Saint-Gobain Reports Record Margin Amid Mixed Market Conditions
Why we think this is neutral
Saint-Gobain's H1 2025 results present a mixed picture. The company achieved a record operating margin of 11.8% and reported sales growth of 3.4% in local currencies. However, this is balanced against concerns such as a 35.4% increase in net debt, an 11% decrease in free cash flow, and challenging market conditions in some regions. While the company maintains a positive outlook, expecting an operating margin of more than 11.0% for 2025, it faces headwinds including economic uncertainties and softness in North American new construction. The balanced performance across different geographic regions provides some stability, but the increased debt and reduced cash flow conversion ratio suggest caution is warranted.
Key Points
- Sales up 3.4% in H1 2025 in local currencies
- Record operating margin of 11.8%
- EBITDA and operating income up 7.0% and 5.0% respectively in local currencies
- Free cash flow decreased by 11% to €2,190 million
- Net debt increased by 35.4% to €12,787 million
- Strategic acquisitions for €1.7 billion in construction chemicals
- Expects operating margin of more than 11.0% for 2025
- Growth in Asia and emerging countries, sequential improvement in Europe
- Softness in North American new construction market
- Balanced contribution to operating income from three geographic zones
Summary
Saint-Gobain's H1 2025 results show resilience amid mixed market conditions. Sales grew 3.4% in local currencies to €23.9 billion, with a record operating margin of 11.8%. The company achieved record EBITDA and operating income in local currencies, up 7.0% and 5.0% respectively. However, free cash flow decreased by 11% to €2,190 million, and net debt increased by 35.4% to €12,787 million, largely due to recent acquisitions. The company's performance varied across regions, with growth in Asia and emerging countries, sequential improvement in Europe, and softness in North American new construction. Despite challenges, Saint-Gobain expects an operating margin of more than 11.0% for 2025, demonstrating confidence in its strategic positioning and operational efficiency.