to these efforts, the Group is capturing market share on major building projects with environmental certification (HQE, BREEAM, LEED, BBC Effinergie, NF Habitat), where the value of our comprehensive offers is approximately twice as high as for traditional projects. The current renovation of Le Carré des Invalides in Paris featuring 10 Saint-Gobain solutions is an excellent example of such sustainable and low-carbon construction.
- In Poland, the “Saint-Gobain Solutions” organization set up at the end of 2022 and bringing together all local brands, encourages the development of systems and cross-selling in key segments such as premium multi-family housing, sports complexes, and educational and healthcare facilities. During the first half of 2023, the “Copernican Revolution Lab” for innovation was unveiled in Warsaw. It features numerous solutions developed by the Group: Isover insulation, Rigips plasters, Weber mortars, Ecophon ceilings and Vetrotech fire-resistant glazing. The Group is also set to launch a digital tool that will allow developers to build housing from prefabricated components using Saint-Gobain’s comprehensive solutions.
- In India, Saint-Gobain is enhancing its proximity to the end customer with a network of soon 100 “MyHome by Saint-Gobain” showrooms for consumers. For multi-family housing, Saint-Gobain is offering a comprehensive solution as part of the “Modern Homes” program, which features solutions based on glass (windows, balconies, shower doors), plaster and plasterboard (ceilings, interior walls), and construction chemicals. Thanks to this global solutions-based approach, the Group has captured market share, notably winning bids on 35 major non-residential projects. The “Central Vista” mega-project in New Delhi is testimony to these efforts, with 11 Saint-Gobain solutions used.
- In Mexico, a central specification team promoting our comprehensive offer is accelerating sales synergies between products (glass, plasterboard, glass wool, construction chemicals), with 50 multi-solution and façade projects in the first half (versus 64 projects for the whole of 2022). The brand-new Waldorf Astoria hotel in Cancun, for example, brings together the Group’s light construction solutions. Lastly, in early 2023, Mexico launched a consulting service recommending Saint-Gobain’s solutions to homebuilders.
Benoit Bazin, Chief Executive Officer of Saint-Gobain, commented: “In a difficult macroeconomic environment, the Group once again demonstrated the effectiveness of its “Grow & Impact” strategy and the resilience of its decentralized operating model. Thanks to our teams’ agility, entrepreneurial spirit and dedication, we once again delivered record earnings, margins, and value creation in the first half of 2023. Our organization by country has enabled the Group to outperform, both by proactively adapting our operations on the ground but also by making selective growth investments, including in additional production capacity and with acquisitions such as Building Products of Canada.
Over 60% of our earnings are now generated in North America, Asia and emerging countries, where trends are improving and the growth outlook is supported by demographics and rapid urbanization. In Western Europe, renovation – our biggest market – continues to show good resilience as expected, with stimulus measures and regulations aimed at accelerating the path to carbon neutrality; structural demand for new construction is growing, even though additional financing costs are temporarily impacting the sector.
Despite a moderate slowdown in its markets in the short-term, in 2023 Saint-Gobain will deliver a double-digit operating margin for the third consecutive year. Over the medium term, I am confident that the Group’s new profile places it firmly on a sustainable profitable growth trajectory.”
