Saint-Gobain stock down on soft volumes, margin concerns despite in-line EBIT

Investing.com -- Saint-Gobain (EPA:SGOB) shares fell more than 5% Friday after reporting first-half 2025 EBIT of €2.80 billion, in line with company and consensus estimates, as weaker volumes and concerns over North American margin sustainability weighed on the outlook.

Second-quarter sales were slightly below expectations, missing Morgan Stanley’s estimate by 3% and consensus by 1%, primarily due to a 1.8% drop in group volumes. 

The Americas and Northern Europe saw sharper declines. Pricing rose 1.1% overall, led by the Americas and High Performance Solutions divisions, which each posted increases just above 2%. Southern Europe pricing continued to decline but at a moderating pace.

Despite foreign exchange headwinds, EBIT rose 2% year-over-year, with the group achieving an 11.8% operating margin.

The Americas division posted record margins, offsetting weaker sales and declines in North America’s new build activity. 

Barclays (LON:BARC) noted this divisional mix was reassuring given softness across the broader U.S. market.

Net attributable profit declined 2% to €1.63 billion. Non-operating costs fell to €50 million from €125 million in the prior-year period. The effective tax rate was 26%, in line with expectations.

Free cash flow conversion, excluding growth capex, dropped to 63% from 75% in the first half of 2024. 

Working capital pressure, a small increase in capital expenditure, and higher finance costs from acquisition-related debt contributed to the decline. Net debt to EBITDA rose to 1.7x from 1.4x in June 2024.

Regionally, European margins declined modestly due to a 2.1% drop in volumes. Northern Europe outperformed Southern Europe, where revenue contraction moderated to 3.2% in Q2 2025 from 6.5% in Q4 2024. Saint-Gobain cited signs of improvement in France, with better trends in home transactions and lending.

In North America, margin gains were supported by exposure to renovation and roofing.

Latin America grew 10%, led by Brazil. Asia-Pacific delivered 4% organic growth, with India achieving double-digit volume gains and market share expansion.

Saint-Gobain maintained full-year 2025 operating margin guidance of more than 11%. 

Morgan Stanley (NYSE:MS) noted consensus already assumes 11.5%, implying flat margins in the second half. The brokerage called this guidance “reasonable” amid modest pricing, ongoing cost inflation, and weak volumes.

Management did not reiterate previous guidance for flat to slightly positive full-year volume growth. 

Morgan Stanley said the updated language no longer points to a second-half inflection, while Barclays flagged persistent softness in U.S. construction and the importance of upcoming commentary on price/cost trends and non-operating items.