Réunion actionnaires Saint-Gobain avec Benoit Bazin vidéo – 5 décembre 2024

We measure engagement as well. We have an annual satisfaction survey among our 165,000 teams. We have an 88% participation rate, which is 30 points above what Ipsos, which conducts this survey, observes in other international groups. And our teams — more than 80% of the workers, the warehouse staff at Point P — so these are not bank executives, these are people on the ground who finish a night shift and answer the 40 questions of the survey. So 88% participation rate is very, very good. And overall, the satisfaction survey shows that the main indicator has progressed by 70% between 2019, the starting point, and 2024, the latest survey from October. And within that, I don't want to be too long because it could be the subject of your questions, but one of the questions that matters most to me is: do you have the right autonomy in your work? When we listen to our colleagues today, they need two things. They need meaning — do I get up in the morning to go to work at Saint-Gobain in Vietnam, in the United States, in France, at a Point P in Normandy — do I have meaning? And the meaning of my work is 'making the world a better home.' So yes, they have meaning, and we are very committed to ensuring this purpose is displayed in the factories, in the cafeterias, in the entry gates of our factories, in the locker rooms. It's not just for executives, it's not just at the Saint-Gobain tower, it's everywhere in the world. So you need meaning, and you also need autonomy so that I can see how I put my individual talent at the service of collective success and the meaning that this collective success carries. And well, 92% of the 88% of our 165,000 collaborators who answer this question say yes, I have the right autonomy in my work. And we are very committed to this, with this empowerment of collaborators, because it's the beginning of success. If I see that I'm trusted, that I have the right autonomy, I see how to engage and how to contribute to the collective meaning of Saint-Gobain's purpose.

As this slide says, and this will be my conclusion: there is no age to become a shareholder. So we are very happy to make our individual shareholders happy, I hope. If I look at the trajectory of the share over the last few years, I can assure you that we will continue to work as well as possible to maintain this beautiful trajectory, and also to ensure that we broaden, that we make known this success of Saint-Gobain to others and to new generations to become shareholders of Saint-Gobain. It is once again, as the slide says, a simple and responsible investment. Saint-Gobain brings something, I believe, to our societies. When we improve the acoustics of a classroom, we can reduce teacher absenteeism by three or four times. It's a difficult profession — if you teach for 25 years in a tiled classroom, besides the fact that children will learn poorly in the third or fourth row, the teacher will develop hypertension and will be three or four times more absent. We have documented this with architects and school directors. So we bring something to the planet naturally, but also to the well-being of the different occupants of our buildings. Being a shareholder is also committing alongside the world leader in sustainable construction. And that will be my final word for my presentation. And now, Olivier, we can move on to questions and answers. Thank you.

Yes, so perhaps not everyone saw it, but three weeks ago there was a Bloomberg article about a rumor that I don't command, because Saint-Gobain doesn't command rumors about why Saint-Gobain couldn't sell its automotive glass. We don't command rumors, and on one hand, I'm not completely surprised that there are rumors like this because we have turned over a lot of the group's revenue — 40% since 2019 to 2023. So there have been many evolutions, acquisitions, divestitures. There are still a lot of new developments here and there in the automotive world today. There are always financial analysts on Saint-Gobain who say you could do this, you could do that. So it's not surprising that there are rumors. We have a habit of not commenting on rumors, whatever the subject and whatever the source. After that, you are absolutely right to say that glass is at the heart of sustainable construction. Building glass is completely at the heart of sustainable construction, and we continue to invest, though more in emerging countries than in Europe, because in Europe, given the current market, we rather have overcapacity in glass today. So we invest in India, we invest in Mexico, Brazil, Egypt. For example, at the time we are speaking, we are investing in a second very large glazing factory in Egypt, because Egypt is also a country with a lot of population growth. The first indicator of growth for Saint-Gobain is population, because population means buildings and therefore the need for construction materials. Egypt will build 27 new cities in the next 30 years to go from 100 to 130 or 140 million inhabitants. So you need glass for buildings. Yes, we continue to invest in glass, whether in research and development, in industrial capacity. We also have projects to export our glass from our strong Indian base to Southeast Asia. So we have many projects in glass around sustainable construction.

But to extend the gentleman's question, are there synergies, as we say, technological complementarities between building glass and automotive glass? Well, there are synergies in many directions and across many of Saint-Gobain's materials. It can be technological synergies, notably in layer coatings, but it's also true with aeronautical glass — we equip a huge number of Airbus aircraft that fly, and more and more Boeing. So there are synergies whether in coating know-how, materials know-how, and then there can be market synergies. For example, in the building glazing part, it's more market synergies, because in our country-by-country, solution-by-solution approach, it's very often through the facade that we begin discussions with architects in the non-residential sector. When you want to build a hotel, the headquarters of Total, or the Saint-Gobain tower, the architect starts very early on with the facade, the color of the facade, the energy and acoustic performance. And so from glass, we then pull our entire offer on plasterboard, insulation, ceilings, flooring solutions. There can be technological synergies or market synergies. It's very important for us to develop market synergies on sustainable construction.

Thank you. So very precisely, I will perhaps just go back to the slide, because our presence in the United States is not two-thirds. It's — you see — the part that is at the top right of the slide. So there is 35% of our result in North America — United States and Canada — 32% on Asia, Middle East, emerging countries, Latin America, and then 33% on Western Europe. So yes, we have a strong presence in the United States. In revenue, it's around 22-23% depending on the dollar exchange rate, so a bit more than 20%. But on the other hand, since we are very profitable in the United States, in North America it's 35%. If I take a slightly longer period, we have doubled the relative weight of North America in revenue from 5 to 20%, but it's not two-thirds of revenue. So we are very physically present in the United States, as in other geographies. The Saint-Gobain group has about 900 factories in the world. There are 200 very large ones, 300-400 medium ones, and the rest are small factories. It's not because we are disorganized, it's because our products don't travel — the cost of transport is important, the materials are not exactly the same because construction methods are not exactly the same between Canada, South Africa, Argentina, not only for climatic reasons but also architectural habits. So it's important to be present locally, and in fact we have 125 factories in North America. If I give you the example of Canada, we have 6 plasterboard factories from Vancouver, Calgary, Winnipeg, Toronto, Montreal, and Quebec. And it's not because we have too many, it's because it's not possible in transport costs to take a plasterboard made in Vancouver and bring it to Quebec. So we are very geographically present in North America.

Our products naturally, especially roofing products, because the images we see are also of poorly built houses from a long time ago. There are sometimes really extreme climatic events in the United States. We all remember the 1999 storm in France — it wasn't the same construction methods, but quite a few tiles were blown off during the storm. So when we arrive at extreme events, it's sometimes a bit difficult to have absolutely perfect resistance. But we have a genuine offer of construction materials, especially roofing products that are very resistant both to wind phenomena and to hail, because in fact the biggest climate impact in the United States is hail. There are many, many territories where you have enormous hailstones that puncture the roof. So there is a strong renovation demand, and there are new products that allow resistance to very strong impacts from very large hailstones. So yes, to answer your question, we are very present in North America, so we are insulated from tariff barrier issues because we don't have imports of raw materials from China. Another figure at the group level: we have less than 1% of our raw material sourcing from China. Our American raw materials for manufacturing in the United States come from North America. In Europe, they come from Europe. We haven't had logistics disruptions in recent years. When the port of Shanghai was closed for COVID reasons, when the boat got stuck in the Suez Canal, it didn't impact Saint-Gobain. Paradoxically, what impacted Saint-Gobain was perhaps — some of you may have noted — there was a very, very strong freeze in Texas in February 2022, and all the petrochemistry in Texas, because it was 15-20 degrees below zero for two weeks, was at a standstill. That impacted us more than COVID. So we are on closed loops, both for raw materials and clients, with local production. So it's very, very important, and perhaps Saint-Gobain hasn't highlighted this enough from an investment perspective for you compared to other businesses or industries. We don't have 40% of our result in China, 20 or 30% — there are large French companies that have a very strong dependence on China. We don't have half of what we sell in the United States coming from France. I don't know, in spirits or other areas, there are tariff duties. So we are — we're not on another planet. If the United States does poorly, we will have a North American activity impacted. But we still have governance by our teams that are local. It's an American in the United States, a Polish person in Poland, an Indonesian in Indonesia, a Mexican in Mexico. Our governance, our manufacturing and sales loops are very local from this point of view, not dependent on tariff duties. That's a long answer, sorry, but the North American market is a very profitable and attractive market for us.

As for the wooden houses — well, we don't make wood, but we make all the facade elements, the roofing elements, the air or water tightness elements, the interior insulation elements, plasterboard. And when we do it well, it's a certain cost compared to some of the houses we see flying away, like the house of the three little pigs, I was going to say. It holds. And we have even developed new materials, especially roofing products, because they are the most impacted, to not be torn off by a wind of 200, 150 miles per hour, or to resist the very strong impact of hailstones. This is a subject we could discuss at length, but while some countries or some people are not necessarily convinced or don't yet see the threat of CO2 today, the urgency of climate change is here. You saw what happened in Spain 15 days ago. We had a factory in Portugal that was 1 km from a fire. A month before, there was a typhoon in Vietnam. The month before, there were hurricanes passing through Florida. Saint-Gobain's factories must resist, our products sold to our clients must resist. So the subject of climate adaptation is extremely important. And I even see in France the debate on thermal inertia, insulation to resist heatwaves, is almost more important or more felt than resistance to cold. Resistance to cold — we turn up the heating when it's 50 degrees outside. It's very, very difficult to resist heatwave events. So the subjects of climate adaptation in sustainable construction are subjects that are evolving at full speed.

Pont-à-Mousson is not a pointed question. I like Pont-à-Mousson very much and we will talk about it. The gentleman's question for those who didn't hear was about the net amount of divestitures versus acquisitions. So I presented the revenue because that's what drives results in the different geographies. So there is more revenue that went out than revenue that came in. However, when we sold activities that were either loss-making or at zero or less than 5% profitability, and we bought companies at 20% profitability, we spent more on acquisitions than we received from divestitures. It had to be done because it improves the profitability and growth profile of the group. And despite having done that, we still managed to increase the return on capital employed — which includes goodwill and so on — on these acquisitions. We moved it from 10 to 15, which means profitability followed, because otherwise we would have gone from 10 to 5 in the return on capital. And secondly, we kept a solid balance sheet, since it's 1.2x net debt at year-end. So we did indeed a very strong rotation with more acquisitions — we did about 11 to 12 billion in acquisition value versus divestiture values — but these were good operations both on entry and exit.

Pont-à-Mousson — it's a historic activity of the group. I have indicated for several years that we all ask ourselves the question: for a know-how activity, Pont-à-Mousson is about piping, it's the conveyance of drinking water. We do a little bit of irrigation, a little bit of sanitation, but it's fundamentally the conveyance of drinking water. A historic activity that merged, as you remember, with Saint-Gobain in 1970. So on all the group's activities, country by country, we always have to ask ourselves: is it aligned with the strategy of being the world leader in sustainable construction? We could say, well, water is part of sustainable construction, even if it's a bit more distant than the building or infrastructure part. And secondly, are we the best owner, shareholder, manager? So we have to ask this question, and the answer to this question was rather no — not really at the heart of the strategy, and Saint-Gobain is not necessarily the best shareholder. I'll give you a simple example: we have a blast furnace at Pont-à-Mousson, which is the last blast furnace in Lorraine. We have 75 plasterboard factories. When we buy three plasterboard factories in Australia, we can instantly tell them in the Saint-Gobain ranking: here's where you stand in productivity, line speed, yield, material consumption. We'll help you improve. With a blast furnace, when we have a blast furnace, when we want to optimize the blast furnace, decarbonize the process, we'll put in electric furnaces. It's not very easy because we don't have other ideas than those of Pont-à-Mousson where there are skills, but we're not necessarily steelmakers who would have 35 blast furnaces to say: come learn from the best. So we have to ask the question. There is no project today, but if one day in the next 10 years there were a serious industrial project that continues to develop Pont-à-Mousson, we would have the duty to look at it. If I were purely in water conveyance, we only do cast iron — ductile cast iron, which is a very beautiful material. Others do grey iron, plastic, steel, concrete. Someone whose only business it was could say: why are you only in cast iron? Because the Germans buy grey iron, the Turks make steel, in other countries they use concrete. You need to have a multi-material offer. That's why strategically we won't go making acquisitions in piping.

However, it's a business that had suffered quite a bit in recent years, which has recovered. We have restored the profitability of Europe, which was difficult a few years ago. We have invested a lot, about 200 million over the last 5 years, and we will invest a bit more than 300 million over the coming years, notably on decarbonization with electric furnaces. We started at Fou, which is a somewhat peripheral unit of the Pont-à-Mousson one. So there are many decarbonization projects, and today Pont-à-Mousson is a profitable activity, in positive cash flow, which doesn't make exactly the same figures as the rest of the group, but which has evolved a lot and has interesting perspectives. Then we sold the activities we had in China because we weren't profitable there. We closed last Friday a small activity that formerly belonged to Pont-à-Mousson, which is the stormwater drainage with cast iron gutters. It's still a small niche, it's increasingly in plastic, so we sold it. So there can be operations at the edges of Pont-à-Mousson, but Pont-à-Mousson is developing well, has recovered well, and has perspectives because the water subject — there are many, many investments, for example in Italy at the moment, also in Spain. We would like there to be a bit more in France, but it's not necessarily easy at the moment.

Thank you for these two complementary questions. On the subject of inflation, you are right, and fortunately we managed through our service offer, through our client proximity, to manage our pricing policy, which allows us to have a price-cost gap between the evolution of raw material and energy costs and our selling prices, which allows us to preserve or even increase our margins. Fortunately we did that. If I take for example the 18 months from summer 2021 to end of 2022, we had 5 billion in raw material and energy cost increases. We came from 5 billion that used to make between 2.5 and 3 billion in operating results. If we had done nothing, we would have been in loss in 9 months. So it was imperative, and it's true that it contributed, as in many areas, between salary inflation, energy inflation, and inflation in general. But we are always very, very attentive to managing the gap between our selling prices and raw material and energy costs. I'm not worried that we'll be able to continue doing it. For example, in 2024, we did it well in the first half. We will have been positive in the second half, but not with the same magnitude as the first half, because precisely we are a bit stuck on the continuation of price evolution and raw material costs have stopped falling or are even picking up a bit. But Saint-Gobain has been managing this for years, we will continue to do it in 2025. I am confident about this with a positive price-cost gap. It's more or less important, more or less easy depending on geographies, but it's typically the valorization of our solutions, our systems. It's true that if you're just selling a commodity — a square meter of basic plasterboard — you risk fighting for a cent or two cents, and you potentially risk falling below your positive price-cost gap. If you bring a high-performance partition system — acoustic, humidity resistance, ease of installation, less metal framing — you differentiate from your competitors. So it's all the work of mix enrichment that we've done in recent years. So I'm confident that Saint-Gobain will be able to hold firmly on this price-cost gap and therefore on these margins.

On the more technical subject of interior insulation, you are right. There are new products, aerogels and so on, which are very expensive, not easy to install, and when you drill them because they're vacuum-based, if you want to hang a picture, you lose part of the property. There are other competitors who propose polyurethane foams that you shouldn't put inside your home — you should put them outside, not inside. They're not easy to recycle and they don't emit pleasant products if they were to burn. So we try to improve the lambda — the thermal performance — by reducing thickness. But it's true that it's a serious issue. We won't tell you that 10 cm of insulation thickness insulates as much as 20 or 25 cm. But we can put — it happens that I did personally recently — 10 cm of insulation is better than nothing, but it won't be as powerful as a greater thickness. Even if at constant thickness, we have progressed by about 25% in thermal resistance over the last 10 years. It's not 250%, but it's 25%. But it's part of the evolutions we have proposed.

So in total, the group, when we look at the Middle East zone, we are quite present because we aim to approach 1 billion euros in revenue. If I take Turkey, the Middle East, and Egypt. More precisely on just the Middle East, the countries that interest us are especially Saudi Arabia, which is a large country with a lot of population and a lot of growth. We have made acquisitions there. And the Emirates. So we have about 250-300 million in revenue on this zone. We participate in a number of large projects, including — I always forget the names — but this gigantic city that is supposed to be 180 km long, for now it's 1.5 km. So there are different projects, there's the part on the Red Sea coast and then this extremely long city. So our solution offers are present. We have factories in Saudi Arabia for insulation, we have mortar factories, more recently waterproofing products. We export our glass from Egypt to Saudi Arabia. Fosroc, this acquisition in construction chemicals that I mentioned earlier, which will close early next year, is very present in Saudi Arabia. So it will be an interesting complement on infrastructure parts, both with concrete additives, cement, and waterproofing. So Fosroc will be an important pillar. So we continue, we have development projects also in gypsum, plasterboard, and plaster. So we participate with local teams and local factories, and also very present in the Emirates. We have a plasterboard factory that works very well in Abu Dhabi. And so Fosroc will truly change our scale on the Middle East part.

You're right, we must always project ourselves. The past can give confidence and in any case perspectives and orientations for the future, but we must always project ourselves, and that's what we do. We do it in our research and development, we do it in the installation of new factories, we do it in the choice of countries, as the gentleman just asked. We look at about fifteen major countries that are countries we want to bring to 500 million, 1 billion in revenue. So the United States, Canada, Australia, the Middle East, Turkey, Saudi Arabia, Egypt, on Latin America, Mexico, Brazil. So we have geographic perspectives with about fifteen countries on which we want to grow. That's point one. Point two is fundamentally enriching and deepening our solutions. I showed you photo examples at the beginning — we make 10 products there, 15 products there, there are 82 in the Saint-Gobain tower. So fundamentally, what I want, and how I encourage the different leaders in the countries, is to look at Saint-Gobain's offer almost like a chessboard with 64 squares or 82 if I take the 82 products, and to say: do I do interior glass, exterior glass for the facade, for residential? Do I do fire-rated glass? Do I do waterproofing? Do I do higher-performance interior insulation? Do I do rock wool insulation, and to fill all the cases of Saint-Gobain's offer. And there are still many places where we don't have all these cases. In India, we have 45% market share in glazing, 55% in plasterboard. Three years ago, we weren't in insulation. We now have a foothold in glass wool, a foothold in rock wool. We're going to expand capacities. So we filled the insulation case. But do we want to have 20, 30, 40% market share in insulation? You see, it's really about enriching Saint-Gobain's offer on sustainable construction, the residential market — and we are much more, fortunately, in renovation than new construction because it's more resilient. Secondly, also the non-residential markets where we are a bit less present, and also infrastructure — bridges, tunnels, in all mining activity, you need to reinforce paths with concrete. We can bring concrete additives. So it's everything we do on sustainable construction with an enrichment, a deepening of the offer that will bring us more value-added, more differentiation, therefore more resilience and pricing power, and therefore more strength on our margin. And that's the roadmap for Saint-Gobain over the next 5 or 10 years. We have a lot of growth because we need to decarbonize construction. We will hold another investor day like we did in 2021. We will do it in October 2025, and we will present at that time perspectives for 5 years. Fundamentally, it will be what I've told you from a point of view of...

From a business perspective, regarding geographical development, the question is whether we'll be in 76 or 85 countries. Perhaps what's more important is whether we truly have weight in 15 or 20 major countries. In the United States, we currently make 11% of our revenue. We now make 22%. We won't get to 45%, but we might reach 25 or 30% within five years. In Australia, we've just entered. We'll do 1.5 billion in revenue and need to reach 3 billion within about ten years. In India, we've doubled our revenue in five years and aim to triple it over the next ten years. So there will be a lot of growth in these major countries, driven by population growth. Underlying growth is driven by the rollout of our offer. What does that mean in numerical terms? Well, it means revenue growth plus acquisitions, margin performance, and returns to shareholders. As I didn't say to the market, I can't tell you the specific figures we've begun to calculate, but naturally Saint-Gobain has entered an era where we're at double-digit operating margins. We want to get to 17%. We want to continue being very strong on performance and accelerate growth, because when we achieve 15% returns on capital — that's after tax, so about 11-12% — and our cost of capital is 7-7.5%, that means we're creating massive value. The objective is more about accelerating growth than chasing extra margin points. When we make 11% margin, that means our industrial businesses are at 14%, putting us in the top 10-20% of industrials, and our trading businesses like Point P are around 6 or 7%, which is above our competitors. This means we're well positioned competitively. We don't need to chase 5 more points of margin — that would make us lose market share. Instead, we want to grow faster with a differentiated, solution-rich offer. That's a bit long, but it gives you the outlook.

The organization works very well. To describe it more explicitly — as I did last year — it's organized by country, and naturally above the countries we have the sovereign functions: human resources, tax, finance, the Secretary General, myself, and so on. Those are the classic functions. Then there are three essential departments for the group's life in terms of synergy, expertise, and know-how. First, innovation, led by an American who manages both R&D — we invest nearly 600 million euros — and we're going to inaugurate on January 30 the extension of our historic research center in Aubervilliers. We spent 45 million on investment, and 360 million on R&D in France. So she manages innovation, R&D, and strategic marketing. Strategic marketing is things like wood construction, which exists in Nordic countries, Germany, Austria, and Switzerland, and is now arriving in France and Spain. What does that mean for adapting Saint-Gobain's products? Second, everything digital and IT — we need technology platforms of a certain scale. And third, industrial performance. We keep specialists by trade. They don't manage the factories that report to the countries — that's where human management happens — but they are specialists in glass, glass wool, rock wool, and they define investments and benchmark factories against each other to improve them. So this organization works well and we won't change it. However, when it comes to solutions, we need to help teams say, 'Have you looked at the data center market? Should we appoint product managers to have an offer tailored to data centers?' So there's a lot of enriching, deepening, and segmentation of Saint-Gobain across different markets.