Saint-Gobain Shares Fall After Guidance on Challenging Year Ahead

By Nina Kienle

Saint-Gobain shares fell after the company warned of a continuing challenging geopolitical and macroeconomic environment that would weigh on new construction activity, particularly in Europe.

At 1058 GMT on Friday, shares were down 5.2% at EUR67.49, reducing their gain in the year-to-date to 1.2%.

The French building-materials company said it expects some of its markets to remain difficult in the first half of 2024, with a contrasting situation between Europe and the rest of the world. While the Americas and Asia-Pacific regions either hold firm or expect growth, Europe's new construction activity will remain difficult before gradually bottoming out country by country, it said.

For 2024, the company targets a double-digit operating margin. In 2023, Saint-Gobain's margin increased to 11.0% from 10.4% for 2022.

Although the guidance is somewhat vague, it is broadly in line with expectations, Davy Research analysts said in a note to clients. Analysts expect a 10.5% operating margin at Saint-Gobain in 2024, according to consensus estimates compiled by Factset.

The market might take comfort in both the company's margin guidance--which effectively sets a base line of 10%--and consensus expectations, but price-cost dynamics and production efficiencies will be key to test the downside from the 11% achieved in 2023, Jefferies analysts said in a research note to clients.

Saint-Gobain on Thursday reported a fall in net profit to 2.67 billion euros ($2.89 billion) from EUR3.00 billion, on sales that dropped to EUR47.94 billion from EUR51.20 billion. Despite recording lower net profit and sales in 2023, the company said it plans a share buyback of EUR420 million in 2024.

Write to Nina Kienle at nina.kienle@wsj.com

(END) Dow Jones Newswires

March 01, 2024 06:34 ET (11:34 GMT)

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