Earnings call transcript: Saint Gobain Q4 2024 reports record performance

Saint Gobain (EPA:SGOB), a leader in sustainable construction, reported record financial performance in Q4 2024, with an operating margin of 11.4% and a recurring net income of 3.5 billion euros. Meanwhile, Sai Gon Vegetable Oil JSC (HN:SGO) (market cap: $13.98M) saw its stock price decline by 16.67%, hitting a 52-week low. According to InvestingPro analysis, the company currently appears overvalued based on its Fair Value metrics.

Key Takeaways

• Saint Gobain achieved record operating margin and net income in 2024.
• Organic sales grew by 1.6% in the second half of 2024.
• Sai Gon Vegetable Oil JSC’s stock fell by 16.67%, reaching a 52-week low.
• Saint Gobain expanded its Construction Chemicals platform to 6.5 billion euros.
• New product launches and acquisitions bolster Saint Gobain’s market position.

Company Performance

Saint Gobain demonstrated robust performance with significant growth in operating margin and net income. The company continues to lead in light and sustainable construction, with strong market presence in North America, Asia, and emerging markets. Strategic acquisitions and product innovations have further strengthened its competitive edge. InvestingPro data shows the company maintains a moderate market risk profile with a beta of 0.99, while its overall Financial Health Score stands at 2.16, indicating FAIR condition. Discover 12+ additional key metrics and exclusive insights with an InvestingPro subscription.

Financial Highlights

• Operating margin: 11.4% (record)
• Recurring net income: 3.5 billion euros (record)
• Free cash flow: 4 billion euros with a 62% cash conversion ratio
• Organic sales growth: 1.6% in the second half of 2024
• Net debt to EBITDA ratio: 1.4x

Market Reaction

Sai Gon Vegetable Oil JSC’s stock experienced a significant decline, dropping 16.67% to a 52-week low. Despite this recent setback, InvestingPro data reveals the stock has achieved an impressive 137.5% return over the past year, with a notable 72.73% gain in the last six months. This movement contrasts with Saint Gobain’s strong financial performance and may reflect broader market trends or company-specific challenges not detailed in the available data. The company’s current ratio of 0.09 suggests potential liquidity concerns.

Outlook & Guidance

Looking forward, Saint Gobain anticipates an operating margin greater than 11% in 2025, with volumes expected to be flattish to slightly positive. The company plans a dividend increase of 5% to 2.2 euros per share and a new 400 million euro share buyback program. Gradual recovery in Europe is expected in the second half of 2025.

Executive Commentary

"We are the worldwide leader in light and sustainable construction," stated Benoit Bazin, CEO of Saint Gobain, highlighting the company’s strategic focus. Thierry Berna, CEO of Construction Chemicals, emphasized the collaborative strength with "We are stronger together."

Risks and Challenges

• Potential macroeconomic pressures affecting market conditions.
• Supply chain disruptions could impact operational efficiency.
• Market saturation in certain regions may limit growth opportunities.
• Fluctuating raw material costs could affect profit margins.
• Regulatory changes in key markets might pose compliance challenges.

Q&A

During the earnings call, analysts focused on the impact of recent acquisitions, which are expected to contribute approximately 3% to sales in 2025. Questions also addressed the company’s positive price-cost spread and continued focus on operational efficiency, with no significant concerns about potential trade tariffs due to the company’s local market presence.

Full transcript - Sai Gon Vegetable Oil JSC (SGO) Q4 2024:

Benoit Bazin, CEO, Saint Gobain: Good morning. It is my pleasure to present our full year 2024 results together with Freda, our group CFO. Once again, in 2024, Saint Gobain delivered a very strong performance with a new record operating margin, record recurring net income, record cash flow, demonstrating the strength of our operating model and the success of our grow and impact strategy.

Let me first share with you some highlights of 2024. I start as always with a few examples in light and sustainable construction of Saint Gobain solutions being used around the world with iconic buildings. For example, Saint Gobain provided a comprehensive range of solutions, including facet systems, fireproofing, insulation and ceilings for the Research And Development District in life science in San Diego in The U. S, the largest urban commercial waterfront site in California. In 2024, we expanded our presence in high growth markets with four major acquisitions CSR in Australia, Bailey in Canada, Fosroc in India, Middle East and Asia Pacific and CEMIX in Mexico.

With these acquisitions, we have further increased our presence in the high growth geographies of North America, Asia and emerging markets, where we now generate more than two third of our operating profit and we have also strengthened our global leadership in Construction Chemicals. In 2024, we also continue to differentiate our offer through sustainability with our low carbon, energy efficient, high recycled content solutions such as the recently launched Infini Soundblock Plasterboard, which is the first in the world made of 100% recycled gypsum. We launched it in The UK with British gypsum. And we achieved a 34% decrease in our scope one and two CO2 emissions versus 2017, further lowering the carbon footprint of our products. The great results have been achieved thanks to a fantastic commitment by all our teams who are always aiming higher.

And I would like to congratulate and to thank warmly all of them. Let’s come now to the financial results. We have delivered record results in 2024 despite a challenging environment notably in Europe. A sequential improvement in sales with plus 1.6% growth in the second half of twenty twenty four compared to the previous year at constant exchange rate a record operating margin at 11.4%, a record recurring net income at EUR 3,500,000,000.0 and also record level of free cash flow at EUR 4,000,000,000 with a 62% cash conversion ratio. Schroeder will give you all the details on the financials in a few minutes.

In a nutshell, we have constantly delivered on our grow and impact strategy with first, of course, a very strong set of financials demonstrating our excellent operational execution. Second, our solutions approach reflecting in our pricing power, increased share of wallet and enhanced product mix. Third, a very disciplined capital allocation towards high growth geographies and construction chemicals and last, our focus on sustainability, which is more and more a competitive advantage for us. Before I leave the floor to Schweden, I would like to say a few words about the changes that we have announced last week. As you know, Schweden will be taking over a new role as CEO of Asia Pacific And India region starting April and succeeding to Santenham, our Asia and India CEO, who is retiring at the age of 68 after a brilliant career of forty five years within Saint Gobain.

I would like to thank you, Chardin, to thank Chardin very warmly for the deep successful impact he has made to the group as CFO for the past six years and for being an exceptional business partner for me and for all Saint Gobain colleagues. In his new role in the Executive Committee, I have every confidence that Gerard will bring all his skills, all his passion, all his energy and all his experience to accelerate the profitable development, low pressure Cheddar, of Sangoma in the high growth markets of India across also Asia Pacific and of course including our recent move big move in Australia with CSR. I’m very pleased to welcome Maud Tudeh as our new CFO. After thirteen years of Thales (EPA:TCFP) where she had various roles, operations, M and A in India, in Egypt, in France. Maude joined Sangoma in 2019 as VP of Strategy.

She played a critical role by my side in our successful acquisitions of Continental Billing Products in 2019 and also of Krizo in 2021. She has been also very instrumental of shaping the twenty twenty one Capital Market Day of growing impact with the success that we know over the last four years. In the last three years, Maude has been CEO of our French glass operations, where she notably pioneered the world premier of zero carbon production and thereafter the launch of the first low carbon glass under the brand name of OHAI. So please join me in welcoming mode. And now, Freda, I leave you the floor to take us through the financial details.

Frédéric Leleux, CFO, Saint Gobain: Thank you, Binhwa. Good morning, everyone. Let me get into the more details of our financial results of 2024. So starting with sales growth, as you can see, our organic growth are sequentially improving between H1 and H2. And we also posted the growth in the second half.

All the segments were stable or growing organically in the second half, except Europe, even though it showed a sequential improvement in H2 versus H1. For the full year, the volumes were down low single digit, bang in line with what we guided the market in the beginning of last year and the prices were slightly down given the deflationary environment that we witnessed in 2024. And when you look at the trend, the Q4 prices were virtually stable, which bodes well for the start of the year 2025. The positive structure, you can see here, the effect has actually started accelerating throughout the year with the impact of the integration of Beli and CSR in Australia. Please note that we have a working day impact minus one in Q1 as well as in Q2, slight negative in Q3 and plus 1% in Q4.

Regarding the operating results, you see here we have delivered a record operating margin of 11.4% and a record operating income at the constant exchange rate despite the fact that we had the volumes which were lower. All the segments delivered stable or increasing margin. The margin improvement year after year clearly shows the capability of the group to demonstrate its ability to deliver even in a challenging environment. And it also reflects the success of the strategic repositioning of the group and also the execution the strong execution of the team. We achieved a positive price cost spread over the full year and slightly positive in H2.

Thanks to our robust pricing discipline even in a deflationary environment. Let’s look at the other P and L lines below the operating income. We once again achieved a new EBITDA margin, which is a new record, the margin of 15.5%. The non operating costs remain below our guidance of $250,000,000 that we communicated during the Capital Market Day. The net financial expense incurred slightly increased slightly mainly due to some increase in the net debt due to the important acquisitions that we did during the year.

Recurring net income and recurring earnings per share also has demonstrated a record level. Please note that to reflect the true operating performance, we have excluded the impacts of hyperinflation and amortization of purchase price allocation from recurring net income. If you look at the free cash flow generation, you can see that this year we have set once again a new record with a EUR 4,000,000,000 free cash flow and a conversion rate of 62%. We have further reduced one day working capital, which means a total reduction of seventeen days in the last six years. This consistent performance year after year demonstrates the cash culture which is completely ingrained throughout the organization.

This also has helped to strengthen the balance sheet and at the same time, we are able to consistently invest on the growth for the Sangamon performance. The net debt to EBITDA ratio was 1.4 times at the December. Taking into account the recently closed acquisition of CEMIX and Fosroc and the net debt to EBITDA ratio will still remain at the low end of the target that we gave at the Capital Market Day, which was 1.5 times to two times in 2025. And I know, knowing Mohd very well, she will continue to keep this financial discipline and you will see that we will have the balance sheet strong even in the future for Sangaba. Now let’s look at the results by reporting segment.

I’ll start with Europe. Overall, we saw a strong sequential improvement in organic growth between H1 and H2, even though the new construction market remained down. Thanks to the renovation market, which remained resilient. Globally, all the countries in Europe have touched the low point, including France, and we expect to continue with the sequential improvement progressively quarter after quarter. We had a positive volumes in The UK in Q4, in Germany for the last two quarters, in the Eastern European countries and Spain and Italy throughout the year.

The operating margin stood at 8.4%, a new record reflecting the successful management of costs, including the headcount reduction, productivity improvement, price cost spread management, the solution journey that has got a positive impact on our business and also all the optimization of portfolio that we are doing consistently. Let’s move now to Americas. North America grew with the volumes holding up well, thanks to a dynamic renovation market in roofing. We are progressing well with our capacity expansions investments. We expect them to be operational by middle of the next year middle of this year and a progressive ramp up in the second half.

In Latin America, the markets remained down over the full year, but picked up as expected in H2, mainly driven by Brazil helped by the market share gain in the light construction market. The closing of CEMEX acquisition will further strengthen our position in Mexican market and Central America. The operating margin reached a new record of 18%. Now coming to my region, Asia Pacific. The organic growth in Asia Pacific was driven by India, where once again delivered we delivered a market share gain and the volume growth was 10%.

We continue to play a leading role in sustainable construction in India with our comprehensive and innovation innovative offer. In China, the new construction market remains significantly depressed. However, we continue to outperform, thanks to our renovation exposure and to the success of countries highly digital driven lead to the market and the way we serve the customers in the region. Southeast Asia recorded growth in H2, driven by the strong momentum in Indonesia and Vietnam. Our CSR acquisition in Australia was closed on ninth July and the integration is going on very well.

It delivered a good operational performance in the second half of the year, in line with our expectations. Each time I go to Australia, I’m really impressed with the team, their competence, their enthusiasm, the way they engage the customers in the market and their understanding of the customers’ needs. Clearly, I see under the leadership of Paul Dalton, they are generating a good number of ideas to leverage Sangamon’s strength and deliver a very strong results in Australia through the CSR team. And I’m very confident that we will create value in this attractive acquisition. And the region’s operating margin remained at record level of 12.6%.

Now let us look at the global customer markets. High performance solutions saw like for like sales down over the full year, but with a strong sequential improvement in H2. Businesses serving global construction customers grew significantly slightly over the full year and accelerated in H2, driven by both Adforced Glass Grid Solutions and Construction Chemicals growing 3.1 like for like. The recently closed acquisitions of Fostrac marks the acceleration of the group’s presence in construction chemicals markets, particularly in high growth countries like India and The Middle East and Asia Pacific. Businesses serving industry declined over the full year, but stabilized in the second half with an increase in the order book at the end of twenty twenty four.

Mobility sales were down slightly over the full year, but gained share in high value added models, thanks to its differentiation strategy and investment in innovation. The operating margin increased slightly to 12.1. Now to conclude, in a nutshell, you have seen in 2024, we have once again delivered a very strong financial performance. And I remain very confident that we will deliver even in 2025. Over the last six years, you have seen Cengaba has radically transformed and repositioned itself as a group which is going to continue to remain profitable, cash generating and value creative.

And this clearly a good performance, a consistent performance is also reflected even in a difficult environment. And that’s why I’m very much convinced that a lot more to come in the future. Now that I pass on the patent to Maud, who will further strengthen the group under the continued inspiring leadership of Benoit. And you will get to meet her during the roadshow with me and have a chance to interact with her. I commit myself to contribute to the exciting future of the group through my new role in Asia Pacific.

As you all know, I have been in the past in the operational role and I love to be on the ground. So I’m super thrilled to be back on the ground, be closer to the customer and look for how Sangabang can differentiate and develop the accelerated profitable growth in the future. As this is my last presentation of the results, it’s a very emotional moment for me. I really want to take an opportunity to thank Benoit. And I always said this quite often that any CFO of any group can contribute only when you have a CFO a CEO who has that ability to listen.

Because if the CEO is not willing to listen, the CFO can do nothing. So I had a big privilege and fortunate boss who was willing to listen, allowed me to challenge him, had the humility to have this conversation with the open mind, and that’s what made a huge difference in the journey of last six years. And I know, Benoit, that you will allow me to continue to do even in the future. So I want to also thank each one of you, all the investors, sales side, buy side. It has been a huge privilege because this is not something I knew.

This is the first experience I had. I think you all gave me a strong support. You trusted me. I think it was a great experience. I just want to thank you.

And I’m sure that I will host you one day in the region and demonstrate again and show you, showcase every good work the team is doing in the region. Thank you once again and then I’ll pass on the floor to Benoit.

Benoit Bazin, CEO, Saint Gobain: Thank you, Shladdagh. Now let me update you on our strategy. As the worldwide leader in light and sustainable construction, Saint Gobain is stronger than ever, because strategically we are positioned on attractive growth markets and also because operationally we have strong action plans to consistently deliver and execute very well. In all regions of the world, we see strong megatrends driving the need for sustainable construction. Energy efficiency in buildings, public and private is supported by enhanced regulations and fiscal support in Europe and we increasingly see a green value reflected in real estate prices.

Decarbonization of construction is another strong trend with an increased penetration of light construction methods that enables a 50% reduction in the embodied carbon and natural resource usage and also a 20% gain in productivity. Finally, the increased frequency of extreme weather climate related event calls for significant investments, be it in The U. S, in Europe or in emerging markets. Sustainable construction just means better buildings and more resilient buildings and infrastructure. Let me now zoom on each of our markets.

First, North America, which is a key growth region for us. The market in The U. S. And in Canada is supported by significant housing shortages and structural renovation needs. We have a leadership position in North America and we have been investing over the past years to strengthen it, notably with more than EUR 300,000,000 growth CapEx in 2024 and new lines and plans that will start for mid-twenty twenty five.

In Asia and emerging markets, Construction is driven by continued urbanization, expected to add roughly 2,000,000,000 European residents by 02/1950 and by ambitious programs like in Egypt and Saudi Arabia with megacities in the years to come. We are reinforcing our presence in these high growth markets, notably in India, which is the third largest contributor to the group operating profit and where we have doubled we have doubled ourselves over the last six years and added 27 new lines or plans from CapEx and acquisitions. Moving to Europe, we see a progressive recovery. For new construction, there is a pickup in housing starts and permits in some countries. Renuation as well, which represents 60% of our European sales, should benefit from rising housing transactions.

Thanks to our comprehensive portfolio of solutions, we are very well positioned to resume growth in the second half of twenty twenty five and benefit from a positive operating leverage. Beside the geographic development of our strategy, our second growth axis is construction chemicals, where we have built a global leadership with a platform representing EUR 6,500,000,000.0 more than twice what it was five years ago. We have achieved this through a combination of organic growth and successful acquisitions starting with Krizio in 2021, GCP in 2022 and continuing with the recently closed acquisitions of CEMIX in January and Forsrock beginning of February. Under the leadership of Thierry Berna, our CEO for Concentration Chemicals, Krizo and GCP are delivering strong synergies and have achieved a combined EBITDA of EUR $325,000,000 in 2024. This represents an EBITDA margin of 20%, one hundred and forty basis points above 23 on top of the more than 400 basis point improvement we have delivered the previous year.

The integration of ForceRock will unlock significant synergies as well with its strong brand, also complementary geographical footprint and comprehensive portfolio of technologies and applications that will reinforce our offerings, particularly in the infrastructure space. Let’s hear now directly from Thierry Bernhardt and Rob Bonnichi, the CEO of ForceRock, with reporting to Thierry.

Thierry Berna, CEO of Construction Chemicals, Saint Gobain: It is with great pleasure that I welcome the Fosroc teams to Saint Gobain. Fosroc is a strong, high performing business that will bring great value to our group. We have built a global platform in construction chemicals with a balanced exposure to both fast growing regions like India and The Middle East, where growth will be driven by population increase and reorganization and to mature countries where growth will come from innovation and sustainability. In addition to reinforcing our established concrete admixtures and cement additive offerings, Fosroc significantly complements our product range in segments such as waterproofing, adhesives and sealants, concrete repairs and flooring. The integration has already started under my supervision and will be carried out by the same team with the same methodology and energy that made the entry of Khryso into the group and the combination with GCP in 2022 such a great success.

With FastRock, we will become an even better partner for our customers and I’m very confident that we will create a lot of value for our shareholders. We really are stronger together. And now I’m pleased to introduce Rob Bonicchi, Fasroch Chief Executive Officer.

Rob Bonichi, CEO, Fosroc: Good morning, everyone. My name is Rob Bonichi, and I’m the Chief Executive Officer of Fosroc. I’ve been in the construction chemicals industry for twenty three years, spending the last decade here at Fosroc. I joined the executive committee in 2015, leading global sales and marketing before expanding to R and D, operations, and M and A. Fosroc is a global leader in construction chemicals built on a foundation of technical expertise, innovation, and very strong customer relationships.

Our specification driven approach means we work closely with engineers, architects, and contractors to develop tailored solutions that meet the most demanding of project requirements. It’s these expertise that have made us a trusted partner in major infrastructure projects where performance, durability, and long term sustainability are critical. Fosroc’s specification driven expertise and technical capabilities are completely aligned with Sangoban’s vision as the worldwide leader in light and sustainable construction. And that’s why joining Sangoban represents such an exciting opportunity. Together, we will unlock new growth opportunities.

Benoit Bazin, CEO, Saint Gobain: Thank you, Thierry. Thank you, Rob. And welcome again to all the FOSFOC teams within Sangoban. Acquisitions and divestitures are part of a continuous journey to optimize our profile for strong profitable growth. We have a disciplined capital allocation policy.

And since the end of twenty eighteen, we have rotated around 40% of our turnover and will continue to be active in acquisitions and divestitures as part of our value creation focus. Our recent acquisitions are performing well, notably in Canada, where we have built a comprehensive offer with the acquisition of Kecan, Building Products of Canada and Bailey, which are running at a combined EBITDA margin of 19%. And in Australia as well, where we have established a leadership position with the acquisition of CSR, the integration of CSR is going smoothly with synergies delivering as planned and we have delivered an excellent EBITDA margin of 18.1% in 2024. Thanks to our targeted CapEx and also M and A in high growth profitable regions, more than two thirds of our operating profit now comes from North America, Asia and emerging countries. So our success is due to the strategic decisions I just highlighted and that we have made in terms of geographies and also in terms of attractive segments such as Construction Chemicals.

They are also linked and based on our powerful operating model. Our focus on execution is what allows us to deliver consistently. We have a strong country led organization, which is well adapted to our local business model that has demonstrated its capacity to navigate and overcome various challenges and economic environment. Our country CEOs own their P and L. They are fully accountable and empowered to take proactive operational action to deliver profitable growth.

They also leverage the full portfolio of Sankaran solutions in their country in order to drive cross selling opportunities and increase their share of wallet with our customers. The solution approach is a key differentiating factor for St. Geban. Our comprehensive range for all construction and billing types is second to none. I would like us to hear directly from Christian Bacot, our VP, Marketing and Development and Thierry Fornier, our CEO for South Europe Pinalist and Africa on the solutions.

Christian Vakko, VP Marketing and Development, Saint Gobain: Hello. I’m Christian Vakko, vice president of marketing and development at Sanguba. Our marketing team plays a crucial role in structuring the group’s offering and providing tools and methodology to bring those solutions to the market effectively. With a global perspective, we share best practices, identify trends, and support countries in rolling out Sangobin’s offer while ensuring local market alignment. At Sangobin, we focus on addressing specific customer pain points to deliver impactful performance.

With our solutions based approach, we go beyond individual products and create comprehensive solutions for specific market segments such as schools, hospitals, or office buildings. This is one of our key unique selling propositions, combining deep expertise, a wide product offering, and complementary services to create differentiations and competitive advantage. Hello.

Thierry Fournier, Senior VP, CEO Southern Europe, Middle East and Africa, Saint Gobain: I am Thierry Fournier, senior vice president, CEO, Southern Europe, Middle East, and Africa. Indeed, Saint Gobain offers a full range of solutions for all building types, positioning us as a one stop shop for our clients. Our breadth of solutions is unparalleled in the industry, Having all our solutions in one country managed by a single local manager allows us to adapt to our clients’ needs. Let me highlight two standout projects that show the power of Saint Gobain solutions approach. First, in France, we contributed to Paris Saclay Hospital project spanning 49,000 square meters with over four eighty beds.

This hospital focuses on patient and staff well-being, innovation in the service of care and excellence of care. For this project, we provided a range of Saint Gobain solutions including multiple plasterboard solutions, fire safety glasses and ceilings. Another example is the Red Sea project in Saudi Arabia. For this tourism megaproject, part of Vision two thousand and thirty of the Kingdom (TADAWUL:4280), we provided a complete solution including insulation, plasterboard, ceiling solutions and construction chemicals for the Sheybala Resort. We are just beginning our solution journey, but we are already seeing its clear potential, improved product mix, market share gains and overall acceleration of Saint Gobain’s growth in Southern Europe, Middle East and Africa region.

Thank you.

Benoit Bazin, CEO, Saint Gobain: Thank you, Christian. Thank you, Thierry. As you have heard, this solutions approach allows us to improve our product mix, increase our share of wallet with customers and outperform the market altogether. Digitalization is also key to our solutions approach across the value chain, be it a door to door logistics setup that we have developed in JETAM over the last three, four years, a digital ordering platform in Australia at CSR or simulation software for Craftman in France, which allows us to outperform the renovation market. Our differentiated solutions also benefit from our commitment to innovation, which I will illustrate with two examples, GlassHawk X that brings superior performance, thanks to its At Force glass grid and which had been launched successfully in more than 80 countries and above now EUR 200,000,000 in sales just in the last few years.

Pre proof liquid sealant is a complementary solution to GCP pre proof waterproofing membrane that brings significant productivity gains to our customers. All this strategy that I presented to you is bringing attractive returns to our shareholders. In 2024, total capital return to shareholders from dividends and share buybacks amounted to EUR 1,500,000,000.0. Since 2021, dividend per share has increased by 16% per year and we have finished our five year EUR two billion share buyback program in 2024, ’1 year ahead of plan. In 2025, we plan a dividend of EUR 2.2 per share, up 5% And we have announced a new share buyback commitment of EUR 400,000,000 in 2025.

Now let me give you the outlook for 2025. In a macroeconomic environment that remains contrasted, St. Gebang will continue to demonstrate a very strong operational performance in 2025. Assuming no major disruption linked to geopolitics, we expect the following trends in the different segments: stabilization in Europe with a gradual recovery country by country expected in the second half construction to maintain a good level of activity in The Americas strong outlook in Asia Pacific and for high performance solutions dynamic growth in construction chemicals mobility to hold share and thanks to a strong value added solution approach and a gradual recovery in growth expected for most industrial markets. We are expecting an operating margin of more than 11 in 2025, which is above the initial range of our strategic plan growth and impact.

Coming back to our strategic plan, Grow and Impact, you can see here that we have delivered on all our Grow and Impact financial objectives that we set out at the Capital Market Day in 2021. I’m very happy to invite you to our next Capital Market Day that will take place on October the sixth of twenty twenty five, where we will set up our group ambition for the next years. This will be an opportunity to demonstrate how we will continue to outperform, leveraging further the very strong foundations that we have built over the past years, a clear strategic vision on light and sustainable construction worldwide leadership, our solutions approach, our value accretive capital allocation and our commitment to strong shareholder returns. So I look forward to unveiling the group’s new ambition on October. In the meantime, as you have heard from Cheddar, I am we are very confident that 2025 will be another strong year for Saint Gobain based on the strong strategic alignment that we have created, very powerful and also excellent operational execution.

Thank you. And now let’s turn to your questions. We will start as always with the questions in the room, you on the left and then we’ll go with you. Please.

Speaker 6: Hello. Thank you for taking my question. First question is not really a question. It’s a message for Sreedhar. I wish you good luck for your new position.

Also good luck to Mud. And maybe a question to you, why this move? Is it maybe a new opportunity, a new challenge for you? Why this move to the EMEA? And maybe a second question on the guidance regarding your message of cost reduction cycle recovery, it seems to be a bit cautious.

So could we have your assumptions in terms of price cost spread and volumes?

Benoit Bazin, CEO, Saint Gobain: So, Shailan, first question and we’ll take

Frédéric Leleux, CFO, Saint Gobain: So you’re saying in the new job, the opportunity and the challenges? Look, there are plenty of opportunities. I can just spend the whole day because it’s a region which is growing, booming. It’s a region which is growing with the population and you know that our business is directly linked with the population growth. And Sangaba is bringing differentiated solution in this market.

It’s shaping the market. I mean there are a lot of technologies, lot of solutions which didn’t exist in the past and in the last few years we have made a big starting point there. So we have a strong brand recognition, we have a good route to the market, we have a solution which is getting more and more accepted. And we are the one who’s seen as a leader in the green and sustainable light and sustainable construction in the market in the region. And I can tell you, I mean, the CSR is another good addition to the Sangamon’s portfolio.

A continent? It’s a continent. It’s a fantastic continent. And I think, you know, when you look at the team, the enthusiasm, the knowledge that they have, the rigor with which they work, I’m all the time, every time I go, I come back with a very positive feeling. So I’m only excited, be rest assured, I don’t see this as a challenge.

Benoit nicely said no pressure, but I love pressure because it’s fun. I think we need to keep ourselves on our toes and we will continue to do our best. I think that’s our approach Pangavang took in the last six years. Each time we faced with the challenges, we just said, okay, what is it that in our control? How are we going to do it differently?

And just deal things which are under control and not get bogged down with things which are not under control. I think that’s an approach I’ll take even in the future.

Benoit Bazin, CEO, Saint Gobain: Thank you, Freda. And maybe I will give you a bit of color around the guidance on volume and price and maybe also on the margin if it’s part of your question. So on volumes, we expect volumes overall to be flattish to slightly positive for the full year of 2025 at the group level. We expect H1 twenty twenty five to be slightly negative, particularly in Q1. Gerhard mentioned also the working day impact because of Europe and many trends.

And we expect growth in H2 with a progressive recovery in Europe. As always, we will keep a positive price cost spread and prices to be slightly positive as well. So and then on the margin side for 2025, we are always very ambitious on the margin. We will remain very disciplined on execution, beat the price cost spread I just mentioned, beat all the productivity actions, the solution journey to improve the mix. And I’m happy to say that for the last year of our Capital Market Day, the floor is what used to be the ceiling when we started the journey.

So I think it’s a real step up in the consistency and the performance and the ambition of Saint Gobain. And as always, we’ll do the maximum. Second question from Yacine.

Speaker 7: Yes. Good morning. Yes. Ingrid from On Field Investment Research. So a couple of questions.

First, on the capital allocation, you’ve done a very good job of building a leading position in concrete admixture and cement additives. I think your team started to mention entering the waterproofing, adhesing and sealant, concrete repair and flooring market. My question would be, what kind of opportunity do you see in this space, in waterproofing, adhesive, sealant? Is it something that we could see where we could see like a substantial growth in the next five years organically and through acquisition? And then the second question on your investments.

So I think you invested a lot in a few plants in The US. What kind of return do you expect on those investments? And what would be very helpful is to get a sense of what kind of additional operating income do you expect on a full year basis for all these plants in roofing and pestlebot?

Benoit Bazin, CEO, Saint Gobain: So yes, Concentrant Chemical, as you know, it’s a billion market from tile fixing, renders, waterproofing, concrete repair, flooring, additives and features that you mentioned. So Krizio was clearly the specialist now with GCP. We are the number one on cement additives worldwide. Weber historically was the worldwide leader and we aren’t worldwide leader on tight tipping. So we have the full range.

We have made quite significant acquisitions on water proofing already not as big as the Krizio GCP that you mentioned but IsoMAX for instance, in Australia was waterproofing. We have done Braspreferred two years ago in Brazil. So waterproofing is indeed a segment that we have invested and for stock is very strong on waterproofing. GCP, you may remember that GCP had also a lot of waterproofing envelope vapor barrier, ice and water shield for roofing. So indeed the construction chemical space is the full range and we are building both capacities.

We invest on new plants and also technologies across the board. It’s a very good question that we’ll address in-depth with Trivia now the Capital Market Day to give you the color of what we have done and the richness of our portfolio and of course the expectation and the ambition going forward. But yes, we are investing the full scope across the board of construction and nickel. It’s part of Thierry what Thierry presented in November 2023 when we had the Investor Day at Hermes, the Crizo R and D and main plant in France. If you remember well, we had this presentation on Concentrating Migo.

In The U. S, so some plants are going to start progressively from mid-twenty twenty five. So it’s mainly roofing and plasterboard. Roofing, we are sold out and we have been sold out for some time. We are sold out at the beginning of the year.

We increased prices on roofing as we speak, so it’s a stronger method. We need capacity. The kind of increment of capacity in roofing is in the 2% to 3% range. So it’s not messy, but it’s something that we need to serve well some of the markets. And we are gaining share a bit in some segments of roofing.

Plasterboard, the second line of Palatka in Florida, we have a unique position in the Southeast Of The U. S, which is a growing region. So it’s also an addition that we absolutely need. And overall, we have more than 20% return on those investments in terms of CapEx. It’s a bit too early to tell you because it’s not going to be visible in 2025 the food operating profit that we’ll add because the plants are going to start around the summer.

So progressively, we will load the plant, but we need those capacities to follow-up the growth of the market in North America. So it will be good additions for both Plastrobot and Roofing.

Speaker 7: Maybe a follow-up question on your guidance. I think there is a little bit of concern among investors when you see energy price rising, gas pricing rising in Europe. What kind of hedging do you have on gas and electricity? And also, when you look at the momentum for pricing, I think it’s been quite good throughout 2024 where you’re ending up the year with relatively stable pricing. Do you see some price increases in 2025 when we look at the You

Benoit Bazin, CEO, Saint Gobain: want some hedging and

Frédéric Leleux, CFO, Saint Gobain: I take the Okay. So, on the hedging, it’s something which we have come back to the old policy that we do it on an average of 50%. That’s nothing specific we did. The only the exception is during the COVID and the energy crisis that we had, we made such an exception, but it’s not business as usual. We continue to cover a part of it in a very systematic manner.

Benoit Bazin, CEO, Saint Gobain: And on pricing, yes, we have multiple you have seen that the price evolution has been improving quarter after quarter in 2024. And at the beginning of the year, we have announced in multiple geographies price increases, beat in The U. S. I mentioned roofing. We have announced also some price increase later on for gypsum in The U.

S. We have multiple price increase in Europe. So yes, there has been a bit more inflationary environment at the beginning of the year. So we will continue to push for price increase in different geographies and different segments. Thank you.

There are another question in the room. If not, we will go to the first question from Elodie Rall from JPMorgan. Elodie, please go ahead.

Speaker 8: Yes. Hi. Good morning, everyone. And congratulations to Strinda again on your journey at Saint Gobain, your next adventure. And we will miss you, obviously.

So my first question is on your guidance again, but just to have your view on the impact from acquisitions that you have announced and so the contribution that you’d expect already on revenue and operating profit for 2025 as well as the FX expectation that you have at this stage? And then second, as volume starts to recover, as you said, from H2 and going forward, if you can help us quantify your expectation on impacts on margins going forward? And if again, Torit, a last question, a typical one. What would be your exposure to Ukraine, Russia ceasefire, so basically recovery? And if there is any concerns to have on tariffs from Trump?

Thanks very much.

Benoit Bazin, CEO, Saint Gobain: I do not understand, Elodie, your last question, our exposure to Ukraine and what to expect?

Speaker 8: So Ukraine and then tariffs impact potential.

Frédéric Leleux, CFO, Saint Gobain: Yes. So LOD on acquisitions, we expect around 3% impact positive impact on the sales. And in terms of profit, it should be around €200,000,000 addition in 2025. And we as you know that the integration is going on well.

Benoit Bazin, CEO, Saint Gobain: You want to mention on the volume? So we expect at the group level, we expect volume to improve in the second half. Of course, as we told you several times, the impact on operating leverage will be more in Europe when volumes improve gradually in the second half country by country because we have troughed in all the countries including France in the fourth quarter. And Gerhard mentioned to you that we have volume growth in Q4 in The UK and two quarters already in Germany. So the margin impact on operating leverage coming from volume will be more Europe than other regions of the world.

When you see the margin that we have in North America, we are already at a very healthy margin. So we don’t expect a significant leverage going forward.

Frédéric Leleux, CFO, Saint Gobain: And you just have to keep in mind that there is a comparison based effect in particularly in Europe in the first half. And also we have, as I mentioned, the working day effect also the negative. So you should expect that Q2 will be particularly in Europe and in France will be a viola.

Benoit Bazin, CEO, Saint Gobain: On the third question, Elodie, Ukraine and then tariff. Ukraine, so we have a very small presence in the West Part of Ukraine. So I don’t think we can expect anything in the very short term. Of course, there will be some activity going forward and we are well positioned notably from Poland to service Ukraine. The Polish manager, she is taking care of Ukraine.

On the first order of magnitude, we could expect on the energy side if something positive happens on the conflict that could release a bit of price pressure on energy. So I think that would be the first order of magnitude or at least on the short term. Going from on, there could be more activity indeed to rebuild Ukraine. But I think it’s too early to say and we see that it’s still a bit wide expectation or wide scenarios on Ukraine. So I would not bang on that for 2025.

On tariff, as you know, Sangoban maybe we are not putting that forward enough, but Sangoban both from a business standpoint, we are on local construction markets. And from a governance standpoint, we are organized by country is very strong in the geopolitical uncertainty, the deglobalization of the world of today. As you know, we have 125 plants in The U. S. They service The U.

S. We have 37 plants in Canada. We are number one in The U. S, number one in Canada. We service Canada.

We have a Mexican manager in Mexico. So we are well positioned. Our products don’t travel. The customers are local. So I’m not worried about this kind of impact.

It’s true in North America, but it’s true also elsewhere. So I don’t expect that to be significant. For me, one question that US administration has not yet landed and maybe you have some questions on the geopolitics. The workforce impact on The US is they are massive deportation of workers that could have impact across The U. S.

Economy. We don’t see that. I think it’s too early to tell, but this should land. But the workforce impact, of course, on the construction infrastructure for the companies which are exposed to infrastructure or building activity, that’s something that we have to watch. So far, there is no impact and we have a good start of the year in North America.

But that’s, I think, even more important than anything else because we are local and products don’t travel. So nothing negative to expect.

Speaker 8: Thanks very much. And I had just a question on FX in expectations for 2025 as well.

Frédéric Leleux, CFO, Saint Gobain: Minuses, so that’s where we see. At this point of time, it’s very difficult to always predict. But when we look at the real current situation, that’s how I look at it.

Speaker 8: Okay. Thanks very much.

Benoit Bazin, CEO, Saint Gobain: Next (LON:NXT) question is from Efraim Ravi from Citigroup (NYSE:C).

Speaker 9: Thank you. Sort of two questions. Firstly, on CSR, I mean, the 18% margin EBITDA margin that you’ve said, I mean, from memory, CSR used to make about 16% EBITDA margin and seems like a fairly big jump this year. I mean, is there a change in scope in the way you’re kind of reporting CSRI is the aluminum business already excluded or is it as was before? And again, is this the kind of margins you would expect in that business going forward?

That’s the first one.

Frédéric Leleux, CFO, Saint Gobain: Yes, sir. What we reported was 17.7% and they are at 18.1%. So they are slightly better than what we had communicated to the market when we made the announcement.

Benoit Bazin, CEO, Saint Gobain: You had the second question, Ifram or

Speaker 9: Yes. On the second question, I mean, if you look at the margin improvement in the businesses that you have recently acquired like GCP, etcetera, I mean, pretty much that accounts for more than 100% of the earnings growth over the last year or even the last two years. So I mean, is there a kind of a story that the rest of the businesses are still under pressure that the legacy Gibson World Board and distribution businesses, while it’s kind of really the acquisitions that are really kind of driving the margin growth that we’re seeing right now in Saint Gobain?

Benoit Bazin, CEO, Saint Gobain: We clearly see that even in Europe, where the markets and the environment has been very challenging. So it had a negative impact on volumes and the negative impact on absolute profit, but we improved the margin in Europe. So again, as Freda mentioned, all the segments of Saint Gobain in 2024 improved, stabilized or improved. So I think it’s a collective success. So yes, all the businesses are very active on driving the value creation country by country and the improvement of the margin.

In terms of mass of profit, we have seen that in Europe. The absolute amount of profit dropped from the year before and that’s something gradually that we will recover going forward with the gradual recovery of Europe that we expect starting in the second half of twenty twenty five. Thank you. Next question is from Brijesh Siar from HSBC. Please go ahead.

Frédéric Leleux, CFO, Saint Gobain0: Hi. Good morning, gents. I have two as well. The first one is on the margin side. In Asia Pacific, that margin came at 12.6%, which is healthy.

But when I look at your previous target of having 13% to 15% margin in that market, so the question is, is there anything which you are still lacking there or you need to do a little more in the portfolio optimization in that business to kind of bring that towards mid teen margin? And the second one is similar on HBS, the high performance and there as well you are probably undersuiting your target there. So is there anything any of that like the mobility business which is underperforming at this point in time, I. E. The auto glass or glass business very broadly need some portfolio optimization to help it improve it.

Benoit Bazin, CEO, Saint Gobain: Will you take your next region, Shradhar and I take HPS?

Frédéric Leleux, CFO, Saint Gobain: Okay. So on Asia, if you look at it, there are a couple of things you need to keep in mind. China has been suffering, you know that. So it has such an impact. And CSR, anytime when you do an integration, there are always some technical effect in the first few months.

But globally, I think we are in good shape. If you look at the second half margin is actually in an improving margin than the first half. So I remain quite confident and there is no reason in Asia, I have no intention to diverse any business because it’s all businesses, good businesses and continue to grow. So we are talking I’m going to invest and grow. That’s what the mandate with which I’m going.

Benoit Bazin, CEO, Saint Gobain: Thank you. And on HPS, the margin improved slightly in 2024 versus 2023. We mentioned a few times already that one business that suffered last year is at force. At force now is impacted more than others by new construction in Europe. So that business has been gradually improving by the end of the year, but suffered overall during the year 2024.

We have seen a nice evolution over the years of mobility, so improving with a lot of innovation, value add type of strategy. And their businesses exposed to industrial markets stabilize during the year and improve their order book in the last quarter of twenty twenty four. So I’m confident that we will see further improvement on those overall segments in 2025 because the dynamic is positive. And of course, within HPS, we’ll keep a strong dynamic in our Concentration Chemical. So the trend is positive and we have seen it in the second half versus the first half, in the last quarter.

You see it also in the price and volume details of HPS. So it bodes well for an evolution in 2025. Next question is

Frédéric Leleux, CFO, Saint Gobain0: Just the second question. Sorry, go

Benoit Bazin, CEO, Saint Gobain: ahead.

Frédéric Leleux, CFO, Saint Gobain0: No, I was just asking about the Asia biz segment again. Sorry, Srita, coming back on that. Given Srita’s enthusiasm and how you are kind of investing in the last couple of years, it sounds like the Asia is going to be much bigger pie of the overall group than what it is right now. I mean, obviously started with 4%, now it’s 6%, it will soon be 8%. But is it easily conceivable in the next three to five years that the Asia will become somewhere between mid teen to around 20 of the overall group sales?

Benoit Bazin, CEO, Saint Gobain: All is ambition during the Capital Markets Day in October. Let me

Frédéric Leleux, CFO, Saint Gobain: get into the job.

Benoit Bazin, CEO, Saint Gobain: And keep in mind that we have a large portion of hyper firm solutions which is linked to Asia. And this is why again when you look at the operating profit of the group today all together across all segments, we have 34% in North America, 30 4 Percent in Asia and Emerging Markets. You know and I mentioned it that India is number three in the profit pool of San Juan. So yes, Asia is much broader and bigger than just the regional exposure that we showed to you in the segment of Asia Pacific. You don’t have the full effect of CSR because we have only a bit less than six months in 2024.

But yes, we have a strong ambition in Asia Pacific across all segments of the group. And Freda again will highlight that as part of our ambition for the next years for Asia Pacific. But it’s the journey and the mandate and the ambition that Scudan will land for us in Asia Pacific. Next, please.

Frédéric Leleux, CFO, Saint Gobain0: Thank you. All the best, Sadar.

Benoit Bazin, CEO, Saint Gobain: Arnaud Lehmann from Bank of America.

Speaker 9: Arnaud? Thank you very much. Good morning, everybody. I have two questions, if I may. The first one is regarding M and A activity.

Can you talk about the pipeline of potential acquisitions? And in particular, are you still looking at more acquisition in the construction chemical space? That’s my first question. And my second question is on your recent acquisition of CEMIX. Can you explain why you’re going to include CEMIX in the Americas region, while all the other Construction Chemicals assets are in the HPS division?

I thought you were creating some sort of global entity for Construction Chemicals. And slightly related to this business, if there were tariffs between Mexico and The U. S, would there be a risk in terms of the synergies between FEMIX and I guess GCP? Thank you.

Benoit Bazin, CEO, Saint Gobain: Thank you, Arnold. So we continue to have strong activity in terms of M and A. You have heard also from Shreedhar that we have a solid balance sheet, a bit below 1.5 in 2024, slightly above, but in the low range of 1.5 to two. That is the range that we gave four years ago at Capital Market Day. Of course, we want to keep a very solid balance sheet.

Yes, we are active on geographical development and also Concentration and Chemical. One example that I didn’t highlight, but it was on my side, Killwater in The UK that we closed in December is a nice addition also to overall our exposure on Concentrating Chemical. But it’s not only Concentrating Chemical. Gypsum is a fantastic business that we grow nicely with the very high margin altogether. So roofing, we grew in Canada on top of The U.

S. So we have multiple avenues for growth on Sangoma. Our worldwide leadership on light and sustainable construction, it’s on residential segments, ceilings, roofing, glazings, facade, flooring, partitions, all these plus non residential plus infrastructure. So this is also what we will highlight at the Capital Market Day, what is the ambition across those different segments, residential, new and renovation, nonresidential and infrastructure. CEMEX, no, there is no impact from the tariff because CEMEX is selling very little to The U.

S. They have more presence in different countries of Central America like Guatemala, like Ecuador. So it’s more Mexico plus Central America than anything else. It’s part of the tile fixing, weatherproofing. We had already a business in Mexico impact weatherproofing that has been reported in the Latin America, Americas region.

And this is why at this stage we put CEMIX in this branch. But again, this is something that we highlight the global picture of Construction and Chemical during the Capital Market Day in October because indeed, like we did for Fosroc, it’s one group now on all the Fosroc regions from Zebra, GCP, Krizo, Fosroc. It’s one management. So India, Middle East, Asia, all these came under one management to make sure that we maximize the synergy of all those businesses across those regions. And of course, this is something we are thinking of going forward.

Speaker 9: Thank you very much.

Benoit Bazin, CEO, Saint Gobain: Next question is from Sedan from Morgan Stanley (NYSE:MS).

Frédéric Leleux, CFO, Saint Gobain1: Thanks very much. Hi, gentlemen. I’ve just got a question on your intention for M and A in 2025. This or 2024, you spent over 3,000,000,000 on acquisitions. It’s a big number for the business.

If I look at sort of a normalized free cash flow level of the business after the growth CapEx for the two years, we’re sort of run rating at about 3,000,000,000 And then you’re paying a little bit more than billion in the dividend, and then you’ve got your new buyback of million. So round numbers that’s leaving the business with billion of sort of unaccounted for cash in 2025, which is fairly quite a big step down from the level of spend in ’twenty four. And I know you’ve got balance sheet capacity because appropriate level of gearing and all, but I’d just like to hear how you’re thinking about the cadence of M and A in ’twenty five. Should we expect another very large year in spend like we had in ’twenty four? Or is this more back to sort of the more normalized level of spend of maybe 1,000,000,000 to 1,500,000,000.0?

So that’s the first question. And maybe you can talk about the landscape for M and A, etcetera. And then the other question is just on the cash flow statement. I know you define free cash flow before growth CapEx and before a lot of other cash items. But if we look at the sort of more clean reported cash flow statement, then the net cash from operating activities after capacity investments and after IFRS 16, that cash actually declined in 2024 relative to 2023.

And there’s some quite chunky numbers around other noncash other operating cash items and sort of deferred tax changes and provisions and liabilities, etcetera, which seem to explain the delta. So I’d just like to understand what those items are. And while they might not be operating cash items, they are a cash call on the business. So if you could give us a little bit of clarity on how to think about those numbers into 2024? Thank you.

Benoit Bazin, CEO, Saint Gobain: Thank you, Fidel. So first, I would say on acquisitions, as I mentioned, we are super concentrated on quality of execution. I think what we demonstrated over the last six years is that we have created a lot of value through our acquisitions. Continental was year two, Crezo was year two and you have seen the improvement of GCP. So before letting Shreedhar mentioned about the capacity of the group in terms of cash, I can tell you that we are very concentrated on a good well documented synergies and delivery on the acquisitions that we have made in the last year.

Frédéric Leleux, CFO, Saint Gobain: Yes. So, Sidhar, some of the observations are very valid. First is when you look at the 2025, you’re trying to see where we are going to lead in terms of debt. You rightly said it’s the shareholder return is more slightly above $1,500,000,000 that’s where I’m seeing $1,500,000,000 including the share buyback. Then you have the growth CapEx close to $1,000,000,000 then you have don’t forget that we have to be paid in the beginning of the year, CEMIX and FOSSROCK.

So again, it’s around $2,000,000,000 dollars So all that if you add up it will be slightly the debt should slightly go up in 2025. Second point on your clean cash flow. First is, yes, there are certain one off implications which are non operational. For example, we made a conscious decision to externalize certain pensions, particularly in France to reduce the volatility on the provisions that we have in pension. So some of these are tactical moves that we take.

Again, it will all have an impact on the positive impact in the future cash flow. So it’s one off decision that we took. Second is we have this year acquisition related costs. As you rightly said, yes, we did certain important acquisitions in this year. So there are certain costs related to acquisition.

Again, this is one off. And particularly in CSR, we had an element of stamp duty, which was known during the due diligence. This is something which is law. We need to do it and it also has an advantage because when you reevaluate your assets, particularly the land, you have to pay the rest time duty, but then you don’t have to have the tax implication when you sell the land. So you will see that benefit, positive benefit in the coming years.

So, yes, it is one off and that’s why it doesn’t make sense to put it in the operational cash flow.

Benoit Bazin, CEO, Saint Gobain: Thank you, Shailesh. Perfect. Thank you. As always, we will I mentioned that we are extremely focused on the quality of integration and synergies. We have heard from Rob Bonici and Thierry Bernard have been working together for the last six months on preparing all the synergies, IT purchasing, organization supply, etcetera.

So that’s extremely important. And second, we are also very disciplined in terms of capital allocation, in terms of strategic allocation towards geographies, high growth and construction and clinical and executing well. So we’ll keep going forward this discipline and we’ll continue also to create value with M and A. So yes, there is acquisition. There is also some cash coming from divestiture.

So you have to think of the net of acquisitions and divestitures. If I take now, there is no more question on the line. So I take the question on the Internet and I will read them so that we can answer. So question from Paul Roger from BNP Paribas (OTC:BNPQY) Exane. Portfolio recycling has structurally added two fifty basis points to the margin.

What is this figure now that we have done more? I mean, it’s around the same. So I think Paul, you have already landed at the right figure around two fifty basis points, if I’m correct. Yes.

Frédéric Leleux, CFO, Saint Gobain: And we’ll have some small impact positive impact of fast rock and semi mix in 2025.

Benoit Bazin, CEO, Saint Gobain: Second question from Paul is several companies in the sector have taken action to crystallize U. S. Value via spins, minority listings, etcetera. Is this something Sangiban would ever reconsider? The answer is no.

We have a lot of synergies in terms of development, in terms of innovation, in terms of manufacturing across the world. So no, I don’t want to lose those synergies. When you think of GCP, for instance, the waterproofing synergy that we have around the world with roofing in The U. S, with other business segments in Latin America or in Europe or in The Middle East, that’s something I don’t want to lose. And the worldwide leadership of the group and the thought leadership on sustainable consumption, when we travel to The U.

S, when we meet customers, when we go to Europe, Middle East, Asia, all this is part of one global leadership and that makes the power of the group. So no, I don’t want to contemplate this kind of evolution. A question from Jareni Ghosh from Societe Generale (OTC:SCGLY). Question could be for you. Should our costs are around EUR 39,000,000,000, of which EUR 9,500,000,000.0 of personal expense for the other 30.

Could you give us a split for materials, energy, logistics, fixed and maintenance costs? How much of personal cost and other OpEx are fixed? I think there is a big miss, which is the distribution part where we buy and resell. So I think that’s maybe a question that should be taken offline because it’s I think we are a bit far off from the Yes.

Frédéric Leleux, CFO, Saint Gobain: But other than that, the big tickets are the raw material and energy is $12,000,000,000 and then you have the salaries and the fixed cost is around $17,000,000,000 and I said in the past always that this $17,000,000,000 1 third of the $17,000,000,000 is semi variable. So that’s where that’s how that analysis reflects.

Benoit Bazin, CEO, Saint Gobain: Another question from Societe Generale, you reached 11% in 2023, ’20 ’20 ’4 was above in H1, H2 still around 11%. Any conservatism into guidance of more than 11 margin? What are the different moving parts? And how should we expect the margin to develop over the four quarters? I think I mentioned on the margin guidance that first, we stay ambitious.

That has been what we did together over the last years. We’ll continue to be disciplined, of course, on all the cost at best, the productivity, proactive actions on headcount like we did in Europe, the price cost spread. And I’m happy to finish the growing impact period with what used to be the ceiling being now the floor, not because we are in building materials that we transform ceiling as floor, but it’s part of the journey over the last five years. And the different moving parts, I can tell you that price volume, it’s always a trade off, an intelligent trade off. We mentioned that the price cost spread will be slightly positive.

We are confident in Europe that we have reached the low point in all our main markets. Acquisitions, Gerard just mentioned that it should add a bit on the margin side. There are plus and minuses on the freight. But again, we are ambitious on the margin and this is how we will drive the group going forward. A question again on Saucis Now, direction trends in pricing and volumes in January, February.

What are your expectations for the full year 2025? I don’t comment specifically on January, February. It’s in line with our expectations, so nothing special to report. I think I mentioned that we have multiple pricing actions at the beginning of the year in multiple geographies. We are doing well and strong on Wuxing, for instance, in North America.

So overall, nothing to

Frédéric Leleux, CFO, Saint Gobain: And we remain confident to deliver price cost spread positive. Of course, it will be a slight positive in 2025, but yes, positive.

Benoit Bazin, CEO, Saint Gobain: And the expectation for the full year 2025, I think I told you that we expect flattish to slight positive volumes for the full year 2025 at the group level. And I mentioned to you the H1, H2 impact and notably because of Europe progressive recovery moving into Europe in the second half. A question from Kepler. The reasons to be cautious operating margin guidance in 2025 is the uncertainties related to the escalating trade war. I think we answered already that question of the guidance and the tariff I mentioned to you that we are local in different local markets.

So and the very important point on construction markets is that beat renovation in Europe, beat new construction in North America, of course, in Asia and emerging markets, there is a big need for construction activity. I mentioned the $3,500,000 shortage of housing in The U. S. It’s bipartisan in The U. S, the 5,000,000 homes that need to be built in Canada between now and 02/1930.

So it’s true, of course, with your validation in Vietnam, in Indonesia, in India, of course, the shortage that we have on newbuild across different countries in Europe, but the big need of renovation and the green shoots that we mentioned to you on the different countries of Europe. What is the reason? Again, question from Kepler Cheuvreux for changing the calculation method for recurring net income. Shada, you highlighted.

Frédéric Leleux, CFO, Saint Gobain: It’s a very simple I mean, we have always made an effort to give you the true performance because it’s important to not have any numbers which is not easy to read. So having something like hyperinflation makes most, it becomes difficult to read the number and the performance. So we did it with a good intention and all the details are given to you. So you have the numbers. I think it’s much more logical in my view.

Benoit Bazin, CEO, Saint Gobain: Maybe before I finish on the Internet, there are now questions back on the call. So Gregor from UBS and then Harry from Berenberg. Gregor, you want to start?

Frédéric Leleux, CFO, Saint Gobain2: Thank you. Yes. So my question is really just coming back on the price cost and I guess the fixed cost management. So I think just to be clear, I think you’ve always sort of talked price cost purely on sort of unit pricing versus unit variable cost. And then obviously, you’ve got fixed cost inflation, which I think historically kind of offset with efficiency.

So I just want to double check that’s your thinking here as well. So in other words, the way we should think about it, price cost drops to the bottom line, volumes flat up you said, the M and A on top and then the fixed cost is sort of taken care of through efficiencies. Is that fair?

Frédéric Leleux, CFO, Saint Gobain: We are very confident to continue work on operational efficiencies. You have seen it in the past. I think the world class manufacturing is something which is completely ingrained in the organization and we are confident with that.

Frédéric Leleux, CFO, Saint Gobain0: Thank you.

Benoit Bazin, CEO, Saint Gobain: Harry, you want to jump on the next question and then I go back to Internet.

Frédéric Leleux, CFO, Saint Gobain3: Yes. Hi, good morning. Just coming back on volumes, you talked about an expectation of, I think you said volumes turning positive in the second half of the year. And then in answer to questions, Shred, I was talking about the 3% positive effect from acquisitions. Just to be clear, when you’re talking about volume growth in the second half of the year, is that on an organic basis?

And then the separate but associated one would be if I look at the Q4 volume effect, it didn’t really show much improvement on Q3. So I guess the question is, are you seeing real improvements coming through in Europe or is there more an opinion you’re taking on the trajectory for 2025? Thank you.

Benoit Bazin, CEO, Saint Gobain: Of course, when we mention the overall assumption on volumes, it’s like for like. It’s two organic growth. Point number one for 2025 and point number two on 2024, there is an improvement on Q4 versus Q3 when you separate the working day impact that was almost plus 2% in Q3. So if you take that out, we are improving in Q4 versus Q3 clearly. And you can see that across multiple segments.

And Schroeder highlighted multiple countries in Europe where we have improved or bottomed in already Q3 and improving Germany, UK bottoming up out sorry in Q4 in France. So yes, it’s all lighter for like. And last year quarter by quarter, we had exactly the scenario that we predicted at the beginning of the year with sequential improvement and low single digit falling down for the full year.

Frédéric Leleux, CFO, Saint Gobain3: Okay. Very clear.

Benoit Bazin, CEO, Saint Gobain: Thank you. Thank you. Thanks. I’ll go back to the question, Pierre, on Tobias Werner from Stifel. Concentration chemical business is now sizable and compares very favorably with its global peers.

Thank you, Tobias. We did not make sense to set it out separately in your reporting across various segments, both in terms of sales and operating income. As I said, I think we will give you more color on construction chemicals overall at the Capital Market Day. We highlighted already quite a lot of touch points. The growth we had on construction chemicals was 3.1% in the second half, slightly below that for the full year, but very good momentum and also the margin.

So to make sure that we give you what we need to report in terms of delivering well on the synergies. But yes, it’s a sizable segment. They are also very attractive segments on multiple other areas, be it insulation, roofing, gypsum and the goal on all the solutions of Saint Gobain and the depth and the richness and how we move on on our solution journey. You heard it from Pierre Bernal. We are the beginning of the solution journey.

How does it improve the mix, the passing power, the share of wallet within Saint Gobain across the board? We will show that in-depth. That will be the main topic of the Capital Market Day of October. Another question from Tobias, HBS did well in terms of maintaining its margins, especially in second half of twenty twenty four. How did your glass business do within this in terms of margins?

We do well in glass. If I take Brazil, Mexico with a nice evolution, India in the full year of 2024, even improving in the second half in Latin America with the recovery of Brazil. We have been impacted in Europe by the drop of volumes, clearly in glass like in other segments. We are increasing the prices as we speak. We have announced multiple price increase across Europe in 2025.

Keep in mind that there is still a bit of overcapacity on glass in Europe, even though when I look at what has been announced by various competitors, I think we have five float glass that have been put down, shut down in Europe. We have done one in Germany. If I’m correct, there is one down that has been announced in Belgium, One in Spain, One in Italy and another one And in

Frédéric Leleux, CFO, Saint Gobain: Germany by the competition?

Benoit Bazin, CEO, Saint Gobain: In Germany. So altogether, there is still a bit of overcapacity, but we have announced and we are very committed to price increase significantly for glass to improve. We are profitable in glass in Europe, but to improve the profitability going forward with the recovery of volumes going forward in Europe and also in glass, which has been an important journey over the years is the mix. We have more and more added value products in glass And we are number one, for instance, on what we call cool light, the solar control on facade, which is an important business for us where we have also solutions of sandbar. So not only the pricing of raw glass, but also, of course, the mix is extremely important for us going forward on glass.

And I think the last question from Tobias, where do you see the structural margin improvement in ’twenty four and ’twenty five on a pro form a basis? I think it’s a complex one. It’s part of what we have encapsulated in our margin guidance, Tobias. And as always, we will do our best going forward. A question from Pierre Russo Barclays (LON:BARC).

One region where margin is not yet the floor is Europe. What are the levers to increase margins in Europe? Well, two things. Of course, the first order of magnitude is recovery of activity in Europe. And as I said, we have green shoots.

So we have stabilized. That doesn’t mean that we will have positive volumes in Europe in the first half because we have stabilized below the level of the first half of twenty twenty four. So it’s only in the second half of twenty twenty five that we will start to see this gradual recovery. So that’s the first parameter, of course. The second is this journey on solutions or the richness of the mix.

The pricing power is exactly what helped us to improve the margin in 2024 despite the challenging environment. And the last piece is continue. We have been extremely committed. And I would like to congratulate and thanks the teams in Europe for productivity actions, headcount reduction, proactive decisions. We have been doing a lot of that across Europe in a tough market environment over the last two years.

And this is the way we also protected our margin on the cost side. So we’ll continue to work hard on the productivity in Europe. And of course, we will also reset and refresh the ambition for all the segments that we kept at market. Another question from Pierre Rousseau. Could you comment on distribution specifically?

What are current margin levels versus your objective? So we don’t report specifically distribution margin because they are part of the French margins, the Nordic margin, etcetera. Based on as you know we have a corridor of 6% to 7% operating margin for those businesses in a very difficult environment. Like I mentioned to you last year for the 23 performance in The Nordics based on the very difficult challenging environment in Europe in those two countries today. We are a bit below this corridor, but I’m very confident that we have the structural quality of the business well integrated as a country approach across the full value chain to come back to this type of very healthy margin.

And I can tell you also that based on what had been reported segment by segment, we are clearly outperforming in The Nordics and in France, including on those different business segments. A question from Laurent Vinascher. Congrats to Shreedhar, I think we should stop there. MediGas storage seem to be filled at a very low level in Europe, which could put price up. What is your take, Shreedhar?

The

Frédéric Leleux, CFO, Saint Gobain: energy you’re seeing it has remained little volatile in the last few weeks if you see it went up and then the last few days it’s coming down. I continue to believe that I think with the crisis that the Europe has faced, I think each country has learned to find first of all, they found alternate source of energy. They have also done lot of other things to have a backup. I think the more and more as you progress, I should see that there will be more stability and and the energy prices should evolve in a more right direction.

Benoit Bazin, CEO, Saint Gobain: Maybe a question related to that from Pierrouso. Could you give us the share of energy costs, specifically within the EUR 12,000,000,000 envelope for raw materials and energy in 2024?

Frédéric Leleux, CFO, Saint Gobain: Slightly more than EUR 2,000,000,000, around EUR 2,000,000,000, I would say.

Benoit Bazin, CEO, Saint Gobain: And another question from Laurent Renacci. You mentioned more and more weather accidents due to climate change. Did you try to assess in the last years how much it brought in terms of additional activity? No, not specifically. But for me, it’s obvious that again, sustainable construction, it’s not so much the CO2 content in a specific building, it means better buildings.

So around the world, I have every confidence that sustainable contribution is there to stay regardless of any political debate. If I’m in The US or president of a university, if I want to attract the best students, the best teachers, I need good air quality in the auditorium. I need good visual light. I need good energy performance. I need good acoustic performance.

So I need better building. We have multiple situations where insurance tires in The U. S. Don’t reimburse the roof repair if the homeowner doesn’t buy a premium product, a better mix of products. So it’s a level of activity that will, unfortunately, only go up because of more frequent extreme weather and improve the mix of Saint Guevara.

So we are working on indeed resilient buildings, better buildings without even mentioning the energy efficiency and the green value that is encapsulated in that that I highlighted for the French example. So it is there to stay and we are leading in terms of sustainable buildings and suitable construction going forward. I think we have exhausted all your questions. So thank you very much for your time and attention. Again, we have a very strong equity story.

So I’m very confident about the path and the journey, Sangobank going forward on solutions. Our solutions journey will continue to accelerate and we’ll highlight that in October. We have now a very strong position across the different regions in terms of operating profit, North America, which is holding up well. And we have, as you know, number one position in The U. S, Canada, there, Asia, I mean, markets and Europe benefiting from the gradual recovery in Europe.

We are very much focused on value creation going forward for our shareholders and we’ll continue to rotate our portfolio with acquisitions and divestitures and cash flow. I can tell you that Shreda among many, many other things did a very nice transition to more than all the teams of Saint Gobain. And of course, not only in Asia Pacific but across the board, I will continue to get inspired by Shreda and all the efforts of other colleagues of Saint Gobain cash. So thank you and we will see you end of and talk to you April for the Q1 call. And again, congratulations and many thanks to you, Shreedhar, and all the best to Asia Pacific.

Thank you.

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