Saint-Gobain Earnings: Record Operating Margin Reflects an Improved Product Portfolio
No-moat Saint-Gobain reported a 2% decline in operating profit, despite improving its operating margin by 40 basis points to a record 11.7% during the first half of 2024. Its record profitability should not come as a surprise to investors as its improved product portfolio achieved via astute capital allocation, supports structurally higher margins for the group. Declining raw material and energy costs have also helped ease the pain of falling sales for the group, largely attributable to weak construction demand in Europe. We reiterate our EUR 68 fair value estimate and view shares as fairly valued.