A rivalry between French firm Saint-Gobain and Swiss company Sika has evolved since 2014, marked by a failed acquisition attempt and legal disputes. CEO Benoit Bazin has since restructured Saint-Gobain, enhancing profitability and local decision-making. Despite challenges in the construction sector, particularly in France, Bazin remains optimistic about the company’s growth potential and the importance of efficient operations. He also rejects the idea of spinning off US operations, emphasizing the need for energy-efficient building solutions.
A Complex Rivalry: Saint-Gobain vs. Sika
The ongoing rivalry between the French building materials giant Saint-Gobain and its Swiss counterpart Sika has been anything but amicable. This contentious saga started back in 2014, when Saint-Gobain sought to gain a majority stake by acquiring shares from the Burkard family, owners of Sika. The move was met with strong opposition from Sika’s board, leading to a legal standoff that lasted nearly three years.
In May 2018, a breakthrough occurred when the two companies reached a compromise, resulting in Saint-Gobain selling a portion of its shares to Sika and fully exiting the deal by 2020. This engagement reportedly generated over 1.5 billion euros in profit for Saint-Gobain.
Leadership and Strategic Changes at Saint-Gobain
Benoit Bazin, who was a division head during the tumultuous period, currently serves as the CEO and chairman of the board. In an interview at the Swiss Federal Laboratories for Materials Science and Technology (Empa) in Dübendorf, he reflected on the past, stating, “I had nothing to do with it.” Rather than harboring ill feelings, Bazin expresses admiration for Sika and shares a cordial relationship with its CEO, Thomas Hasler.
Since taking on the role of Chief Operating Officer in 2019 and later becoming CEO in July 2021, Bazin has implemented significant changes within Saint-Gobain. Over the past six years, he has strategically restructured the company, affecting 45 percent of its portfolio. This involved divesting from low-margin sectors while focusing on acquiring more profitable ventures. As a result, Saint-Gobain has sold businesses generating 10 billion euros in revenue while acquiring those worth 7 billion euros.
Thanks to these efforts, the company has successfully increased its operating profit margin (EBIT) from 7 to 11 percent since 2020. Although still trailing behind Sika’s impressive EBIT margin of nearly 14 percent, Bazin notes that in its self-manufactured product line, Saint-Gobain also reaches a 14 percent margin.
By transitioning away from a complex matrix organization, Bazin has empowered local subsidiaries to make market-specific decisions. This shift has not only enhanced efficiency but also fortified the company’s resilience against global challenges, including tariffs. With 900 manufacturing sites worldwide, including 130 in the USA, Bazin emphasizes the importance of local production capabilities.
Bazin’s leadership has also led to successful acquisitions, including a recent victory in Mexico where Saint-Gobain outbid a large Swiss cement manufacturer, presumably Holcim, in a competitive bidding process.
On the subject of Holcim’s plans to spin off its US operations, Bazin expressed no interest in following suit. He believes that the demand for energy-efficient building solutions is a global necessity and that maintaining synergies within the group is crucial.
As Saint-Gobain continues to thrive in various markets, Bazin acknowledges the benefits of population growth in regions like Switzerland, Australia, and Canada, which contribute positively to construction activities. However, he also recognizes the challenges posed by rising interest rates and lengthy approval processes that have stalled construction in many areas.
Particularly in France, the construction sector is facing unprecedented lows, with activity at its lowest point since 1953. Bazin argues that his home country needs to undergo significant structural reforms and reduce its debt to foster a more favorable business environment.
“At Saint-Gobain, we’ve demonstrated the advantages of streamlined structures,” Bazin states, advocating for a re-evaluation of France’s bureaucratic landscape, which he believes hinders progress.