sain t-gobain annu al report 2008 annual report

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In the Nordic countries, Dahl delivered an excellent
performance – experiencing a downturn only in the last
two months of the year – and increased its market share.
At Optimera, like-for-like growth slowed in a very difficult
building materials market. The external growth strategy
was pursued, with sixty-one merchant outlets acquired
in Scandinavia representing €567 million worth of
revenues per year.
In Switzerland, Sanitas performed very well throughout
the year, confirming its market leadership (1) particularly
in the kitchens segment.
In Eastern Europe, like-for-like growth was on a par with 2007.
La Plateforme du Bâtiment delivered a strong performance in
Poland but sales weakened in the Czech Republic and Hungary.
Building Distribution sales in Spain were badly hit by
the severely impaired economic environment during the year,
although specialist merchants were less affected than general
builders’ merchants. The Sector’s Italian operations had
a satisfactory year.
Outside Europe, Telhanorte in Brazil and Barugel in Argentina
both reported increased sales, with the outlets opened
in Brazil in December getting off to a good start.
The North American building market that was an early victim
of the economic crisis sank even deeper into the doldrums.
The Sector expanded its position in this region in 2007
with the acquisition of Norandex.
Lastly, the Chinese market also fell victim to the crisis in 2008.
This environment led to a 1.2-point decline in the Sector’s
operating margin to 4.5% of sales. The fall could have been
greater, had it not been for the energetic action to cut general
distribution costs that was taken throughout the Sector
from the second quarter on. At the same time, improved
management of inventories and trade receivables drove a
significant improvement in the Sector’s cash flow from
operations.
Outlook for 2009
The international financial crisis has led to credit restrictions
as well as to deep corrections in the real estate market,
and 2009 looks set to be considerably more challenging
than 2008 from a macro-economic point of view. Drawing on
its experience and high quality offer, the Sector has
established an action plan to align its operations with
the new economic environment and emerge from the crisis
in the best possible shape.
The Packaging Sector
Contribution to the Group 2008 2007 2006
% of net sales 8 8 10
% of operating income 12 10 10
% of cash flow from operations 14 11 12
Key figures
(in € millions) 2008 2007 2006
Net sales 3,547 3,546 4,080
Operating income 442 401 376
Cash flow from operations 510 425 402
Capital expenditure (2) 283 309 335
2008 business review
The Packaging Sector’s reported sales were stable year-on-year.
The 2007 figure included just three months’ sales by the Flasks
business that was divested in March of that year, while 2008
sales included six months’ contribution from Kamyshinsky
Steklotarny, a Russian company consolidated from July
which has annual sales of RUB 1,733 million (€48 million).
The Sector’s like-for-like sales rose 7.4% to €3,610 million
from €3,362 million in 2007.
The currency effect trimmed €90 million from reported sales,
of which €74 million was due to the change in the dollar/euro
exchange rate.
In response to a second year of highly volatile demand,
the Sector deployed all available scheduling and production
resources to meet the needs of its customers.
Business was buoyant during the year, particularly in Europe.
In the United States, sales grew at a satisfactory rate in local
currency, primarily reflecting higher prices and improved
industrial efficiency, while manufacturing optimization
measures implemented under the World Class Manufacturing
program helped to drive a significant improvement
in operating margin.
In Latin America, strong sales growth was attributable
to increased volumes and higher prices arising from
improved industrial efficiency.
In all, the increase in Packaging Sector sales attests to
its robust marketing dynamic, underpinned by rigorous
attention to quality and an unrelenting commitment
to competitive differentiation and customer satisfaction.
Its objectives in the latter two areas are met through
an innovative and regularly extended product range
and world-class production facilities.
2008 saw a sharp rise in feedstock costs, particularly
sodium carbonate, and highly volatile energy costs,
the effects of which were passed on for the most part
in sales prices.
In the United States, as well as in the Sector’s other host
countries, sales contracts include price revision clauses
covering increases in factor costs and energy costs.
During the year, the rigorous policy of enhancing productivity
and containing other production costs was actively pursued.
Saint-Gobain - 2008 Annual Report
(1)
Source Saint-Gobain.
(2)
Excluding finance leases. Sales data by Sector include inter-sector sales.