Benoit Bazin: Like-for-like sales increased +2.5% in Q3. In July, we told you that the longer the war in the Middle East lasted, the more the like-for-like would be driven by price. This is indeed what we saw in Q3, with pricing driving the like-for-like, demonstrating our strong pricing power. We saw like-for-like growth in all regions, and another outperformance in construction chemicals with +6.3% growth in the quarter. The rollout of our Lead & Grow strategy continues.
Benoit Bazin: Our solution strategy is working well, pulling the offer country by country to deliver more high-added-value sales, more specified sales, and also more cross-selling. Our broader range of solutions is driving double-digit growth in Poland and the Czech Republic. The specified project pipeline rose double digit in Brazil, and we have also bolstered our technical support capabilities, for instance, in the US, with a new fire testing facility in Northborough, Massachusetts.
Benoit Bazin: We know indeed from our customers' feedback, notably for non-residential applications, that building science expertise is one of the key reasons they come to Saint-Gobain Solutions. We are winning new projects in the non-residential and infrastructure markets in line with our goals. For instance, a green energy giga complex in India, where in India, non-residential and infrastructure sales already represent nearly 40% of our sales in the country.
Benoit Bazin: Also the Izmit Metro in Turkey. In Northern Europe, we are now active in over 200 data center projects, specifying an increasingly broad range of solutions. Together, these strategic action priorities are driving our performance in key countries. For instance, in Spain, Italy, Eastern Europe, the US, India, China, and the Middle East.
Benoit Bazin: On the strategic side, we are also delivering fast with determination on the group's profile optimization, with EUR 3.3 billion of sales in divestments or acquisitions announced year to date, making very good progress on our target of more than 20% portfolio rotation in terms of sales by 2030. So far this year, we have announced 11 divestments, including Dahl in the Nordics, which should close next week in attractive conditions.
Benoit Bazin: We have also announced 17 acquisitions, and I am particularly excited about the growing position we are building in infrastructure in the US with the acquisitions of Xypex and D.S. Brown, differentiated high-added-value construction chemical solutions. We will continue to be active, strengthening the profile of the group and allocating capital to our investment priorities. You may have also seen that we have appointed as Chief AI Officer to our executive committee, Annica Hagen.
Benoit Bazin: Annica Hagen will structure, prioritize, and scale up our successful local artificial intelligence initiatives that have been put in place across countries and businesses over the last few years. We are already a leader on AI in the construction sector. Combined with our very large database, AI is a real competitive advantage for Saint-Gobain in terms of optimizing commercial effectiveness, answering sales quotes, all the RFQs for craftsmen in France across hundreds of sales outlets, R&D, of course, manufacturing, and business processes.
Benoit Bazin: Last week, Microsoft chairman and CEO visited our teams in Paris to dig specifically into how we at Saint-Gobain are accelerating the development of new, more efficient construction materials. Annica's appointment will ensure that we make the most of the opportunities that AI offers us across the group. Now, getting back to the Q3 sales, I will hand over to Maud, who will discuss the figures in detail.
Maud Thuaudet: Thank you, Benoit. Good evening, everyone. I am pleased to give you some details on our Q3 sales release, and I will start with sales growth. Q3 sales were up 2.5% like-for-like, with growth in all regions, and an outperformance in construction chemicals, which saw 6.3% growth in Q3. As usual, let us look at the technical effects first. We had a positive currency effect in Q3 of 1.4%, mainly due to the appreciation of currencies in the Americas against the euro.
Maud Thuaudet: The scope effect was -2.1% for the quarter, mainly reflecting our continued portfolio streamlining with the divestment of distribution businesses in the Nordics, Brazil, and Belgium, and of dry mortars, offsite construction, and HKO in Germany. As Benoit said, the divestment of Dahl, the Nordic specialist distribution business, is expected to close on 2 November. Prices increased in all regions in a more pronounced inflationary environment.
Maud Thuaudet: helped by proactive actions on commercial excellence and sales of higher value-added products as part of our solutions approach. We expect 2026 inflation to be on the high side of the mid-single-digit range of our EUR 12 billion raw materials, energy, and transportation bill. Inflation is creeping up a bit everywhere, especially in the US in transportation. We are confident to achieve a neutral to slightly positive price-cost spread for the full year at the group level.
Maud Thuaudet: Now, on energy specifically, we are much less energy-intensive than some may think, with an energy bill below 4% of group sales, around half electricity and half gas. So our gas bill represents less than 2% of group sales. Remember as well that we are well hedged at 75% plus for 2026, and well hedged beyond at 70% plus for 2027, and higher for the coming winter. Now let us look by region.
Maud Thuaudet: Sales in Europe increased 2.5% like-for-like in Q3, driven by new construction, pricing, and high added value products, with a contrasted situation country by country. Northern Europe grew 3.4% like-for-like, driven by growth in our main market, with the exception of the UK, which was impacted by the downturn in construction market. The Nordics saw further good growth, benefiting from value-added mix and our multi-product specification capabilities, with increased exposure to non-residential.
Maud Thuaudet: Switzerland and Eastern Europe continue to outperform, with Poland and the Czech Republic delivering double-digit growth. Germany was up slightly, supported by non-residential renovation and by infrastructure. We are seeing their commercial success in construction chemicals, especially for energy infrastructure. Turning now to Southern Europe, which was up 1.6% like-for-like over the quarter. France delivered slight growth in a cautious market. Renovation was affected by the uncertainties weighing on consumer confidence, despite new construction growth in Q3.
Maud Thuaudet: Heatwaves had a slightly negative impact on the quarter, but should be a growth opportunity for the group in the long term. They have concentrated attention on the need to adapt to climate change, and at Saint-Gobain, we have the solutions to reduce indoor temperature by up to 10 degrees, be it in residential or non-residential buildings. Spain and Italy increased slightly, with interior solutions continuing to capture market share.
Maud Thuaudet: The Middle East delivered further double-digit growth, led by construction chemicals, and with a strong outperformance in Turkey. Benoit discussed our AI strategy earlier in the call, and we are already advancing fast on the ground. In Southern Europe, for example, we are introducing advanced AI power control systems in our plasterboard plants, initially at Quinto pilot site in Spain. This project has the potential to gain around 1.5 days of production per line per year.
Maud Thuaudet: If I move now to the Americas. The Americas rose 0.6% like-for-like in Q3, reflecting growth in North America and a contraction in Latin America. North America delivered 2% like-for-like growth, thanks to an increase in both prices and volumes. This growth was driven by construction and despite industrial solutions remaining down.
Maud Thuaudet: The inflationary environment is accelerating, particularly for transport. Roofing and plasterboard were slightly up, outperforming thanks to our differentiated solutions in a market affected by the absence of major weather events and by the decline in new residential construction. The out-performance in interior solutions was also supported by exposure to non-residential application.
Maud Thuaudet: In roofing, our focus on differentiating ourselves is evident in the market share gains of our CertainTeed Integrity Roof System solutions for climate resilience, and the good momentum we have seen in contractor engagement, with a 10% rise in the number of CertainTeed accredited contractors over the nine-month period. We delivered, lastly, another strong out-performance in construction chemicals, with high single-digit growth and market share gains.
Maud Thuaudet: Latin America decreased 3% like-for-like, with volatile markets affected in the short term by the current context. The quarter saw caution ahead of the presidential elections in Brazil, but we are progressing well with our Lead & Grow strategy. The region saw further growth in construction chemicals in Brazil, in Mexico, and Central America, thanks to the success of Cemix, and in Peru with the integration of QSI Peru.
Maud Thuaudet: Lastly, moving on to Asia Pacific, which delivered strong organic growth of 8% in Q3, thanks to strong momentum in India and Southeast Asia. India saw further market share gains with double-digit organic growth driven by the strong reputation of the Saint-Gobain brand in the country, along with our comprehensive, innovative, and sustainable offering.
Maud Thuaudet: An AI-powered customer recommendation tool has been developed and deployed within sales teams in the country, and this leverages customer buying patterns, product mix analytics, and sales context to drive more effective customer interactions and conversion rates. Southeast Asia continued to grow thanks to Vietnam, the Philippines, Indonesia, and Malaysia benefiting from the increasing adoption of sustainable construction solutions and a greater market share in data centers.
Maud Thuaudet: We are investing to continue to capture this momentum with the startup of new lightweight board production lines in Malaysia and Vietnam, and the acquisition of a new plasterboard production line in Vietnam. Australia reported slight growth driven by new construction, and we once again outperformed in China, showing modest growth in a market that remains down.
Maud Thuaudet: To sum up Q3, like-for-like sales growth in all regions, prices increased in a more pronounced inflationary environment. We are confident to achieve a neutral to slightly positive price-cost spread for the full year at the group level. Our local teams are proactive and focused on a small set of priorities, like-for-like growth, cost management, and out-performance. Benoit, I hand over to you for the concluding remarks.
Benoit Bazin: Thank you, Maud. Let me make a few comments to conclude. In an uncertain macroeconomic and geopolitical backdrop, we focus on the right price, mix, volume dynamic to deliver the best top line and the best bottom line. We will continue to be very proactive in terms of cost and productivity. Overall, our geographic diversification enables us to capture growth opportunities in multiple geographies, and I am confident our proven local business model is a real asset in the current context.
Benoit Bazin: The same team has shown already over the last 5, 6 years that we know how to navigate successfully under various challenging short-term conditions. I am also very confident in the strength and the capabilities of this very focused and hands-on team. Now, on the midterm basis, there are clear structural needs and strong mega trends in construction across multiple end markets and geographies.
Benoit Bazin: Last week, for instance, we announced two capacity additions in Egypt, a high-growth country, which plans to build 37 smart cities by 2050 to meet the 30% increase in its 120 million population expected over the next period. We have a lot under our control, and we will continue to focus on this, our solution strategy to drive ou-tperformance, our expansion in non-residential and infrastructure markets, and our portfolio rotation, where we will continue to be active.
Benoit Bazin: In a contrasted macroeconomic environment and uncertain geopolitical landscape, the group expects like-for-like sale growth for the H2 2026, and we confirm our 2026 outlook. Saint-Gobain expects an EBITDA margin of more than 15% in 2026. So thank you for your attention, and Maud and I are now happy to answer any questions you may have.
Operator: This is the conference operator. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. The first question comes from Cedar Ekblom with Morgan Stanley. Please go ahead.
Cedar Ekblom: Thanks very much. Hi, both. I just wanted to touch base on the sequential trends in organic growth in Q3 and how we should think about that as we move into the end of the year. So, you have done a good job. The market is not easy, but overall, the organic growth is actually a bit lighter in Q3 relative to Q2. Mix is a bit better, obviously, a bit more pricing, but less volumes.
Cedar Ekblom: So, can you talk about how we should think about the volumes in the Southern European business, which appears to be the sort of real delta quarter-on-quarter from a volumes perspective? And also, if I look at where consensus sits for Q4, assuming it is updated, we are sort of looking at 3.5%, 4% or so organic growth, which would assume that there is that sort of acceleration. Do you have confidence that we should see better organic growth in Q4, or is it a case that the Southern European region is presenting a little bit of risk as we move into the end of the year? Thank you.
Benoit Bazin: Thank you, Cedar. I will maybe give you the high-level picture, and Maud will zoom into the European market. First, something which is very important is that in our solution strategy, we truly move with a focus on value over volume. It is very important because that is all the drive in terms of upselling, in terms of prescription sales that we are pushing.
Benoit Bazin: This is the strategy of the group. As we said in July when we published the H1, we said that the longer the war, the more pricing we will see versus volumes. But I wanted to highlight this point that it is a value over volume strategy, and therefore the like-for-like, which matters the most. Now, thinking that Q4, we expect positive like-for-like sales growth in Q4, a bit softer than Q3, with the current geopolitical context. That is, I would say, the high-level picture on how we drive like-for-like and how we think about Q4. Maybe, Maud, you want to give some color on the different countries?
Maud Thuaudet: Yes, sure. When we look at the different countries, starting as I said during the introduction, if I look at the southern part of Europe, Italy, Spain, continuing to be at good levels. If I look at Middle East, we are seeing strong growth there. France is clearly the place where we are more cautious. We have seen in Q3 the consumer confidence weighing on the renovation demand, whereas the new construction has been continuing on the improvement that we had seen in Q2.
Maud Thuaudet: So that is overall the trend for the Southern Europe. If I unzoom and look a bit more broadly at Europe overall, we are seeing Eastern Europe with a strong growth pattern. The solution strategy is also supporting quite well this acceleration. The push into infrastructure is delivering. Germany is slightly up. There might be some signals of start of implementation, but I am a bit cautious. Let's see how things go. But seems like Germany is going in the right direction. The Nordics clearly improving, as I said. So that's for Europe, César.
Benoit Bazin: Outside of Europe, if I take this opportunity, in North America, we have new construction expected to remain weak given the interest rates, which have been increasing. As you know, we have seen less weather-related demand than last year. In Asia Pacific, we expect strong growth driven by market demand, penetration of our solutions across Asia, notably India and Southeast Asia. Everywhere, we continue to focus on our growth plan country by country, our performance, the competitive advantages of our solutions, and also the expansion into non-resi and infrastructure.
Cedar Ekblom: Very helpful. Thank you.
Operator: The next question comes from Elodie Rall with JP Morgan. Please go ahead.
Elodie Rall: Good evening. Thanks for taking my question. Just a little bit of a, sorry, a bit of a silly question, but you reiterated like-for-like sales growth in H2. Last time you said you expect like-for-like sales growth in all regions. Is that still the case? My question is really on the price increases and the actions that you've taken so far. What should we expect here, and the acceleration, and most importantly, what is needed in 2027 given the current inflation backdrop? I think you can remind us with that question how much hedging you've done already for 2027. Thanks a lot.
Benoit Bazin: Maud will take the second. The like-for-like, everywhere we are pushing for our performance. As you know, there is a lot of uncertainties around the world. In North America, let's hope all together that the midterm elections will go smoothly. There is always the weather impact in Q4, a bit earlier, a bit later, so always a bit of uncertainties in Q4. Overall, the dynamic, as you have seen in Q3, has been stronger across all regions. It is still a bit too early to say for Q4, but we are all pushing for all regions on the performance. Maud on the-
Maud Thuaudet: Yes, on the price increases. We have delivered 3.2% in Q3, which is a good outcome. Again, we have been pushing very early on on the price increases with several rounds of price increases. You remember we had several discussions on this topic.
Maud Thuaudet: What I see for how things from now on are going to go, we will be very opportunistic until the end of the year. Obviously, price increases will be now mostly for 2027. When I look at what is needed for 2027, if we were to see a mid-single-digit inflation in 2027, our embarked price effect at the group level of nearly 1.5% for 2027 means that we are quite well placed to compensate.
Maud Thuaudet: In terms of, again, pricing dynamic, we have been pushing that in a very systematic and disciplined way in all regions, and the outcome is clearly that we are in a good position for 2027. Of course, we will remain extremely disciplined and opportunistic.
Elodie Rall: And on hedging?
Maud Thuaudet: On hedging, yes, indeed. Thank you, Elodie Rall. On hedging, we are hedged 70% plus for 2027, 75% plus for this year, and clearly more on the upcoming winter. When you look at how we constitute those hedging positions, we typically have a multi-year hedge strategy, which gives us good visibility in how we constitute those hedging positions.
Elodie Rall: Okay, thanks very much.
Operator: The next question comes from Arnaud Lehmann with Bank of America. Please go ahead.
Arnaud Lehmann: Thank you very much, and good evening. A couple of questions on my side. Firstly, on the price-cost spread, did I hear correctly that you are not talking about a neutral to slightly positive rather than a slightly positive price-cost spread for the year? Is that correct?
Arnaud Lehmann: That is my first question. My second question is on your Americas volumes. They are down less than 1%. I am sure you have seen the ARMA data for US shingles down 13%, and it looks like North America is also outperforming the region. Can you talk to us a little bit about your US roofing trends? It seems you are outperforming the market. Thank you.
Benoit Bazin: You take the first one?
Maud Thuaudet: Yes, on the price-cost spread, indeed, Arnaud, I said neutral to slightly positive. A few highlights on this topic. Clearly, when I look at how the spread is going along the year, the situation improved in terms of spread during the summer, but then again in September, since September, inflation has accelerated and is creeping up, especially, I would say, if I look at the US and notably in transportation. All in all, again, we are confident at group level for a neutral to slightly positive price-cost spread for the full year.
Benoit Bazin: On North America, indeed, we have, relative to the market, I think, a clear out-performance in Q3, and it is valid for exterior products, notably roofing, but we have also a good performance in siding. We have seen also a very good performance in plasterboard, and I think it is related to the fact that we have a good share of added value products.
Benoit Bazin: We have also a pretty good presence on commercial applications for plasterboard, so it is not only residential, and it is important for the interior solutions. We have also quite a good presence in Canada, so across the board, be it exterior or interior solutions, we have delivered a decent performance, out-performance in Q3.
Benoit Bazin: I was actually happy to have done that because we had the board of Saint-Gobain for almost 1 week in the first week of October, so it was an important investment in terms of time for the board to review all the moves we have done in North America and a good performance from Mark Rayfield and his team.
Benoit Bazin: They are always, keep that in mind, that Q3, Q4, there are always some moves from distributors, from one quarter to the next in terms of destocking, stocking, et cetera. We had also a pretty low comparison basis in Q3 last year. Let us continue to have an important goal long term. We have a Q3 last year, notably for roofing, which was low, so that helped a bit, but nonetheless, we have delivered a good Q3 indeed in North America.
Arnaud Lehmann: Very clear. Thank you so much.
Operator: The next question comes from Ebrahim Homani with CIC. Please go ahead.
Ebrahim Homani: Hello, Benoit. Hello, Maud. Thank you for taking my question. If I may, the first one is about Northern Europe. How much did you outperform your peers in the region, and how much of it came from mix and new solutions? My second question is about construction chemicals. What is the margin gap versus the group today, and how much mix benefit did it bring to Q3?
Benoit Bazin: What is, sorry, on construction chemicals, what is the
Ebrahim Homani: The margin gap versus the group today.
Maud Thuaudet: Margin gap?
Benoit Bazin: The margin gap, no. Well, you want to take the first?
Maud Thuaudet: Yes, sure, Benoit. Northern Europe, we had a strong performance. If I look country by country, a bit more granular, clearly Eastern Europe outperformed very strongly, and there we benchmark versus some listed peers. We benchmark versus construction output data, strong outperformance. Nordics did a bit better to in line with the markets. In the UK, in a difficult market, our teams delivered strongly again versus the market.
Maud Thuaudet: When I look at the addition of value-added products, clearly that was one of the key drivers for this outperformance. If I look by type of category, I would say in the Nordics, we have a good push from the sustainable offer, the recycled offer, the low-carbon offer. In Eastern Europe, it is a lot about system sales, fireproofing, and how we can differentiate versus other local competitors. Having the full solutions offer, I was in Poland a few weeks ago.
Maud Thuaudet: In Poland, we have entertained strong discussions with all the architect community, make them, support them in how they design their new buildings to deliver performance, and that drives clearly high-value-added products.
Benoit Bazin: On your question related to construction chemicals, we do not publish the margin. We gave you the color at the time of the CMD, a year ago. What I can tell you is that each time we move on an acquisition, if I think of the last ones I mentioned, Xypex, D.S. Brown, they are above the group average. They are more in the 20% type of, above 20% EBITDA margin.
Benoit Bazin: Clearly, that is a relative impact on the margin for the group. Of course, it is a very strong mean and avenue for us to expand into non-residential and infrastructure applications. If I think of all the teams we have now dedicated by segment, on airports, on data centers, on tunnels, on bridges, on windmills, all this is important, and it is a lot of key account management in all major countries.
Benoit Bazin: I mentioned the fact that in India, with Fosroc, which is the number 1 player of construction chemicals in India, it is 40% of our sales are on non-resi and infrastructure applications. Of course, construction chemicals is a big component of that. The like-for-like performance, and it is one area also where we have delivered a positive price-cost spread on construction chemicals. So, it is a leverage effect from the top line to the bottom line, which is interesting, and we continue here also to invest on innovation, on value, and market and customer segmentation.
Ebrahim Homani: Thank you very much.
Operator: The next question comes from Ben Rademartin with Goldman Sachs. Please go ahead.
Ben Rada Martin: Hi, good evening, Ben Rademartin. Maud, thank you for the questions this evening. My first question was just around the Americas margin. I think at the last update, we were speaking about a H2 margin that was in line or maybe slightly below last year's H2 level. Would you be able to give us an update on your expectations there, given, I guess, some decent out-performance against what is a difficult backdrop for a lot of the categories? My second question would just be on cost inflation.
Ben Rada Martin: Maud, I think you mentioned a kind of mid-single-digit working assumption for 2027. I am just looking to confirm that that is on the cost buckets of, I think it was energy, transport, and materials around the EUR 12 billion mark that you had previously spoken to. Thank you.
Benoit Bazin: I will take the first, and Maud will take the second. Overall, what is important is that I am confident we will deliver the full-year margin above 15% at group level. America's EBITDA margin in H2 2026 is expected to be below H2 of 2025. You have heard from Maud that inflation is increasing pretty fast. Notably, we have seen that in September.
Benoit Bazin: New construction went a bit weaker recently, and we had, even compared to the H2 of last year, lower weather-related demand, which, by the way, makes me quite optimistic when we have weather normalizing in 2027. In Q4, we have a bit of the uncertainties around the politics and the midterm election. That is on the Americas margin.
Benoit Bazin: In Europe, if I look at the big picture for the group, Europe should continue to see sales growth, portfolio optimization, which will support margin evolution. That is important on the margin evolution in Europe. Asia Pacific will continue a strong dynamic across the board with good level of margin. Everywhere, be it in North America, be it in Europe, and notably for those two regions, we are very proactive in terms of cost and productivity. We have taken proactive actions in Europe and also in North America on some of the areas where we can lower the cost base to continue to improve or protect the margin. Maud?
Maud Thuaudet: For your second question, Ben, cost inflation, what I said is for 2026, we expect to be on the high side of the mid-single-digit inflation on our EUR 12 billion bill, which includes raw material, energy, and transportation. So, high side of the mid-single-digit range. For 2027, what I said is basically, if we were to consider such range of inflation, our embarked price effect for 2027 of around 1.5% would put us on the right side, well-placed to compensate. What will be the 2027 inflation, we will see how things evolve in the coming months, but at least you have those elements regarding 2027, and to give you a bit of color.
Ben Rada Martin: Very helpful. Thank you. Could I just come back on margins? Would you be able to provide the kind of the portfolio rotation contribution to margins this year? Just conscious that there is some benefit from Dahl and also some of those bolt-ons as well. What kind of margin support do you expect portfolio rotation to drive in 2026? Thanks.
Maud Thuaudet: Yeah. Dahl divestment will be quite limited in terms of impact. It is just two months that we will include, so it is a few basis points. On a full-year basis, it is 40 to 50 basis points of the portfolio rotation that we announced this year.
Ben Rada Martin: Great. Thank you.
Operator: The next question comes from Yassine Touahri with Onfield Investment Research. Please go ahead.
Yassine Touahri: Thank you. Thank you very much. Just a question on the margin in the second part of the year. You mentioned that America's margin should be down in the second part of the year on year. Could you qualify for the group as a whole? Could we see a little bit of margin erosion in the second part of the year, which would imply that your full-year margin could be close or just above your 15% or above target?
Yassine Touahri: Or do you think margin could still improve in H2? When you are talking about offsetting cost inflation, do you mean offsetting cost inflation in absolute term, which mean that energy and raw material costs should not have a negative impact on the EBITDA growth, but could still have an impact which is negative on margin? Or do you think to have a price increase that fully offset the cost inflation and help protect margin?
Benoit Bazin: I take the first one, Yassine Touahri. We have the target to be above 15% for the group on a yearly basis on the margin. As you know, we are always ambitious, this is the guidance. We do not change it. We do not fine-tune it or tweak it. This is the margin target for the group for the full-year basis.
Maud Thuaudet: In terms of price-cost spread, the objective is to offset indeed in absolute terms. We are saying that we are, again, confident on the neutral to slightly positive in mass for the full year.
Yassine Touahri: Maybe a last question on the You mentioning 70% hedges. Is there any indication on the inflation that you see on this 70% that is hedged?
Maud Thuaudet: 70% plus. I said 70%.
Yassine Touahri: Yeah, 70% or more. The question would be, depending on the timing, whether you started to hedge before the war or after the war, the embedded inflation is different. Do you have any indication of the inflation that exists on the amount that you have hedged?
Benoit Bazin: Yassine, I take this question. Maud mentioned during the Q&A and earlier on that we have this multi-year rolling hedging policy. That gives you the flavor that we have a good portion that we hedge multi-year. Beyond that, I don't want to be more specific because it's a very commercial sensitive matter. Even from a competitive standpoint, antitrust standpoint, it's something which is very sensitive.
Benoit Bazin: We have this multi-year rolling hedging policy. We have done well over the last five years, including in 2022 when it was quite hectic with the war in Ukraine. This is how we handle that, and I think we have proven to be quite successful and proactive on how we deal with those supply chain, energy, or raw materials issues.
Yassine Touahri: Thank you very much.
Operator: The next question comes from Harry Goad with Berenberg. Please go ahead.
Harry Goad: Yeah. Hi, good evening. I have got a couple of questions, please. Sorry, just coming back on US roofing again. I know you talked about an easier comp in Q3, but the weather effect being almost milder than it was in 2025. Could you give us an indication of what that comp looks like for Q4? The second question, also weather-related, what sort of impact did heat waves have, be it positive or negative, on European activity in Q3? Thank you.
Benoit Bazin: Well, it will require more and more weather expertise on our side based on your two questions. I think it is a Keep in mind that we had a pretty decent Q4 last year, so I do not think we should over-read the Q4 like-for-like. We outperformed in Q3, for sure, versus ARMA. You may have some distributors having a bit of destocking in Q4.
Benoit Bazin: Some others, I think, are in a good position, so there should not be any negative impact of destocking. It is always a bit difficult to read. The important point is that the distributor, they want to start the year 2027 with the right level of stock end of Q1. So nothing more to read into Q4. Heat waves in Europe, there might have been a bit of disruption in Q3, but very limited.
Benoit Bazin: More importantly is that we see some good midterm impact coming for our business out of that. You may have read that in France yesterday, the government announced, not only because of the heat waves, but because of what happened, but a lot of that is related to the conditions of the buildings, universities, and schools, EUR 5 billion to renovate schools, high schools, and universities.
Benoit Bazin: It is, of course, after the events that we have seen in France, but after the heat wave. Yes, we should see, and we have the right offer for that bit on public buildings to work with well-being, summer comfort. You may have seen that we have had quite a lot of advertising here and there on the fact that you can cool down by 10 degrees.
Benoit Bazin: the attics with the right insulation, you can have six degrees below normal behind the windows with solar control glass. There are multiple ways where the Saint-Gobain offer is quite relevant on not only the winter, but also the summer comfort. It is an important play with that, but it relates to all the acceleration of the climate adaptation. It is storms in the US, it is flooding, it is a fire in a lot of areas, and heat waves.
Benoit Bazin: The need for more climate adaptation and proactive actions is extremely important. The cost of inaction, if you think, and if you talk to the insurance companies, the insurance companies are driving a lot of that because the cost of inaction is extremely important. You have one house out of 33 in Florida which is not insured anymore because of the climate change. This is all the FORTIFIED homes offer, resilient homes that we have, notably in North America, but not only. Heat wave is an important parameter in Europe.
Harry Goad: Okay, thank you.
Operator: The next question comes from Julian Radlinger with UBS. Please go ahead.
Julian Radlinger: Hey, thanks very much, guys. Appreciate it. Two quick ones from me. The first one is, on pricing for next year, how much of your pricing, I do not know if it is easy to give an answer on this, is more sort of surcharge-driven or dynamic with the input costs, i.e., if input costs come down, the pricing will follow relatively quickly, let us say, versus structural pricing that you think you are going to be able to hold even in a deflationary, Iran war's over kind of scenario next year?
Julian Radlinger: Then secondly, my other question is, I am thinking back to the Capital Markets Day last year and to all the things you told us about capital allocation and the share buyback specifically. Your shares are, and this is not at all unique in the sector, of course, quite a bit lower now than back then. Does that change anything about the way you are thinking about share buybacks versus M&A at all? Would love to hear your thoughts on that. Thank you very much.
Benoit Bazin: Maud on the-
Maud Thuaudet: Yes, on the first question, Julien, pricing for next year, remember that transportation is EUR 2 billion out of our EUR 12 billion total bill. Surcharge is mostly used for transportation, hardly not for any of other categories. We would expect clearly a limited, clearly much more of structural pricing, and therefore, being able, of course, to play that smartly, depending, of course, on how the geopolitical situation evolves.
Benoit Bazin: On your second question, well, indeed, with the current share price, we will be more active in 2026 than the one-fifth of the EUR 2 billion share buyback that we announced during the Capital Markets Day a year ago. That is for 2026. Now, I think it is a very good position to be in, to have a strong balance sheet, because we enter, of course, a bit more difficult times.
Benoit Bazin: So, it is very good that we, and it is a real asset in this current uncertain context, that we have this strong balance sheet to be able to take the right opportunities. I am happy that we have delivered well on divestitures, because you have seen the conditions and what we have done with divest. So, we have been proactive on that. On acquisitions, you also know that it is important to have a seller willing to sell and a buyer.
Benoit Bazin: But when you sell, it is up to you to decide, and we have done it with determination, and we have done it extremely well. So, we will have a strong balance sheet by the end of the year. A bit more opportunistic, of course, as we speak on these share buybacks, but also viability with a good pipeline to be able to seize the right opportunities in 2027. So, that is, I think, something that we wanted to be in terms of healthy, solid position, and we are there.
Julian Radlinger: Okay, great. Thank you so much.
Operator: As a reminder, if you wish to register for a question, please press star and 1 on your telephone. The next question comes from Will Jones with Rothschild & Co Redburn. Please go ahead.
Will Jones: Thank you. Evening. Two or three from me, please, if I could. First, just coming back to margin and thinking about the difference perhaps between the distribution businesses and the manufacturing ones this year. Typically, distribution can capture a gain when we see sequential price inflation like we have seen.
Will Jones: I just wondered if you have seen any of that in your distribution businesses through 2026. Second was maybe coming back to LATAM. I think we have had a few quarters there of negative like-for-like now, and you mentioned Brazilian elections as one factor around a pause. Clearly, they have passed. Do you think that region can make its way back to growth over the next few quarters? Then maybe if we can just tie it on the technical, I think, I don't think it's been mentioned, but on FX, is there any live view you have for where Q4 could shake out with sales? Thanks.
Benoit Bazin: Well, LATAM, I take that one. I'm very confident that we have a very solid business. Here also, we drive value over volume. Yes, LATAM, notably, what we have done on Construction Chemicals, Cemix, I think we mentioned several times that Cemix is a very, very good acquisition, delivering well in Mexico and Central America. We had some businesses, indeed, a bit more impacted by public investment, and therefore, in the last six months, a bit more negative.
Benoit Bazin: But yes, I'm confident that LATAM will come back next year into a positive like-for-like growth on a very solid and very healthy business. Keep in mind that last year, it was part of the negative like-for-like. We divested, we did shut down before the divestiture, our distribution business in Brazil. Some of that in recent quarters were not helpful, but we have now a very solid, healthy business in Latin America, and I'm confident about the way forward and all the management teams we have locally.
Maud Thuaudet: I will take your first and last question regarding the margins for distribution businesses. Indeed, inflation is a pass-through for distribution, but at the same time, you also have a bit more transportation in the distribution business. All in all, I would say there is no big gap between a distribution versus industrial, how margins behave in such kind of environment.
Maud Thuaudet: Coming to your last question about foreign exchange, we expect the same order of magnitude as for Q3, but obviously things can move. You've seen that Brazil, for example, is moving quite sharply these days. The dollar is also moving. So let's see how it goes, but our assumptions would be same order of magnitude as Q3.
Will Jones: Thank you.
Operator: There are no more questions registered at this time. Floor is back to the speakers for any closing remarks.
Benoit Bazin: Well, thank you very much for your time. You have seen that we deliver Lead & Grow. We are active, proactive on what we can control, be it the pricing power of Saint-Gobain, cost, and productivity. We continue to target market out-performance everywhere with our solutions, and I am happy to expand on what the teams have done in terms of ownership to expand in non-residential and infrastructure.
Benoit Bazin: Of course, the group profile optimization is important, and the transformation is not finished to ours, strong sustainable growth going forward. We will have our Milan site visit on 1 December, so we will be very happy, Maud, myself, Vivien, and Gaetano Terrasini, to host you there. We will visit the Cascina Monluè. It is a renovation project showcasing Saint-Gobain full range of solutions, combining performance and well-being. We will also see our Milano Solutions Experience Center and an Isover glass wool insulation plant.
Benoit Bazin: There, you will meet our local management, and also you will meet with architects and installers to hear directly from them what matters most for our customers. So I hope a lot of you can make it. We will publish our 2026 results on 18 February 2027. Thank you very much for your participation in this call.
