Saint-Gobain Lifts Prices to Compensate for Higher Costs

By Nina Trentmann 
      Building materials supplier   Compagnie de Saint-Gobain SA plans to keep raising prices to offset higher raw materials, energy and transportation costs. 

"We are pushing prices in all geographies, a little bit everywhere," Chief Financial Officer Guillaume Texier said Thursday in an interview with CFO Journal. "Pricing is one of the top priorities for this year," Mr. Texier added.

The French company raised prices for its products by 3.5% year-over-year in the three months through September, compared with a 3% increase in the second quarter and 2.1% in the first quarter, Mr. Texier said.

As well as higher costs for raw materials such as asphalt, cement and timber. Saint-Gobain is battling higher transportation costs, particularly in the U.S. Cost inflation is expected to amount to additional charges of around EUR600 million ($680.6 million) by the end of the year, according to Mr. Texier. "That's what we need to offset," he said.

Saint-Gobain analyzed various factors, including list prices, rebates and transportation costs, before it raised prices, the finance chief said.

The company, which has more than 179,000 employees and a presence in 67 countries, spends around EUR6 billion a year on raw materials. Mr. Texier didn't provide more detail on the nature of the price increases.

"Saint-Gobain is a leader in several markets where it operates, so in our view its strategy to focus on pricing makes sense in [the] current environment of increasing inflation costs," said Renato Panichi, an analyst at Standard & Poor's Financial Services LLC.

Other building materials makers have taken similar steps, said Mr. Panichi. "We see most peers...focusing on prices, instead of volumes, to protect their margins," he said.

Saint-Gobain also plans to cut EUR300 million in costs by the end of the year compared with its 2017 expenses, Mr. Texier said.

The company on Thursday reported revenue for the first nine months of 2018 of EUR31.13 billion ($35.55 billion) compared with EUR30.57 billion during the prior-year period.

Write to Nina Trentmann at [e-mail]

(END) Dow Jones Newswires

October 26, 2018 11:41 ET (15:41 GMT)

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