Saint Gobain is to step up its cost cutting programme in a bid to address the deteriorating economic climate – with its Flat Glass division a target.
It follows gloomy H1 financial results for the group with its Flat Glass division in particular underperforming.
Flat Glass sales fell 6.5% on a like for like basis during H1 due to a contraction in automotive production in Western Europe, the collapse of the solar market, a fall in prices (especially float glass) and a rise in raw material and energy costs.
As a result, the operating marg in for the division narrowed to 2.1% of sales from 9.5% in first-half 2011.
The company said it will step up the cost saving programme, which started in Q2, in H2 after saving €170 million in Western Europe and Asia in H1. For the year as a whole it expects to save €500 million.
So far it has stopped four floats in Europe: in Portugal, Belgium, France and Germany, and three floats in Asia: One in China and two in South Korea as well as a patterned glass line in China.
In total float line capacity has been reduced by 19% in Europe and by 21% outside of Europe. The measures for the rest of the year will be primarily focused on Europe. It will also put any acquisition projects on hold for the rest of the year.
Saint Gobain’s overall net profit in the first six months of 2012 slumped 34% to €506 million ($613.45 million), while operating profit declined 12% to €1.51 billion.
