Owner of Telhanorte bets on the resumption of hotels and offices

Since July, in the presidency for Latin America of the French multinational Saint-Gobain, specialized in the civil construction sector, the Spaniard Javier Gimeno affirms that improvements in the industrial process allowed the group to withhold part of the transfer of inflation to the consumer. Even so, it was necessary to raise the values ​​of the products. “I believe that 2022 will still be an inflationary year,” he says.

The group plans to finish this year with a 40% growth in sales in Brazil, and reach 15% in the next. To encourage this increase, the executive is betting on a resumption of the non-residential civil construction market, such as that of offices and hotels. With the return of face-to-face work, or at least hybrid, “teams need a higher level of comfort, health and safety than before”, he analyzes.

The multinational, which has Brasilit, Quartzolit and Telhanorte among its brands, will invest 100 million euros (BRL 627 million) in the country until December, in actions such as the construction of a new line of plasterboard, in Mogi das Cruzes ( SP), a new fiber cement tile factory in Abadiânia (GO) and the expansion of production of this product in Recife.

The Mogi line promises to increase the internal reuse of waste by 50% and will serve the dry construction market, which generates less water waste.

What is the impact of high inflation on the company’s business? Is it being transferred to products? Inflation is a worldwide problem. Demand has exploded and suppliers are unable to keep up with that demand, so as a result, prices rise. In this context, it is necessary to understand whether this inflation is cyclical or structural. I have no way of answering, but I believe that 2022 will still be an inflationary year.

At Saint-Gobain, we have a very strong industrial culture and this allows us to offset some of the inflation with improvements in manufacturing processes. But inflation was so important in recent months that, in order to preserve our profitability, we had to increase prices, in a more limited way than inflation, but this increase happened and I believe it will continue in 2022.

Civil construction has shown good results in Brazil this year, do you expect this to continue next year? The construction industry is having a fantastic year in Brazil, in Latin America. The first reason for this is that we are comparing it to 2020 demand, which was low because of the pandemic. The second is that the pandemic has accelerated the demand for the types of products that Saint-Gobain produces, which are directly related to health, comfort and sustainability. The third is that people are spending more than ever on renovating their homes because they have spent so much more time in them and have become aware of the need to improve their home habitat.

Will the reforms continue even as the pandemic subsides? I don’t see a degradation of this trend, it remains stable and is long term, because it is a cultural change.

Renovation will continue to be an important growth element for Saint-Gobain, as the new residential market is not expected to be very dynamic in 2022. I believe the number of new buildings will be more or less equal [a 2021].

For 2022, what I also expect is a reactivation of the non-residential market, of offices and hotels, which was very weak in 2021. Now, the teams are coming back [a trabalhar presencialmente] and they need a higher level of comfort, health and safety than before. They need more space.

Did you have to change expansion plans in the country because of the effects of the pandemic? This year, we announced three new factories that are in the process of construction and that should start their industrial activity by 2023. All of this is an investment of considerable money [100 milhões de euros], but that’s what we need to do to keep growing at the rate we want to grow here.

Last year, you projected 17% growth in sales for 2021. What result should you achieve and what are your expectations for 2022? We will have 35% to 40% growth this year compared to last year, in Latin America, and 40% in Brazil. We were optimistic at the beginning of the year, but we did better than we expected. The growth rate in 2022 should not be as high as we are going to compare with a more demanding year, but we want to grow double digits.

What is Saint-Gobain’s situation in other Latin American countries? We are growing a lot in Mexico, Colombia, Peru and Chile. But Brazil is more advanced, has more sophisticated demand, and Saint-Gobain’s presence is greater. Brazil represents nearly two-thirds of sales in Latin America.

We have a very ambitious strategy for Latin America: it is a region that needs urgent regeneration of urban space. The urbanization rate is very high, but without taking into account needs in terms of sustainability, comfort and well-being. The renovation of these urban spaces will bring extremely important growth for companies like Saint-Gobain, which propose this type of solution.

What is the Brazilian market’s interest in more sustainable construction? Is there resistance to changing the traditional method? Construction is a very traditional industry, in Brazil and elsewhere. Innovation needs a long time, but I believe that conditions here are very good for an acceleration of the use of the type of product and service proposed by Saint-Gobain, I see that the Brazilian middle class is expecting this type of product.

I believe there are two important trends: the first is a need for productivity, the industry needs to build faster and cheaper, and for that we need to provide them with easier solutions in terms of installation. The second is that, in terms of sustainability, we need less costly solutions in terms of resource use and CO2 emissions.

The difference with other countries is that in Brazil everything depends on the demand of end customers, because, for now, the legislation does not define the use of this type of product as necessary. In France, you have an obligation to build buildings with low CO2 emissions, and in Brazil this does not exist. But I believe that, with countries more oriented towards being sustainable, this legislation will arrive.

What makes you think that? For two reasons: the first is because this is what Brazilian society wants. People are concerned about climate change, about the level of comfort and well-being in their homes, and will demand this type of product. The second is that Brazil’s political authorities are committed to other countries in terms of sustainability.

How is it possible to make this emission reduction? With solutions in terms of thermal and solar insulation. If you insulate a building and there is no temperature exchange between the inside and outside, you don’t need heating or air conditioning. Today we are in a position to completely insulate a building. But it is an investment in terms of reducing energy use and CO2 emissions. If you look at what’s happening in the US and Europe, that’s a trend.

Javier Gimeno, 56

Graduated in economics from the University of Navarra (Spain), with an MBA from the IE Business School, in Madrid, he joined Saint-Gobain in 1990. He has already held the positions of vice president of marketing and sales at Saint-Gobain Sekurit Internacional, president of Saint-Gobain Glass Solutions France, President of Saint-Gobain Sekurit Asia-Pacific, Executive Director and Vice President of the Saint-Gobain Group Asia-Pacific.

X-ray of Saint-Gobain

Founded in 1665, in France (start of operations in Brazil in 1937)
Employees 180 thousand in the world, being 12 thousand in Brazil
Areas of expertise Civil construction, industry and retail
Revenue Estimate of BRL 12.1 billion in 2021 in Brazil