Saint-Gobain’s sales for the first nine months of 2016 came in at €29.3 billion (approximately $32.5 billion), compared to €29.8 billion (~ $33 billion) in the same period the prior year. The negative 1.1% reflects the impact of disposals carried out in 2015 aimed at optimizing the Building Distribution portfolio. The negative currency impact narrowed to 2.6% in the third quarter, mainly due to gains in the Brazilian real. The negative 3.2% currency impact results primarily from decreases in the currencies of Latin American countries and the pound sterling against the euro.

On a like-for-like basis, sales were up 2.6% over the nine-month period and 2.1% in the third quarter. The third quarter confirmed improvement in volume, which rose by 1.6%, and by 2.8% over the nine-month period, partly buoyed by the positive impact of more working days in the second quarter. Prices edged up 0.5% in the third quarter, leveling off in Western Europe but remaining slightly down in the U.S., albeit in a less deflationary environment.

Innovative Materials sales climbed 4.3% over the nine-month period and 4.2% in the third quarter, powered once again by Flat Glass. Flat Glass delivered further good organic growth over the quarter, at 5.9% (6.3% for the nine-month period), driven by an improved mix and higher sales prices in construction in Western Europe. In Asia and emerging countries, construction and automotive sectors continued to enjoy good momentum.

High-Performance Materials (HPM) sales continued to rise in the third quarter, up 2.2% after a 2% increase in the first half. All divisions made gains in the third quarter, led mainly by Ceramics and Textile Solutions. Construction Products (CP) sales advanced 1.6% over the nine-month period as in the third quarter.

Interior Solutions sales climbed 4.3% in the nine-month period. Sales continued to advance in all regions in the third quarter (up 2.5%), despite the negative impact of fewer working days. In a still deflationary environment, prices remained slightly under pressure in developed economies, although less than previously. The decline in Exterior Solutions sales narrowed to 1.1% over nine months due to a 0.6% increase in the third quarter. The downturn in Pipe has eased somewhat. Exterior Products in the U.S. reported volume growth in the third quarter although did not benefit from the same positive weather impacts of the second quarter. Prices remained slightly down but improved quarter-on-quarter in line with asphalt costs. Mortars performed well during the quarter, spurred in particular by Asia and emerging countries; the business managed to stabilize its trading in Brazil despite challenging economic conditions.

Building Distribution sales rose 2.6% over the nine-month period. After a first half buoyed by a greater number of working days, volumes continued to advance in the quarter with sales up 1.6%. Trading in France confirmed the rally in the new-build market while renovation remained sluggish. Good momentum in volumes continued, especially in Nordic countries, Spain, the Netherlands, Germany, and the UK which is showing no sign of weakness. Pressure on sales prices eased in a less deflationary cost-of-sales environment. The market downturn continued to take its toll on Brazil.

France was lifted by the rally in new builds, while renovation remains sluggish for the time being. Organic growth came in at a negative 0.5% for the quarter, affected by the slight negative impact of fewer working days and prices that remained down. Other Western European countries delivered further good growth, at 3.2% (3.9% over the nine-month period), reflecting good market conditions in all main countries, including the UK.

In North America, construction volumes remained upbeat over the quarter, even though Roofing no longer benefited from a favorable weather impact as in the second quarter. Industry volumes retreated slightly, and prices continued to have a negative impact on sales in a still deflationary environment. Organic growth therefore was a negative 1% for the quarter, but a positive 2.1% for the nine month period.

Asia and emerging countries continued to report good growth in the third quarter, at 6.1%, confirming first-half trends (up 4.9%). Brazil remained down but China improved.

Saint-Gobain expects trading in France will continue to benefit from the rally in new builds, while renovation is not yet showing any signs of improvement. Other Western European countries should deliver further growth. In North America, construction should advance while industrial markets remain cautious. Asia and emerging countries should continue to see good levels of organic growth.

The group confirms its action plan priorities for the full year are: keep its priority focus on sales prices in a still deflationary environment; unlock additional cost savings of around €250 million (~ $277 million) calculated on the 2015 cost base, including €150 million (~ $166.2 million) in the first half; pursue a capital expenditure program of around €1.4 billion (~ $1.6 billion); renew its commitment to invest in R&D to support its differentiated, high value-added strategy; prioritize high levels of free cash flow generation; and pursue its plan to acquire a controlling interest in Sika. The group also expects a like-for-like improvement in operating income in the second half compared to second-half 2015.

“The third quarter confirmed the upturn in volumes in Western Europe,” said Pierre-André de Chalendar, chairman and CEO. “France benefited from the steady improvement in new builds; the UK showed no sign of weakness. Volumes continued to grow in U.S. construction despite the lack of positive weather impacts for Roofing in the quarter. Our businesses in Asia and emerging countries remained strong, delivering further robust growth. The price effect moved back into positive territory over the quarter, reflecting Saint-Gobain’s strong positioning on its markets. In line with the 2016 goals, these results allow the group to confirm its objective of like-for-like growth in operating income in the second half vs. second-half 2015.”

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