Saint-Gobain recently experienced a decrease in share value following concerns over the ongoing challenging geopolitical and macroeconomic environment impacting new construction activity, particularly in Europe. At 1058 GMT on Friday, shares were down 5.2% at EUR67.49, with the year-to-date gain standing at 1.2%.
Market Outlook for 2024
Looking ahead, Saint-Gobain anticipates several markets to face difficulties in the first half of 2024, highlighting a contrast between Europe and other regions like the Americas and Asia-Pacific. While the latter regions are either stable or expecting growth, Europe’s new construction activity is expected to remain challenging before gradually showing signs of improvement on a country-by-country basis.
Financial Targets and Analyst Expectations
In terms of financial targets, the company aims for a double-digit operating margin in 2024, building on the increase from 10.4% in 2022 to 11.0% in 2023. Despite somewhat vague guidance, analysts from Davy Research find the projections broadly aligning with expectations. Consensus estimates suggest a 10.5% operating margin for Saint-Gobain in 2024.
Analyst Insights and Company Performance
Jefferies analysts emphasize the significance of price-cost dynamics and production efficiencies in testing the potential downside from the 11% operating margin achieved in 2023. Meanwhile, Saint-Gobain reported a decrease in net profit to EUR2.67 billion from EUR3.00 billion, alongside a drop in sales to EUR47.94 billion from EUR51.20 billion in 2023. Despite these figures, the company plans a share buyback of EUR420 million in 2024.
Conclusion
Saint-Gobain’s recent market challenges reflect the complexity of the current economic landscape, particularly in the construction sector. With a focus on operational efficiency and strategic financial planning, the company aims to navigate these hurdles and maintain its competitive position in the market.