Saint-Gobain Cuts Profit Goal on Higher Energy Costs

Date: 29 October 2005
Source: Bloomberg.com

Date: 29 October 2005

Cie. de Saint-Gobain SA, Europe's biggest distributor of building materials, cut its earnings forecast as a higher oil price increased the company's energy and transport costs and crimped demand from its customers.

An increase in full-year operating profit will fall short of the 4.9 percent achieved in the first half, Chief Executive Officer Jean-Louis Beffa said today on a conference call. In January the company said it was aiming for a 6 percent increase.

Saint-Gobain, also the world's biggest glassmaker, supplying windows for half the cars in Europe and perfume bottles for Chanel, has been unable to pass on the cost of gas used in furnaces and diesel for its trucks. The price of crude oil reached a record in August and is up 47 percent this year.

``Due to our contracts we cannot increase our prices straight away, but we do hope to do so before the end of the year,'' Beffa said on the call. Saint-Gobain, based near Paris, expects 200 million euros in energy costs this year, 50 million euros more than it had budgeted for, he said.

Shares of Saint-Gobain have gained 3.2 percent this year, fifth from bottom in the 18-member Bloomberg Europe Building Materials Index, valuing the company at 15.8 billion euros. The stock closed little changed prior to today's announcement.

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