(News Bulletin 247) – The turnover published by the construction materials specialist slightly exceeded expectations for the first quarter. Importantly, the company’s management believes it has reached a trough in volumes with several countries in Europe having reached or are close to reaching an inflection point.

Used to delighting the market after each publication, Saint-Gobain had, unusually, missed its meeting with the market last March, after revealing its annual results. The stock found itself under pressure due to the outlook for 2024 which had worried investors a little.

Everything returns to normal this Friday. The oldest company in the CAC 40, with origins dating back to the 17th century under Colbert, is at the top of the CAC 40, gaining 6.05% around 2:45 p.m., after revealing its first quarter activity.

The group published revenues of 11.36 billion euros, down 8.5% on a comparable basis, and down 5.8% excluding currency and scope effects. This is a little better than expected by analysts since the consensus was at 11.29 billion euros and anticipated a decline of 5.7% on a comparable basis, according to Stifel.

Saint-Gobain suffered from negative currency, price and scope effects of 0.5, 1.1 and 2.2 percentage points respectively.

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America as a point of salvation

Investors are mainly monitoring the evolution of volumes, which fell by 4.7%, a little less than the 4.8% expected by the consensus. Above all, this decline includes a negative calendar effect in terms of working days. Restated for this impact, Saint-Gobain considers that these volumes showed a drop of 3.2%, marking an improvement compared to the 4.5% decline in the previous quarter, excluding the impact of the number of working days.

Saint-Gobain continues to suffer in Europe (a zone which also includes the Middle East and Africa and which represents 56% of revenues) where its sales fell by 11% on a comparable basis. The Americas (+5.9%) and especially North America (+12.2%), where the group has strengthened itself in recent years through acquisitions, cushion the shock.

Following this publication, the company confirmed that it expects a double-digit operating margin for 2024 for the fourth consecutive year.

Positive signals in Europe

But more than the figures themselves, the market mainly buys the words of management during the conference with analysts.

The general manager, Benoît Bazin, made it clear that the best was yet to come for the company’s business. “At group level we think we have reached a bottom and the worst is behind us,” he said.

After several quarters of declines, volumes are approaching the low point in Europe, he indicated. The leader detailed the trend by country. Volumes have already started to rise again in the fourth quarter of 2023 in Eastern Europe, which continued into the first three months of 2024.

The bottom of the wave has been reached in the United Kingdom, while Germany and the Nordic countries are very close to it. As for France, this should happen “in a few quarters”, judged the leader. Benoît Bazin notably cited data on mortgage loan approval rates which “are moving in the right direction” in France and the United Kingdom.

Volumes also remain robust in Italy and Spain, as well as in North America, while in Brazil “several product lines” are on a better trend, he added.

Time to buy?

“The group seems well placed to do better than its volume objective (‘low single digit’, i.e. a drop of between 1% and 4%, Editor’s note) over the year (consensus at -3 %)”, estimates Oddo BHF.

“Investors should welcome this publication (the shorts, probably not). The trends are improving and management has shown greater confidence than when presenting the results last February,” continues the broker in its note published before the opening of the market.

“Historically, we buy the stock (Saint-Gobain, Editor’s note) when volumes are less bad, which is expected by management and seems to be the case,” explains Stifel, which, logically, reiterates its advice to procurement.