St-Gobain says it needs U.S. recovery

Tag : Construction Building Materials
Saint-Gobain, the world's biggest building materials group,said its 2010 profit targets will require a “bigturnaround” in the U.S. market and it may sell bonds oroperations to raise funds.
Heavily exposed to the hard-hit U.S. housing market, where itinsulates one in five homes, Saint-Gobain a day earlier cut itsprofit forecast and announced it would dismiss 6,000 of its 200,000employees.
“We would need a big turnaround in 2010 (in order to achieveits targets),” Chief Executive Pierre-Andre de Chalendar saidon a conference call with analysts.
“The U.S. is a country that is rather cyclical – eventhough I believe the low point will continue for a while, I alsobelieve there will be a rather strong recovery.”
Saint Gobain on Thursday lowered its 2008 target for net profit atconstant exchange rates to “close to” last year's€2.1- billion from a previous aim of “modest”growth.
Finance director Benoit Bazin said the group could issue bonds orsell its packaging activities for refinancing.
“We did not do it in the first half because we did not needany particular refinancing in 2008. We have time, between thesecond half and 2009,” he said.
Mr. de Chalendar also said the company was willing to act.
“If there is any further deterioration (in sales), we willtake additional measures at the end of 2008 or in 2009,” hesaid, adding that 2009 organic sales growth would remain below themid-term trend.
Saint-Gobain has forecast annual average growth of 5 per cent insales, excluding acquisitions and the impact of exchange rates, and10 per cent in earnings per share between 2007 and 2010.
Saint-Gobain shares were up 3.54 per cent at €37.98 at 1017GMT, outpacing a European construction and building materials indexthat was down 0.69 per cent.
A global economic slowdown triggered last year by defaults in U.S.subprime mortgages has cast doubt over demand for Saint-Gobain'sgypsum, pipes, mortar and other materials.
It also makes windows for half the cars produced in Europe and hassuffered from a downturn in the auto industry.
Its job cuts are in the United States, Britain and Spain, wherehousing markets are down, and are aimed at cutting costs by€300-million in 2008.
Mr. De Chalendar said the group would maintain its dividend policyof regular rises in line with recurring net income.