Good evening, everybody. I hope that you have received our press release and that you have been able already to go through the highlights. Together with Sreedhar, we will comment our Q1 sales and take your questions. I'm very satisfied with our start of the year and the excellent dynamic that we have been able to deliver again in this first quarter. Let me sum up what has been a new record as a first quarter sales performance. We have achieved very dynamic organic growth in Q1, up 16.4%, making the most of supportive underlying markets and being very focused to leverage our pricing power and accelerate our price increase in a timely manner in the face of higher inflation. As a result, all our five segments have achieved double-digit like-for-like growth.
This reflects the group's strong strategic positioning as the worldwide leader in light and sustainable construction. Also, a strong governance country by country to offer unique, innovative solutions. Finally, a commitment to strong execution from our teams on very clear operational priorities. As I said, we saw an acceleration in organic growth compared to the second half of 2021 across all our segments. Our volumes are up almost 2% in Q1 against a high base last year, and up 8.3% versus 2019, which is our pre-COVID comparison basis. All these driven by, in particular, continued good trends in renovation in Europe and construction in the Americas and Asia. We are confirming our guidance for 2022. Our medium and long-term drivers are strong, with a clear need for light and sustainable construction as the world strives towards its net zero carbon goals.
The current critical focus on energy, whether this is driven by high energy prices for consumers or by geopolitical reasons, is making energy efficient renovation even more urgent. I'm very confident that our organization has demonstrated again its ability to overcome tough challenges, whether supply chain, high inflation, or geopolitical crisis, and will allow us to continue to outperform as we have done in recent years. I now hand over to Sreedhar who will give you additional information about our first quarter sales.
Thank you, Benoît, and good evening, everybody. Let me give you more details about our Q1 sales. We achieved an acceleration in our organic sales in Q1 as compared to H2 2021, up 16.4% on supportive underlying markets. The currency impact was positive at 2.6%, mainly linked to the U.S dollar, the British pound, and the Brazilian real. We saw a negative structural impact of 3.3% in Q1, reflecting in particular the divestments in distribution, Lapeyre, the Netherlands, Spain, and Graham in the U.K., as well as PAM in China and several small glass solutions in various European countries. In terms of acquisition, you have the impact mainly of CHRYSO, consolidated since October 2021. Now back to the like-for-like growth.
Pricing accelerated to 14.5% in Q1 after 10.3% in Q4 last year. Against the backdrop of increasing inflation in raw materials and energy, this allowed us to achieve a positive spread in Q1. After the recent geopolitical events, we now expect raw materials and energy inflation of around EUR 2.5 billion in 2022. Energy is one of the big drivers of this increase, especially in Europe. Our energy cost is now hedged at around 80% for 2022 and at around 50% for 2023. We will continue to increase our hedge for next years as and when we get the right opportunity during 2022.
Given the progress that we are making on pricing quarter after quarter and the new price increases in Q2, we are very confident in our ability to continue to offset the inflation in raw materials and energy expected for 2022. In terms of exposure to Russian gas, the countries where we are most sensitive are Germany, Poland, and Czech Republic. We have drawn up various plans to mitigate a supply cut of Russian gas in these countries. Thanks to the levers at our disposal, we estimate we should be able to limit the impact to something like 2% of group sales. Volumes were up 1.9% in Q1 versus 2021, with good trends continuing despite the difficult geopolitical situation and various supply chain disruptions.
We continue to have a particularly good dynamic in renovation in Europe and constructions in the Americas and Asia. I will now give some more details by segment. In Northern Europe, we saw organic growth accelerate to 19% with double-digit like-for-like sales in all our main countries. Nordic countries continue to see solid growth with the renovation market supported by energy-efficient renovation projects. The U.K. showed good growth driven by a dynamic renovation market. Germany accelerated its growth, thanks to our strong positioning in energy-efficient renovation solutions. Eastern Europe continues to see a very good momentum everywhere. We saw good sales trend in our light and thus more sustainable offer. Now coming to Southern Europe, organic sales grew 16%. All countries showed double-digit growth as our unique offer of comprehensive solutions helped us to outperform a growing renovation market.
France continued to show good trends driven by the structurally supportive renovation demand. The stimulus plan for households, MaPrimeRénov', continues to be a success, and the order backlogs for craftsmen continue to be full. Our complete offering of sustainable and innovative solutions, which help customers to gain productivity, is allowing us to make the most of these strong trends. We have launched our CapEx investment of EUR 120 million in insulation in France to expand our capacities, which includes EUR 20 million specifically targeting the decarbonization of our plants and our increased presence in recycled materials. Spain and Benelux are growing, especially in light and sustainable construction solutions, and Italy continued to benefit from its country-wide support program for energy efficient renovation.
The installation of photovoltaic panels on our Italian insulation factory in Vidalengo demonstrates as one of the examples among many, how we are continuously investing to improve our energy mix. In the Middle East and Africa, we saw continued good growth benefiting from the opening of new factories to make the most of the dynamic underlying markets, especially in Turkey and Egypt. Turning now to the Americas, which also saw an acceleration for the second half 2021, with organic growth up 17%. North America grew 16% with good trends in light construction solutions, from roofing and siding for the building envelope to solutions designed to deliver comfort in any living space. The local organization allowed us to once again minimize the negative impact of the supply chain tensions, as well as the disruptions in the workforce seen at the start of the year due to pandemic.
We are making progress on our more than EUR 400 million CapEx plan to increase our production capacities in plasterboard, roofing, and insulation in the U.S. Latin America continued to see strong growth with organic sales up 18% despite a less dynamic macroeconomic environment in Brazil. As we told you already a few months ago, growth in our other countries in the region, such as Mexico and Colombia, continued to be supported by new production facilities and targeted acquisitions. Our Asia Pacific region saw strong sales growth with like-for-like up 25%. Again, an acceleration from the second half of 2021. India achieved an excellent performance with market share gains and our integrated and innovative offerings for facades, as well as the light and resource efficient buildings. China also saw growth supported by market share gains despite pandemic restrictions worsening from March.
Southeast Asia is picking up again after the pandemic related issues in 2021, especially strong in Vietnam. Now, High Performance Solutions saw organic sales up 10%, benefiting from the improvement of its market apart from the European automotive market. Our businesses serving global construction customers achieved record sales and outperformed the market with 22% growth, continuing to benefit from external thermal insulation demand for sustainable construction. CHRYSO continued to see very good sales trend, and the integration process is going on very well. Mobility continued to see good sales growth to the Americas and China, especially in electric vehicles, which continues to account for more and more of our business. The European market, however, continued to deteriorate, especially at the end of the quarter as the geopolitical backdrop and the COVID situation in China weighed on supply chains.
Nevertheless, our mobility business continued to clearly outperform the automotive market, achieving a slightly positive like-for-like sales for the quarter, thanks to our strong positioning on green mobility. Industry saw good growth, supported by activities related to our customers' investment cycles like specialty ceramic refractories surpassing 2019 levels. Benefiting from our innovative technologies to help our customers decarbonize their processes. To sum up, a record quarter, acceleration in pricing with a positive spread in Q1, and we are confident to offset the full year inflation. Underlying trends remain strong in our key markets. Our sustainable and performance-driven solutions, combined with customer-centric organization by country, are allowing us to strengthen our market position. I will now hand over back to Benoît for concluding remarks.
Thank you, Sreedhar. Now I would like to make a few comments about the outlook and our strategic priorities. Despite a difficult geopolitical environment, along with ongoing disruptions to global supply chains, in 2022, the group should continue to benefit fully from good momentum in its main markets, especially renovation in Europe, as well as construction in the Americas and in Asia. We affirm its excellent operating performance thanks to a solid, focused, and well-aligned organization. In this environment, and provided there is no new major impact related to the coronavirus pandemic and the geopolitical situation, Saint-Gobain expects the following trends for its segments. In Europe, a supportive renovation market requiring comprehensive solutions along the full value chain that increase efficiency and save time for customers country by country, albeit with a high comparison basis in the first half of last year.
In the Americas, amid market trends, particularly in residential construction in North America and in Latin America overall, despite a less dynamic environment in Brazil. In Asia Pacific, market growth with continued good momentum in India and a gradual recovery in Southeast Asia with short-term uncertainties in China related to COVID restrictions. For High Performance Solutions, market growth with supportive long-term trends in sustainable construction, a demand for innovation, and new materials for industry decarbonization and green mobility, despite uncertainties regarding the automotive market in Europe. Under our Grow & Impact plan that we shared together last fall, our strategic priorities are first to accelerate the group growth and impact by outperforming our markets, thanks to our comprehensive range of solutions offering sustainability and performance for our customers. Further strengthening our key role in building a carbon neutral economy, thanks to our positive impact solutions.
Also, by the ongoing optimization of the group profile, where we will see in 2022 the full effect of the CHRYSO integration, and where we are preparing for the GCP acquisition. We'll continue this dynamic and targeted and value-creating divestments, such as our specialty distribution business in the U.K. or in Poland that we have announced in recent weeks, and acquisitions such as IMPAC in Mexico on construction chemicals or early this week, Dalsan in plasterboard in Turkey. Second, we'll continue our initiatives focused on profitability and performance, maintaining robust margins and strong free cash flow generation. To conclude, in this context, Saint-Gobain confirms that it is targeting a further increase in operating income in 2022 compared to 2021 at constant exchange rates. Sreedhar and I are now happy to answer any questions you may have.
Thank you, ladies and gentlemen. If you wish to ask a question by phone, please press zero and one on your telephone keypad. We have our first question from Yves Bromehead from Exane BNP Paribas.
Good evening, gentlemen. Thank you for taking my questions. I'll have two, maybe three, but let's stick to two for now. The first one is just looking at the split by country and the development in terms of like-for-like, just noticing that France is a bit shy of the rest of the group and, assuming that you had the same type of pricing growth in France as with the other countries, you would assume negative volume. So just wanted to understand if you could sort of split maybe and give a bit of granularity in terms of what you're seeing in France. Maybe post the election, is there anything in the bag within the Macron re-election that you think could come?
My second question, maybe for you, Sreedhar, on the price-cost spread, can you elaborate what is the absolute amount in Q1? Could the group actually keep the positive price-cost spread going forward, even if you see more inflation? And maybe last but not least, a third question on margin overall. Last time you spoke to the market, you maintained the 10% being sort of a floor. Assuming price-cost spread is positive in Q1 and flat for the rest of the year or even better, assuming volumes is good, mix is positive. I mean, is there enough here for margins to actually be well above 10% and closer to the top end of your medium-term or longer-term range to 11%? Thank you very much.
Thank you, Yves. I will answer first question number three. We confirm our ambition for the year of a double-digit margin. That's what we said end of February. We confirm that clearly. Question number one, when you look at France, it has had a very good first quarter. Keep in mind that it was super strong in the first quarter of last year. You know, the first quarter of last year was extremely high. If I take the relevant comparison basis over three years, if I jump over the years 2020 and 2021, we have above 25% like-for-like growth in France with an average of 9% volume, so that's 3% per year.
We continue to roll out a very strong underlying trend in France and the rest being in prices. We have a good momentum in France versus the first quarter of last year, the comparison was slightly higher for France versus the other countries. On a three-year trend, we are very confident of what we have delivered and what we see ahead of us. To the second part of this first question, yes, you know, when I see and read through the lines what has been declared by our president, the success of MaPrimeRénov', close to 700,000 projects filed in just one year, he has almost committed. Of course, it will have to go through the new government to push that for the next five years. It's very good news.
We knew it would be already there for 2022. He declared very loud and clear that that will be one of the top measures going forward for the next five years. You know, for me, and I take France as an example, but it's particularly true for all Europe, we always said that energy efficiency was high. I always said that the best energy is the energy you don't pay. When it's even higher in price, point number one, and second, when it does create now geopolitical issues, the alignment between the planet's carbon neutrality, the purchasing power of, you know, households in France and in Europe. Third, the alignment with geopolitics make energy efficiency super critical. We have already heard the declaration from President Macron.
We know that in all countries, you can read the German newspapers, you can read in the U.K., you can read everywhere, energy efficiency of buildings is even higher than what it was when we published our results end of February. Sreedhar?
Yeah, on pricing, on the spread, Yves, as we said at the end of February, January was neutral, and then February and March were positive. As you have seen, we have been increasing prices proactively, clearly ahead of inflation curve. I think we have to remain focused on this because it's not just compensating the inflation. It's important that we continue to push the prices up to ensure that we protect our margin. Benoît just now confirmed that our ambition of double-digit margin remains. It's important that we continue to remain focused on this price-cost spread. I think you have seen our capability of doing it consistently quarter on quarter.
I remain very confident, given all that new price increase we have announced in the second quarter, I remain extremely confident that we should be able to compensate the inflation for the full year.
Great. Do you have a number for Q1 or you don't want to give it?
It's too early. I don't want to give a precise number.
Okay. Okay, that's fine. No problem.
I will certainly give you in July.
No problem. I respect that. No worries.
You know, it's a rolling set of actions. We continue to push up prices in April, in May, in June. All this is ongoing and will continue. We didn't stop on March 31st.
I think what is important is to know that January was neutral and February and March were positive. I think that's a good trend.
No, very clear. Thank you and congrats again. Thank you, guys. Bye.
Thank you.
We have another question from Jean-Christophe Lefèvre-Moulenq from CM- CIC. Please go ahead.
Hello? Hello?
Yes, we hear you, Jean-Christophe. Please go ahead, yeah.
Good evening, everyone. I have three questions. First, energy. I think that most critical issue is Europe and across Europe, mainly power, electricity cost. Can we elaborate more on your hedging policy on power? Are you also hedged at 80%, like gas or less or higher? Also an issue with the French system, you have the industrials so far had a very good protection with the ARENH system. But what is the future in France? ARENH is probably diminishing its coverage. Second question, could we have more color on energy cost for plasterboard and insulation? What is the share of energy in the cash cost of both insulation and wallboard, plasterboard? Last question, could we have the consolidation impact of CHRYSO? Could you quantify it? Many thanks.
Maybe you take all the energy question, Sreedhar. On CHRYSO, what I can tell you is that the integration is doing extremely well. We are of course already preparing the next step of what will bring GCP on top of it. I'm happy to share with you that CHRYSO had a 26% like-for-like increase versus the first quarter of last year. That shows the extremely strong performance of CHRYSO and the fact that we are even accelerating the performance of CHRYSO within Saint-Gobain. That's a very good performance.
Um, but-
Yeah.
No, go ahead. Go ahead, Sreedhar.
No, go ahead. Go ahead.
Yes. Just to quantify, the sales of CHRYSO in the first quarter, maybe.
You know, CHRYSO last year was in the above EUR 400 million range. They are ahead of their quarterly performance. I don't want to give you the exact absolute amount.
Okay.
You know, you could divide not exactly by four and add the 25% on it, 26%, and you come out more or less outside of the exchange rate impact with the right figures. Very good performance.
Okay.
Very good set of actions also on pricing, because like any other business, they face some inflation on raw materials.
Many thanks.
Yeah. Coming to the energy cost, Jean-Christophe, you know that in 2021 we said it's EUR 1.5 billion, the total energy bill. We have the natural gas, which is slightly above 50% of the total, and the rest is electricity, mainly electricity. When I say 80%, hedging is for both gas and electricity together. This is something which is done across and monitored on a regular basis. This is something which we will continue to monitor and increase as and when we have the right opportunity, as we make progress during the year.
Okay. Also in France, with the critical ARENH issue.
Yeah. When I say 80%, it's all covers.
Okay. Maybe more color on the energy cost of plasterboard and insulation. What is the share of energy in the cash costs of these two business units, please?
You know, we don't communicate specifically on that, Jean-Christophe. You will appreciate that it varies a lot, country by country. You know, if I take the U.S., we have a very minimal energy inflation in the U.S. In the U.S., the first part of the cost cake would be more gypsum, paper, and transportation.
Okay.
In Europe, today, indeed, the energy content will be the first part of the cost cake. You know, it's in the 20%-30% type of range. When energy is expensive, again, we have hedged our energy purchase in Europe. It varies a lot country by country. Again, very minimal or much lower in the U.S. compared to Europe. Very similar for insulation. Ultimately, like for the rest of the group, what matters is to push up our prices and to have a price-cost positive. We look at that country by country, and within the countries, we look at that product line by product line. All those actions are in place, including for gypsum and insulation. I can tell you the pricing dynamic is strong.
Could you give us some examples in the U.S. Where we have had a very strong pricing dynamic? The volumes are very strong. We have a lot of plants on allocation, so all the volumes are dynamic. Keeping in mind that in most of our geographies, whether it's Europe or the U.S., number one topic for our customers is availability of materials. Availability of materials, it's true for insulation, it's true for plasterboard, it's true for roofing. It's true in Europe and in the U.S.
Okay. Many thanks.
We have another question from Matthias Pfeifenberger from Deutsche Bank. Please go ahead.
Yes, good evening, gents. Thanks for taking my questions. I've got two. The first one is on this 2% of sales guidance you give for basically the Russian gas situation. Is this the scenario where the Russian gas is basically going to zero in those countries and including the mitigation measures? That's probably the delta from the EUR 1.6 billion cost inflation to the EUR 2.5 billion, just to confirm. A second one on pricing. Do you see a lot of price pushbacks at these high pricing rates you're calling and any demand destruction there on the ground? Thanks a lot.
I'll take the first one. You know, since the outbreak of the war on the February 21st, we have worked extensively in some operations in Europe. As we wrote in the press release, we are talking mainly about Germany, Poland, and Czech Republic. It's not related to the EUR 2.5 billion of energy and raw materials inflation that Sreedhar alluded. It's the analysis of what are the operations in those three countries and what would happen in the case, in the scenario, there would be a cut of Russian supply in those countries. What are the operations related to gas as a supply? Second, what is the proportion of Russian gas in those three countries? I highlighted already that it was very early on, end of February. What are all the measures? Of course, we have worked extensively on contingency plans since then.
First, to be qualified as a priority industry in those countries for glass, for instance, on the one to 12 scale in Poland, we are second to the hospital, of course, hospital being number one in terms of priority. Second, on alternative energy sources, keeping in mind that we have 13 float lines in Europe, we have only four that consume Russian gas, two in Germany and two in Poland. In Germany alone, we have four float lines. We have one which is relying purely on Dutch gas. We have another one which is already on heavy fuel oil and two others. That's measuring the impact of those two float lines and similar for Poland.
The last point that we have also worked on is, of course, the flexibility of our various production capacities and analyze this, you know, the different scenarios and what kind of supply we could move from one country to the other. All together, we come up with something which could be, you know, in a bad scenario of 100% cut in those three countries, around 2% of our sales, which would be impacted. Now, of course, it depends on how long, when, for how much. You know, we know perfectly how to drop 10%, 20%, sometimes 30% of gas supply to one plant. If you take Poland, we know that they are going to be independent from Russian gas by the end of the year. They are now filling up their storage capacities for the fall and the winter.
It's just a matter of which is happening as we speak, you know, our float lines, our operations in Poland are running perfectly fine, even after the announcement of the Russians, two days ago. We wanted to give you, in the worst-case scenario, the magnitude of what would be impacted and of course, to reassure you that we have worked on contingency plans for different product lines. In other countries, you know, if I take France, all our insulation businesses are running on electricity. France is relying on 15% gas coming from Russia, and our businesses have been on a super high priority list. That's why we focus only on those three countries.
The 2% on top of the 2.5%, which is basically the inflation you're already seeing in the market. Understood.
No, the inflation is the increased purchasing cost of raw materials and energy versus the bill we had last year.
Yeah.
What we are talking about in terms of 2% is what could be at risk of lower production related, so in terms of sales, I'm talking about 2% in sales.
Okay. Understand. Okay.
related to the three countries we mentioned. Within those three countries, the impact it could be on some operations running with gas.
Okay. Understood. Thanks a lot for clarifying.
Yes.
Coming to your question on pricing, the market dynamic is very good. You have seen in our numbers that we have been able to make progress, sequential progress quarter after quarter. If you recall, we were at 8.7 in the third quarter, and the fourth quarter was 10.3, and then now it's 14.5. This clearly demonstrates that the market dynamics are good. There is no big pushback. We are able to push the prices up. I think the fact that there is an inflation, it also makes the market to understand, and we are able to influence the markets consistently across the board. Now, you see that if you look at segment-wise price increases, it is very high. In Europe, it's 16%. Americas is 17%-18%. Your Asia is, again, 17%.
It's across. Like, if you take the glass, the glass has sequentially improved from last quarter to this quarter, 14%. There is an across-the-board, we are able to push the prices up. That's why we are, you know, in spite of the fact that the inflation is so high, we have been able to deliver the positive price-cost spread in the first quarter.
Okay, thanks a lot. If I can sneak in a last one just on housing. You mentioned upbeat momentum, and I think it will continue for the majority of the year. What do you make of increasing mortgage rates in the U.S. and recession risk there? We just saw a big reversal there in the GDP growth today.
No, we are confident about the underlying trends. We talked at length about renovation in Europe, energy efficiency being a super high priority. If I look at the U.S., we don't see a slowdown today. We are running big and on allocation for most, if not all, our product lines. Keep in mind that there's been a huge underbuilt in the U.S., close to four million housing units over the last 10 years, versus the big financial crisis of 2008. You have much more fixed interest rate as mortgage for the household owners, you know, in the U.S. We are confident about the trend for 2022 and going into 2023 in the U.S. Again, we don't expect that to jump by another 10%, 20% next year.
If we keep a good 1.7 million housing start in the U.S., that's good, and that will make a very solid market for us this year and into next year. Another parameter we look at is the lag between start and completion. It had been big. Why? Because there had been a lack of workforce builders across the country. Sometimes because of COVID, sometimes because of resignation, et c. You still have a lot to build in the U.S. for the coming years.
Yeah. Okay.
We are confident about that.
Thanks a lot. Appreciate it.
We have another question from Glynis Johnson from Jefferies. Please go ahead.
Thank you. Two, if I may. The first one is just in terms of Northern Europe. The like-for-like, actually for the division is higher than the countries you've broken out, so I'm wondering if you can just give us a bit of color. You referenced Eastern Europe, but you know, can you give us a bit more color in terms of the other countries within that Northern Europe that have clearly done better than the ones you've detailed out? And then secondly, on the GCP, I wonder if you can just give us an update. What competition authorities are we waiting to hear from? Which ones do you need to get before this one crosses the line? Thank you.
Sreedhar, you take the first and I take the second one.
Yeah. If you look at the segment by segment, you have clearly the France, which has in terms of like-for-like, the France has primarily is driven by the pricing. And it's mainly because the comparison basis was tough in the last year. Then you have. You wanted only for the Northern Europe?
It was Northern Europe. Sorry.
Yeah, it's Northern Europe.
The average of the region being above the countries we highlight, which mostly relate to Eastern Europe.
Okay. Sorry. If I have to come to Northern Europe, you know, you have clearly Eastern Europe has been one of the biggest region because Eastern Europe has grown significantly in the first quarter. I would say that's the main reason there.
Can you give us any breakdown in terms of price, volume, country, just a little bit more color on that Eastern European business? It's clearly outgrown, you know.
Yeah. Well, overall, I would say the dynamic on pricing has been even above the average. There is a clear lack of products in most of those countries on top of very good volumes. We have the perfect match between strong pricing, strong volumes, and also, I can tell you, good, strong outperformance from our teams, whether it's in Poland, in Czech Republic, in Romania. All those countries and teams are fully leveraging the Grow & Impact plans and all the benefits of the last three years of reorganization under Transform & Grow. So a very good performance in Eastern Europe. A few points on GCP for your second question. Well, first, we have seen that we received, no surprise, but the approval from shareholders in early March. So that's done.
Related to antitrust, we have received major approvals in the countries in continental Europe where we had to file. That's done. There is still progress in other jurisdictions. You know, as a matter of principle, I would rather not comment on these other jurisdictions. We just had the approval of Brazil this morning. It was a bit longer than expected for administrative reasons, but we just had the approval from Brazil. It's making good progress in other jurisdictions, but I prefer respecting those authorities not to make some comments. We are confident that we'll be able to obtain all necessary approvals and to close by year-end 2022. This is what we highlighted at the time of the acquisition.
The third point I would mention on GCP is that the spirit, also the excitement between the two teams, because we meet of course with the presence of flow leaders, because we are still competitors, of course, during all this process of filing. We can still introduce to each other and prepare the integration and the spirit of integration planning is extremely positive. That's what I would like to share with you regarding GCP, and we'll update you in due course end of July.
Thank you.
We have another question from Yassine Touahri from On Field Investment Research . Please go ahead.
Yes. Good evening. I would have two questions. First, coming back to GCP, the margins of the GCP were a bit disappointing in the second part of 2021. Do you see a risk that the margin of GCP could continue to be under pressure before you acquire the business? And how confident are you in your ability to bring the GCP margins to a level which is closer to the one of CHRYSO or Sika? Maybe a second question on volume. Have you seen any cancellations or postponements of construction projects because of higher construction costs or building material shortages in your geographies?
On GCP, you know, they mentioned that their 10-K, which had been released on March 1st. They mentioned that there is some disruption on their ongoing global supply chain. No surprise, we all face the same. Their priority number one is to compensate these higher costs in their pricing actions, and they are working on it. But of course, I cannot discuss that with them because we are competitors. We are very strict on those legal parameters. It's something you remember when we announced GCP that we had analyzed in depth the gap on GCP performance versus what we have within CHRYSO or what you could see within the industry, keeping in mind that CHRYSO is above any other peer in the industry.
It was a combination of two things, SG&A, that's not rocket science to work on SG&A once the integration will be done. We know how much we can gain on SG&A. Second, yes, have a very rigorous customer management, various actions on innovation. All that will be part of our plan that we highlighted to you at the time of the acquisition. Another parameter which is something super strong in terms of cost is that GCP, the difference of CHRYSO and Sika, we are the only two players integrated vertically on the polymers they buy.
We make, we manufacture polymers within CHRYSO, and instead of buying them on the market like GCP, that's a benefit both on the cost side and innovation that we will bring to GCP and to the benefit of GCP customers in terms of innovation, best offer, as soon as we can integrate. Yes, we have clear ideas in mind on how to fix all those different points. In the meantime, they are going to suffer from that. We knew from day one that GCP, you know, in terms of improvement, is not a walk in the park, and it will not happen in one or two quarters. It will require several years, but it's well embedded in our business plan. Thierry Bernard, the CEO of CHRYSO, is very focused on that.
We know what to do on the admixtures piece, and we know also what to do on what we call the SBM, so the waterproofing membranes that will be integrated as part of CertainTeed roofing business in North America. The plan is well highlighted and pressure on the margin in 2022 for sure, like anyone in any industry. It's all about pricing actions, and it's all on our side about preparing the detailed action plans once we can fully close the transaction.
There's a second question. Did we see any construction project cancellation? We didn't see any such cancellation anywhere. This is something we monitor very closely. It's important parameter. You know, when it comes to the renovation market today, I think the biggest challenge is to get the right skilled workmen and get things done. You know, there's such a backlog. As Benoît said, we are talking of a backlog of more than three months. There's so much work to be done. That is as of now, we don't see that as an issue from a volume perspective.
That's actually true and strong on renovation. We might see for 2023 in some new build in Europe, not in the U.S., but in Europe, there might be a bit of slowdown. It's too early to say, but there might be a bit of slowdown for 2023 in some, which is not the bulk of our market. I'm just talking about new build in Europe. Renovation is very strong. Renovation will continue to accelerate. Keep in mind the Fit for 55 from the E.U. We need to triple, and it was prior to the war in Ukraine and the energy crisis we face. We need to at least triple the renovation rate in Europe to be on par with the carbon neutrality target. Renovation will accelerate.
If anything, new build in some countries could a bit decelerate or squeeze a bit some projects. Instead of building a large apartment, a larger house, you could squeeze a bit on the square meters. But yeah.
Even if that happens, you know, you will have more craftsmen available for the renovation work. To me, I think, you know, it is today the biggest challenge in the renovation work is the availability of people.
Thank you, everyone.
Thank you.
We have another question from Tobias Woerner from Stifel.
Yes. Good afternoon, Benoît and Sreedhar. Can you hear me?
Yes, very good, Tobias. Thank you.
Yes, thanks for taking my question. Three if I may, and I'll make them very short. Number one, can we also apply the logic you gave to us, in the first half results that, a price increase of 6%-7% on the industrial businesses sales should be able to offset a EUR 1.6 billion inflation cost impact to the numbers we've just seen, i.e., the EUR 2.5 billion and your 14%? Can we follow that logic? That's the first question. The second question, a number of your peers, but also other industries, pursue a pricing approach or an invoicing approach where they currently sell their price increases on the basis of energy surcharges. Do you pursue that, methodology as well?
Basically they're saying to their clients, if energy costs are going down in the future, we will reverse those, rebate to you on those prices. Just the last question. This morning, the ifo published a survey which showed that there was severe supply shortages in building materials again in Germany, probably the highest we've ever seen, on the back of steel and electrical parts missing. How does this impact your business in not just Germany but across the world? Thank you.
Yeah. Take the first.
Yeah. To answer Tobias, you know, if you look at our industrial businesses, we're talking about close to EUR 25 billion.
Mm-hmm.
If EUR 2.5 billion is the inflation which we are talking about, we need around 10% price increase for the year. You have seen what we are at 14.5%. I think we are in good shape. I said that we continue to remain focused on price in second quarter. We have made some more announcements. Compensating the inflation for the full year, we are very confident.
On your second question, the answer is no. With one small exception, which is our admixtures construction industry business, where early this year we applied an energy surcharge on top of higher price increases. All the rest, it's, I would say, plain vanilla price increase. I guess the back of your question is, if energy at some point does moderate or does come down, there will be no automatic changes of the prices. Keeping in mind that our pricing dynamics, it's on one side to offset the cost inflation we face. Second, number one priority for our customers around the world is availability of building materials. It's related to your third question. Craftsmen, builders and customers, they are happy when they have the products on the job site. We invest on our side on raw materials.
We invest to secure our supply chain. I would like also to pay tribute to our local organization and the empowerment of our country CEOs. First, to deliver the exact pricing they need. It's not Sreedhar or myself who dictate at the center that they should increase prices by 10%, 8% or 12%. If they can do more in their country, they do more. If they should do a bit less to secure more volumes and then balance, improve their P&L, they do it. We have a very pragmatic, value-creative approach. Again, it's very different from the past. You know, in the past, if the guy heading all glass worldwide was happy with a 5% price increase, if myself in Poland, I could deliver 6% and 7%, maybe I would have stopped at 5%.
Maybe in the U.K., I would have pushed 5%, but screwing up on the volumes way too big instead of a 3%-4% price increase. Now we have country CEOs optimizing exactly the pricing they can land on the market based on their good service, which had been a number one priority for us, their intimacy with their customers, and at the same time, of course, coping with any kind of supply chain disruption they have on the raw material. It's a good transition, I would say to your third question. Yes, you know, we have been managing over the last 18 months supply chain disruptions. Frankly speaking, we thought end of last year, beginning of this year, it would ease a bit, and it was easing a bit.
If I take, you know, our large presence across France, talking and selling to all craftsmen, and that's why we gained so much market share on renovation in France, because we talk to 400,000 craftsmen thanks to our distribution outlets. We were at 7%-8% stock out. In June last year, it was down to 1% and 2%. End of this year, beginning of this year, we have invested on inventory. I talked yesterday again to our business over there, and today we are still at 2%. I guess it varies a lot by country and also by player, depending on how much you have invested, how much you have secured on your supply chain, on your inventory and raw materials.
It's deteriorating a bit, clearly because of the war in Ukraine, because of some disruption we are seeing or we could see out of China. All this for us is quite minimal. You know, China supply is below 1% for Saint-Gobain. China supply getting out of China. On many, many occasions, we have learned and we have prepared the last two years in the COVID outbreak to prepare a second or third source of supply. Yes, this is coming back on top of the, of the pile, I would say, supply chain disruption, but we are managing it, I think quite well versus what I see in different markets. One choice I would like to highlight also is that we have several competitors who had major presence in Russia.
If I take one example, we have a strong Finnish insulation business, which was over the recent years under pressure on pricing from supply from Russia. I'm not going to give names, but you know who are the names supplying from Russia. All this has been cut. Finnish customers are happy to buy from a Finnish plant, and that gives you a good availability. For us, better pricing, better margin. If I take the glass in Europe, we have half of the exposure of Russia and Eastern Europe compared to our competitors. Again, there is a changing dynamic and we are taking as much as we can, the you know a way to outperform the market. Supply chain, you are right, is back on top of the list. This explains also why we see such a strong pricing dynamic.
Thank you. Thank you very much for these answers and congratulations.
Thank you, Tobias.
We have another question from Sven Edelfelt from ODDO BHF. Please go ahead.
Good afternoon, and thank you for taking my question. I'm a bit surprised you are not guiding a little bit more the market, especially for H1. We are already end of April, and given the very strong Q1 on the three months backlog that Sreedhar just mentioned, I would like to understand why you are so cautious. I mean, is it a discussion you had at the board level? That's the first question. Then the second one would be a clarification on your cost raw material guidance. The EUR 2.5 billion you mentioned, we're talking at constant volume here, meaning that it only include the price increase portion.
You want to take the second and I take the first?
Yeah. You know, the inflation is based on what you have. You're right, Sven. You know, at the end of the day, you need to take the base figure. The base figure is the reference here is 2021.
To your first question, you know, we guide, I think, well the market. We guided the market end of February. I can tell you that April has been good. I answered clearly your question or the prior question on the margin. We will update you in due course. We can see good trends in the different markets. We are confident about the midterm, long-term drivers. We are confident, as we said, about our ability to offset raw materials and cost inflation. Also, about the strength of our local organization to adapt to any different challenges. In April alone, you know, we have seen some slowdown in China. Okay, China is a bit less than around 3% of our total sales, but clearly there will be an impact on China in the second quarter.
We told you, like, already in April that Brazil is softer than last year, but, you know, last year we had 25% volume growth in Brazil, so we expected that. Auto Europe in April and in Q2 will be a bit more challenging. But altogether, we are confident with our guidance. On the second quarter, keep in mind that the comparison basis from last year is high. We are confident about volume growth for the full year. It's too early, I would say, you know, in our business, first quarter in terms of seasonality, you still have a bit of winter. So it's too early to think differently. I think we have given you quite a lot of colors on where we stand, the focus on our teams and how we run the business going forward.
Thank you very much indeed.
We have another question from Arnaud Lehmann from Bank of America. Please go ahead.
Thank you very much. Good evening, gentlemen. Three hopefully brief questions from my side. Firstly, do you mind commenting again on High Performance Solutions? I think you had about 5% volume growth in Q1. That's quite, I guess, encouraging considering the automotive trend. Would you mind helping us understand what's the underlying driver and if they are sustainable? Secondly, in your statement, you are mentioning that the optimization of the portfolio continues country by country. Are there any more kind of meaningful asset disposals in the pipe that we need to consider? I mentioned the pipe already. Lastly, just a follow-up on GCP. Do you need the approval from the Chinese competition authorities? Thank you very much.
Thank you. On GCP, no, we don't need the approval for Chinese authorities. HPS indeed has had a very strong first quarter. Sreedhar told you that the very good dynamic on our sustainable construction overall segment. We have had also a very good dynamic on some specialty materials for industrial applications. That's a good performance, and it's driven by innovation. By the way, it was something we highlighted during the capital market day. We have a lot of industrial customers that are asking in a big way new technologies, new materials to decarbonize their own processes. We have kept increasing the backlog of orders on those materials, which is good, and we have a good dynamic of both volume and prices.
I must say that even in mobility, we have been slightly up. Of course, up in Americas and Asia, down a bit in Europe, but altogether up. That means we have outperformed the market, clearly, overall. This is due to our strong positioning of electric vehicles. Overall, a good dynamic on High Performance Solutions. We'll see a good second quarter improvement also on High Performance Solutions for the margin versus the second half of last year. On your second question, you know, it's portfolio optimization. It's a routine of our managers. We are extremely pragmatic, driven by value creation country by country, and we keep pushing for that, both on acquisitions and divestments. There is no taboo.
Solutions have to fly, but there is no taboo. We'll continue to do that. We'll update you in due course. You have seen some recent announcements, we'll continue to work on that. Some of them were focused on our U.K., especially distribution banners. Tadmar was distribution in Poland. We are working also on some downstream glass solutions businesses. We'll continue to work on that, improving the businesses sometimes before we sell them. That's part of the routine, and I can tell you everyone is focused on that. We review that, Sreedhar and myself regularly.
Very clear. Thank you very much.
We have another question from Martin Flueckiger from Kepler Cheuvreux. Please go ahead.
Yeah. Evening, gentlemen. It's Martin Flueckiger from Kepler Cheuvreux. I've got two questions. Firstly, I guess for Sreedhar. If I understood you correctly, you were mentioning the required selling price increases to cover the EUR 2.5 billion cost inflation. Now, you know, if again, if I understood Benoît correctly, actually Sreedhar, you're actually targeting not only to offset cost inflation in absolute terms, i.e. in euro terms, but you're actually targeting to hedge the operating income margin. So my question is, how much pricing do you require to safeguard the operating income margin, not the absolute operating income level? And then my second question is again margin related.
I was wondering how much margin accretion do you expect from the change in scope in 2022? You know, leaving GCP, the uncertainty with regards to the closure of the GCP acquisition aside. Leaving GCP aside for now, just what we know as of today, what kind of changes in scope you will have? What kind of margin accretion will we see, this year? Thank you so much.
Yes. You're right that our ambition is to protect the margins. We will continuously look for not just offsetting in euro terms the inflation, but beyond that. If you have to mechanically calculate, we are talking about instead of 10%, we're talking of 11%. That's what you need to target to make sure that there is no impact on the margin.
Only 11%?
Yeah, instead of 10% for the full year.
It would be 11%. Okay. Just that small difference. Okay.
Yeah. I mean, you know, again, you have to go back to the 10% is your margin of the group, so you just have to apply that simple logic.
Okay.
Okay? Coming to the, you know, impact of the structural impact, I, you know, margin-wise, it's very limited, but what we said is from an euro terms, it will have something like 1%-1.5% in 2022.
Sorry, I didn't quite get that.
I said in terms of euro terms.
Yeah
The impact on absolute improvement in the profits would be around 1%-1.5%. In terms of margin, it will be very, very minimal.
Oh, okay. Perfect. Thank you so much.
We have another question from John Fraser-Andrews from HSBC. Please go ahead.
Thank you, and good evening, gentlemen. Two for me, please. The first on the volume impact, the 1.9%. Perhaps you could identify what the volume anticipation effect was in Q1 2021, so we can identify exactly how strong that 1.9% was in underlying terms. Within the volumes, you've called out High Performance Solutions in Asia Pac for their volume growth year-on-year. It sounds like Southern Europe, because of the very high base in France, there wasn't much volume growth, but perhaps you can give some color on the other regions. That's the first question. The second is in China.
Did you see some volume growth in China in the quarter year-over-year? Could you perhaps comment on the property market there? Is it just COVID, do you think that's causing a little bit of disruption or do you think the underlying market is weakening with some of the data points that are coming out of China? Thank you.
Okay. I take the second question and Sreedhar will give you more color on the volume versus the volumes of last year. Yes, we have seen some volumes up in China in the first quarter in the range of 2.5%-3%. Decelerating, of course, in March versus a very strong start of the year. For me, the volume impact is entirely related to COVID lockdowns and restrictions. We expect, I don't know whether it will take one month, two months, but we expect that to bounce back very strongly. To some extent, I would say unfortunately, we already went through that over the last two years, I would say three times in India, up and down, lockdown, come back strongly. We experienced that also in China, so it's entirely related to COVID restrictions.
Auto was strong in China for us, but now has been, you know, dropped big way in April. Same for construction across all different product lines, particularly light construction plasterboard. We expect that to come very strongly. I would highlight one point, which is, maybe not in our or in your radar. The Chinese government came recently with some very strong directives and guidelines for energy efficient buildings and light construction for the next five years. We don't have time to cover that in details, but that's something which should support our offer in terms of light construction, plasterboard, plaster, construction chemicals in China going forward, because they are asking for recycling, they are asking for CO2 lower weight products. That will be another reason to bounce back strongly after the end of the lockdown.
Yeah. Coming to the volume increase, if you take Northern Europe, it was 3.1%. Southern Europe was 0.1%. We just have to keep in mind that here is the tough comparison basis, so it's good to see the numbers in the last three years comparison, which was of 2019. We are talking about around 2.5% per year volume growth in Southern Europe. Americas, again, it was a - 0.9%. Here also, when you compare last three years' average, it's more than 5% per year. Again, very strong volume growth. It clearly shows that there was a comparison basis that was tough last year. You have Asia, which was 7.3%, and High Performance Solutions was 4.7%. You know, as Benoît said, overall, we remain confident to continue to deliver the volume growth for the full year.
Thank you both for those answers. Very helpful.
We have another question from Rosemarie Morbelli from Gabelli. Please go ahead. Sorry.
Good evening. Rosemarie Morbelli with Gabelli Funds. You had already a few questions on GCP, but I was wondering if I could add another one. Could you give us a little more details on the prep on how you are preparing for the integration of that particular business? And then regarding the regulatory approval and its status, I understand that you cannot give details, but are you expecting any issues in the U.S., for example? And with the situation in Russia, and I believe you do need their approval, can you bypass that approval, or do you expect things to go as you know in the past?
Russia is extremely minimal, so we don't need approval in Russia. In the U.S., no, I don't anticipate any particular point. We are in the process, so it's just a matter of time, I would say. But again, I prefer not to comment, respecting, you know, the different antitrust authorities. Preparation means, again, not talking about business because we are competitors, but means who are the different people on both sides. Our teams from High Performance Solutions and CEO of CHRYSO went to Singapore to say hello and present Saint-Gobain, present CHRYSO to the GCP teams, which we were extremely happy about that. What would be, you know, the R&D policy, the different footprints of our plants in Asia. We did the same in Latin America.
We did the same in the U.S. several times. It's mostly on the people side to tell them we are there. This is the fantastic, you know, evolution of the business that we are going to create together when we are together and all the benefits for the customers in terms of best service, in terms of innovation, in terms of increased offer. We are preparing that, plus some, I would say, obvious back office stuff. What about the IT? How do we plug their IT to our IT? What about the payroll? What about the healthcare medicals in the U.S.? I would say all the administrative work that you have to make in such an integration.
It's a combination of. On our side, of course, we have a lot of internal plans on the business side, but what we share with the GCP teams is more the high level of who is Saint-Gobain, what is the footprint of Saint-Gobain Brazil. Wow, fantastic. You have 19 plants of construction chemicals. That would be a great combination and the likes of those discussions. All that, all the time with lawyers because we are competitors and we need minutes of the meetings with lawyers. I personally visited several plants. I talked to the GCP CEO once a month at least, if not more. I did that again with lawyers yesterday, and we exchanged on the high level ideas. We exchanged, for instance, on retention of managers.
Right after the acquisition, we highlighted together a list of, I think it's 160 managers, where we have put a retention bonus so that they are there when we close, and we are happy to welcome them. We review where they are, if they need clarification, et c., et c. Those are the ones we have done it in the past. I've done it personally already with Continental Building Products. We know how to do that, and we are paying attention to all the details because it's critical and, the more you prep, the faster you go after that.
Thank you very much. I really appreciate. That was very helpful.
We have another question from Manish Beria from Société Générale. Please go ahead.
Yes, just a very quick one. What was the pricing in distribution in the industrial business? 14.6% or whatever, if you can split into industrial and distribution.
It was in the same range of what we have for the whole group.
You know, we look at that, we manage country by country. For me, what is important is when there is a strong dynamic. When there is a strong demand on renovation, when we have a strong market share, how do we leverage our end-to-end solutions across the value chain country by country? We look at that. I look at the performance of the synergies of the teams on a very pragmatic way, country by country. This is how we manage the business. This is how we have managed the business for the last three years.
One more, if I can add. Can you confirm that in the distribution business, you are able to maintain your margins?
Again, it's a country by country approach.
Yeah.
The answer is yes, because you do it immediately. So country by country, yes, we are able to pass the overall inflation on the materials, the Saint-Gobain building materials. Of course, we coordinate all this together in a smart way, and of course, other building materials country by country. The U.K. is different than Sweden, which is different than Norway, which is different than France.
Okay, thank you very much.
We have another question from Cedar Ekblom from Morgan Stanley. Please go ahead.
Thanks very much. Three questions on costs from me. In the full year numbers a couple of months ago, you had guided to cost inflation of around EUR 1.5 billion, and you gave us some guidance on being hedged on energy. We're now sitting two months later, and the cost guidance is EUR 2.5 billion despite that energy hedging. I'd just like to understand how effective the hedging is, that you have, and does it really provide you any insulation from what's going on in the energy markets and raw material markets more broadly? Just how do we think about the effectiveness there? The second one is on incremental costs to switch your energy sources in those assets that you spoke about should you get into a situation where Russian gas is not available.
We understand the revenue impact if you have to turn those assets off, but how do we think about the costs that you may have to incur to keep them running? Finally, on the EUR 2.5 billion headwind that you flagged on raw mats and energy, could you break out how much of that is energy and how much of that is other raw material costs? Thank you.
Sure. Okay. You know, we just have to keep in mind that I gave EUR 1.6 billion and I indicated EUR 1.6 billion inflation, which was similar to what we had in 2021, end of February, where the Ukraine war was just announced. It was like, you know, we didn't have a good visibility of how long this will continue, and it's clearly, with the sustained high level of energy costs, now clearly impacting across all the raw materials, packaging, transportation. This is not just energy costs. We're talking about an increase of around EUR 900 million increase. If you have to take, again, a split of this EUR 2.5 billion, around 50% of increase is coming from energy related.
When I say energy related, gas, electricity, transportation, asphalt. Then you have another 50% across all the raw materials coming. This is, again, not just in one, it is across the board. I confirm to you that the hedging is very efficient, and it is not something which is, you know if you would have not done hedging, I think we would have been in a deep problem, I can tell you. This is a very, very effective and we have been monitoring it very regularly. To me, this is something, you know, we have started thinking about 2023 - 2023 now itself. That also reflects that we anticipate and, at appropriate time, hedge our exposure.
Onto the second question, Cedar, I can answer. When we switch to heavy fuel oil, it's actually cheaper today. The reason why we didn't do that in the past is that unfortunately, it's not good for the CO2. So in terms of carbon footprint, it's not the right decision, but we do it if we have to do it in order to save the gas supply. But it's something that we had dropped years ago in terms of way to supply and to heat a furnace because of the higher CO2 content. But it's actually quite significantly cheaper as we speak versus, let's say, the spot market of natural gas or even the hedged price that we pay for our natural gas.
Is it cheaper when you take into account you'll be paying for carbon?
Uh.
Your carbon emissions will go up, right? I mean.
Yeah, we have quota. Sorry, I've not made the math in those details because we have quotas, and we are in excess of quotas.
Yeah.
Uh-
That's not our ambition. That's not what.
It's a short term, yeah.
Yeah.
It's a short term fix.
It's a-
I tend to think that it would still fly, based on the gap today if I were to take a spot price of natural gas and heavy fuel oil. It's not something we are happy to do, again, because of the CO2 impact. It's just, I would say backup plan.
Okay. Thanks so much.
We have another question from Elodie Rall from JP Morgan. Please go ahead.
Hi, good evening. Sorry for asking so late, couple questions. Just a couple left on my side. First of all, did you disclose the distribution like-for-like growth for Q1? I don't see it. Sorry if you did. Second, in terms of volume for Q1, have you observed any pre-buying ahead of the new price increases that are being announced? Maybe a last question on the measures that you're seeing coming through for incentives with regard to energy efficiency and decarbonization, the European Green Deal on it, et cetera. I mean, we talked a lot about the MaPrimeRenov', but once that's done, like what other measures are you seeing that are coming through which gives you the confidence that energy efficiency renovation will increase from next year? Thank you.
As far as the distribution like-for-like is concerned, it's almost in line with the group average, Elodie.
You know.
Yeah.
As you know, the new organization is by country, and we have aligned our reporting effective 2019 by country, with one exception on distribution overall during the transition period over the last three years. It's done. It's over. We don't have any owner. There is not a single manager running this P&L within Saint-Gobain. They have completed their transformation as planned. We have actually reached very healthy margin, 47% operating margin for distribution end of last year on the perimeter that we have, we have kept. We are extremely happy to give you color country by country on the dynamic, whether on pricing and whether on volumes.
We continue country by country, whether it's on insulation, when we sold some EPS foams in France and Germany two years ago, some glass solutions or some distribution assets like our specialty business in the U.K. or Poland recently. We continue to optimize also our different distribution assets country by country. I want to be aligned in terms of reporting with the way we manage distribution, which is by country with a country CEO owning the full presence on the value chain. Now on your second question, yes, we have seen a bit of pre-buy end of last year. The start of the year in some product lines was a bit softer.
Even Saint-Gobain, you know, in some of our, if I take France distribution, coming back to the prior question, we did buy a bit of extra inventory end of December last year to be before the price increase of January 1st or February 1st. There was a bit of pre-buy and therefore, in some countries or product lines, we have seen a bit of the impact in Q1. Your third question on energy efficiency, I'm very confident that it will, in France stick and, it has been a clear debate, you know, during the short but efficient campaign we have seen. Energy efficiency for households, for public buildings, we'll start to push and see that in 2022, is on top of the agenda.
There was not a single paper article from journalists, talking about what needs to be done in terms of carbon neutrality, roadmap for France in the coming years without talking about energy efficiency. On a broader scope across Europe, this is the case as well. When you see, you know, Italy spending on the Superbonus 110% still for the next years until 2025, when you see the turmoil in Germany in terms of geopolitical dependence on energy, there is a strong push towards renewable energy on one side, and there is a strong push to accelerate energy efficiency of homes.
It's on top of the agenda everywhere, and I'm very confident that for not only carbon neutrality like in the past, not only cost efficiency, you know, when you renovate a home with, that was a use case we showed during the capital market day, all the good Saint-Gobain products and the solutions delivered by our distribution, you save 70% on the energy bill. It's even higher in terms of payback when the energy price is higher. Second, it was based on purchasing power for the households. Third, now it's aligned in terms of geopolitics in Europe. The Fit for 55 on tripling energy efficiency renovation in Europe is getting now a geopolitical parameter, which I'm afraid is not going to disappear. It's going to further accelerate.
Yes, I'm confident that we are going to see that, and we are, as you know, expanding our capacities on light and sustainable construction, whether it's for insulation in France, whether it's plasterboard in Romania, in Spain recently. We are adding some what we call spinners in some of our plants, running five shifts. We are pushing, all Eastern Europe is out of capacity of insulation. We got some products were coming from Ukraine and Russia in the past. Some competitors are shut down or cannot supply. If you take Poland, you know Romania, Czech Republic, the super high like-for-like growth we just highlighted a bit earlier during the call, it's related to all those product lines where we have a good presence and a good offer.
Okay, thanks very much.
We have another question from Nabil Ahmed from Barclays. Please go ahead.
Yeah, good evening. Thanks for taking my questions. I have two, actually. The first one is about HPS margins. Could you please help us understand how much benefits you expect from the adaptation measures of the last two years? Maybe if you could confirm that you would expect margin to increase even if there is no recovery in European OE volumes this year. The second question was on the acquisition pipeline. Maybe if you could elaborate on the state of the acquisition pipeline. I guess the question is to understand whether we could see a larger acquisition this year or if the priority for now is to close GCP first.
On HPS margins, we are confident that sequentially versus the second half of last year, we will improve in the first half without, you know, offsetting the negative of mobility being weak in the second quarter. Even with that, we are confident that we'll improve the margin in the first half versus the second half of last year. We have a good dynamic within High Performance Solutions, so I think we'll come back to good, healthy levels of margins within High Performance Solutions. We forecast, you know, for the full year a further improvement versus the margin we had last year. The dynamic is strong. We have a good organization and a very good team.
In terms of pipeline for acquisitions, you know, we continue to look at several segments across different geographies. Construction chemicals is one. We have been happy to close a significant one in Mexico end of March. Light construction like plasterboard. It's a partnership. It's not an acquisition, but it will make us by far the number one in Turkey. So we are already very strong in insulation and very strong in construction chemicals. CHRYSO was also strong in Turkey, so that Dalsan partnership is a very good one. We are looking, you know, on two axes. One, completely aligned with our strategy on light and sustainable construction. Second, in terms of geographies, I highlighted North America and Asia emerging markets.
That's a trend we would like to continue to push. Third, which is extremely important for us, to be very disciplined on value creation. We did pass on some acquisitions late last year in some of our businesses. We want to be extremely disciplined on value creation, and we know where to stop. We are going to make some acquisitions before the end of the year or before the close of GCP. You know, in the small to mid-size that we like, where it's easy to integrate, where we know the measures and where the alignment on the strategy, on the geography, and on the value creation financially is extremely strong. We continue to be active.
That's very clear. Thank you, Benoît.
We have another question from Tobias Woerner from Stifel. Please go ahead.
Sorry, apologies for a follow-up question, but I'm just trying to check a logic here. Sreedhar, you earlier said 10% needed for the EUR 2.5 billion. Clearly in the first quarter of 2021, the price increase was 2.6%, and then sequentially got higher up to 10.3%. If I do the math, it seems like you need sequentially +2% as the year progresses to get to 10%. Does that make sense?
You know, when you look at, if you take the base effect, we are at this point of time mechanically translates to 10%. So you are right. I mean, if we, you know, we need at least maybe a additional 1% or 2%, if that's something which we will continuously focus on.
You know, we have country CEOs who are fully empowered to maximize the P&L of Saint-Gobain. We insist loud and clear on their pricing actions, their margin actions, and also their volumes, because we want to continue to outperform the market. They make a combination of all this to maximize the P&L of Saint-Gobain. It's not just running prices like crazy at the expense of volume outperformance. We have been happy to gain market share, whether it's in France, in the U.S., in the Nordic countries, in India, et c., in several markets at the beginning of the year. It's a combination of all those parameters that we keep in mind with a good balance.
You really need to fine-tune this approach for the rest of the year if I hear you correctly.
Once we have covered the price-cost spread being positive, once we have secured the margin, the third topic in terms of priority is to continue to outperform in terms of volumes, leveraging the very strong end-to-end solutions of Saint-Gobain across all the value chain. We have to keep this parameter in mind, and we are doing that, running Saint-Gobain. I told you that, you know, during the capital market day, we highlighted a small set of financial parameter. When we run at double-digit margin within Saint-Gobain, that means we deliver a very healthy return on capital employed. It was above 15% last year. When we are there, the motto is to accelerate organic growth. We were in the 1%-1.5% for the last decade. We have been running well above that in the last three years, outperforming our peers.
We want, in terms of absolute value creation for our shareholders, to continue to maximize that. Therefore, the top line is also important once we have secured such a high level of value creation in terms of kind of 14%-15% ROCE.
Great. That's very helpful. Thank you very much.
It was the last question. We have no further questions, gentlemen.
Thank you very much for your attention. I will just flag if you have still one minute of attention that our first half results are going to be published on Wednesday, the July 27th. Sorry to introduce this huge disruption in your calendar. It used to be the Thursday evening. This time, for agenda reasons, it's going to be on the Wednesday. We'll be happy to host our investor analyst call on the Thursday morning, and the results will be published on Wednesday evening. Please, we'll be happy if you could mark that in your agenda.
We'll be happy to see you in person. Hopefully, everything will be all right.
Between, absolutely. See you yeah. Thank you very much, everyone. Be safe and have a good evening. Thank you.