29th Jul 2005 07:02
Compagnie de Saint-Gobain29 July 2005 July 28, 2005press release FIRST-HALF 2005 RESULTS: O SALES up 7.0% to €16,877 million (up 7.4% at constant exchange rates*) O OPERATING INCOME up 4.6% to €1,372 million (up 4.9% at constant exchange rates*) O NET INCOME up 13.9% to €632 million CONFIRMATION OF 2005 TARGET: > 6% GROWTH IN OPERATING INCOME at constant exchange rates (average exchange rates for 2004) * based on average exchange rates for first-half 2004 Consolidated first-half sales for the Saint-Gobain Group (six months ended June30, 2005) came in at €16,877 million, up 7.0%, or 7.4% at constant exchangerates*. The contribution of the Group's acquisitions to the growth figure, netof disposals, amounted to €848 million during the period, accounting for a riseof 5.4% in net sales. Like-for-like growth (constant structure and exchangerates) for the period was 2.0%, with 4.1% growth in the second quarter. * based on average exchange rates for first-half 2004 Consolidated net income for first-half 2005 advanced 13.9% over the year-earlierperiod, at €632 million. Excluding capital gains, consolidated net incomeclimbed 10.9% to €642 million, fueled mainly by the improvement in businessincome. - Performances of the Group's business sectors: Overall, despite a difficult first quarter, the Group's fivesectors saw a rise in like-for-like sales over first-half 2005, with mostbusinesses reporting a significant rise in sales prices and, in the secondquarter, robust organic growth. Like-for-like second-quarter sales were up 4.1%,on the back of a 0.7% dip in the first quarter. Like-for-like sales for theGroup's Flat Glass and Building Distribution Sectors - hard hit by the severelate-winter weather in the first quarter - rebounded strongly in the secondquarter. Overall, the Group's first-half sales advanced 2.0% on a like-for-likebasis (including a +2.4% price impact and a -0.4% volume effect).Operating income for the Group gained 4.6%, driven by afurther improvement in the Building Distribution and High-Performance MaterialsSectors. On an actual structure and exchange rate basis, the Building Distribution Sectorreported a strong 13.7% rise in sales, thanks to the first-half contribution ofits recent acquisitions, particularly Dahl (consolidated as from May 1, 2004)and Sanitas-Troesch (consolidated as from March 1, 2005). A strong upswing inthe second quarter of the year (up 5.0% like-for-like), after a slow firstquarter due to bad weather conditions, fueled a 2.3% rise in sales. French andScandinavian markets were the main growth drivers, while Germany and, to alesser extent, the UK, remained on a downward trend. Operating margin for theBuilding Distribution Sector continued to improve, coming in at 4.9% comparedwith 4.8% for the same period in 2004. The High-Performance Materials Sector reported a 1.4% increase in sales on acomparable structure and exchange rate basis, with growth in volumes and salesprices in the Ceramics & Abrasives Division partially dampened by the drop insales volumes reported by the Reinforcements Division. The profitability of theHigh-Performance Materials Sector has further advanced, with operating marginaccounting for 11.2% of sales, compared with 10.4% for H1 2004. First-half sales for the Flat Glass Sector inched up slightly on a constantstructure and exchange rate basis, thanks to the upturn in the second quarter.However, increased start-up costs due to the fast expansion of the Flat GlassSector in emerging countries and Asia in particular, dented profitability. The Packaging Sector reported a slight rise in like-for-like sales, with pricerises across the sector offsetting the contraction in sales volumes in theUnited States and in Germany, while the European wine market is stabilizing.However, the profitability of the Group's Packaging business was trimmed byrising energy costs, particularly in the US. The Construction Products (CP) Sector posted the Group's strongest organicgrowth, up 3.9% despite the 3.9% drop in like-for-like sales for the PipeDivision following the last delivery under the Abu Dhabi contract at the end offirst-quarter 2004. Higher prices across the Pipe business helped to offset theimpact of spiraling raw materials costs on the division's operating income.Building Materials and Insulation Divisions posted organic growth of more than6.0%, as benefits from a buoyant US and European (excluding Germany)construction market continued to filter through. Operating margin for thesedivisions also advanced, fuelling the improvement in operating margin for thesector as a whole. * * * - Detailed review of interim consolidated financial statements: The Group's interim consolidated financial statements prepared in accordancewith IFRS, which were reviewed by the Board of Directors on July 28, 2005, aresummarized below: H1 2004 H1 2005 % change (IFRS) (IFRS) • millions • millions (1) (2) (2)/(1) Net sales* 15,768* 16,877* +7.0%Operating income 1,312 1,372 +4.6%Non-operating costs (133) (108) -18.8%Other business income and expenses (31) 4 n.m.Business income 1,148 1,268 +10.5%Financial income (expense) (261) (266) +1.9%Income taxes (316) (359) +13.6%Share in net income of equity investees 3 5 +66.7%Income before minority interests 574 648 +12.9%Minority interests (19) (16) -15.8%Net income 555 632 +13.9%Earnings per share (in •) 1.61 1.83 +13.7%Net income excluding profit (loss) on sales ofnon-current assets 579 642 +10.9%Earnings per share excluding profit (loss) on sales ofnon-current assets (in •) 1.68 1.86 +10.7%Cash flow from operations 1,263 1,355 +7.3%Cash flow from operations excluding capital gains tax 1,252 1,360 +8.6%Capital expenditure 554 598 +7.9%Investments in securities 534 563 +5.4%Net debt 7,431 7,463 +0.4% * including ancillary revenue for €118 million for first-half 2005, comparedwith €91 million for first-half 2004 Consolidated first-half sales climbed 7.0% on an actual structure basis and 1.5%based on a comparable structure. At constant exchange rates*, sales were up 7.4%on an actual structure basis and 2.0% on a comparable structure basis. Salesprices rose 2.4% on average, while volumes dipped slightly by 0.4%. France accounted for 32.7% of total sales, with other western European countriescontributing 40.1%, North America 16.1% and emerging countries and theAsia-Pacific region, 11.1%. Business remained buoyant, on a like-for-like basis,in each of these areas, with the exception of western Europe, hampered by theslowdown in Germany and the UK. First-half operating income advanced 4.6%, and by 4.9% stripping out thecurrency effects. Operating income represents 8.1% of sales, compared with 8.3%of sales over the same period in 2004. In accordance with IFRS, operating incomenow includes the cost of stock option programs and the Group Savings Plan,representing a total of €26 million, compared with €23 million for first-half2004. This slight dip in operating margin reflects the increased relative weightof the Building Distribution Sector in the Group (despite the further advance inthe sector's profitability, to 4.9% compared with 4.8% for first-half 2004), aswell as higher start-up costs due to the fast expansion of the Group in emergingcountries. Excluding Building Distribution, the Group's operating margin slippedto 10.4% from 10.5% in first-half 2004. The Group's operations in the US and western Europe reported an improvement inprofitability, with the exception of France, where it remained flat. In emergingcountries and Asia, first-half profitability was dented by the large-scaleinvestments made over the period. * based on average exchange rates for first-half 2004 First-half business income jumped 10.5%, mainly thanks to the increase inoperating income and in profit on sales of non-current assets during the period,coupled with the fall in non-operating costs. Non-operating costs were scaled back slightly, to €108 million from €133 millionfor the six months ended June 30, 2004. Non-operating costs include a €54million charge in respect of asbestos-related claims against CertainTeed(compared with a charge of €50 million in the year-earlier period). Financial expense remained virtually flat at €266 million, against €261 millionin first-half 2004, reflecting the stability of net debt at June 30, 2005compared with June 30, 2004. Minority interests slipped slightly to €16 million, from €19 million in theprior-year period. Consolidated first-half net income came in at €632 million, a rise of 13.9% overfirst-half 2004. Based on the 345,255,470 shares outstanding at June 30, 2005,earnings per share jumped 13.7% to €1.83, compared with €1.61 in first-half 2004(based on 345,124,327 shares). Excluding profit and loss on sales of non-current assets, net income climbed10.9% to €642 million, compared with €579 million for first-half 2004. Based onthe 345,255,470 shares outstanding at June 30, 2005, earnings per share rose10.7% to €1.86, compared with €1.68 in the prior-year period. Cash flow from operations totaled €1,355 million, up 7.3% on first-half 2004.Excluding the tax effect of capital gains and losses, cash flow from operationsadvanced 8.6% to €1,360 million, compared with €1,252 million for the six monthsended June 30, 2004. Capital expenditure increased 7.9% to €598 million, compared with €554 millionin first-half 2004. The rise in capital spending was fueled by the ramp-up ofthe capital expenditure program in emerging countries and in particular Asia (up30.7% over the same period in 2004). Investments in securities totaled €563 million, including €336 million in theBuilding Distribution Sector. Net debt after payment of the 2004 dividend remained virtually stable incomparison with the year-earlier period, at €7,463 million compared with €7,431million at June 30, 2004. The gearing ratio - based on consolidatedshareholders' equity - was 62.2%, compared with 69.1% at June 30, 2004. * * * - Update on asbestos claims in the United States: some 10,000 newclaims were filed against CertainTeed in the six months to June 30, 2005, on apar with the last two half-yearly periods. Approximately 3,000 mass claims werefiled in the State of Kentucky, for which no proof of medical impairment hasbeen provided. During the same period, some 13,000 claims were resolved(compared with 11,000 over first-half 2004), and 3,000 claims were transferredto an "inactive docket". Therefore, the number of pending claims at June 30,2005 continued on a downward trend, standing at 100,000 at June 30, 2005,compared with 106,000 at December 31, 2004. The average cost of claims settledover the last twelve months was approximately US$ 2,500 per claim, lower thanthe average cost of settlement at March 31 (approximately US$ 3,000 per claim),due to a more favorable claims mix than the earlier period. On the legislative front, the bipartisan vote by the US Senate JudiciaryCommittee on May 26, 2005 concerning the Asbestos Trust Fund Bill has sinceprompted much debate between the Bill's advocates and its opponents. The Billmay be put before the full Senate as from the Fall. * * * - Outlook and targets: The Group expects the recovery observed in thesecond quarter of 2005 to pick up pace over the next six months, and thereforeconfirms, for the full year, its target of 6% growth in operating income atconstant exchange rates (average rates for 2004). Forthcoming results announcements: - Sales for the first nine months of 2005: October 25, 2005, after close oftrading on the Paris Bourse. * * * Investor Relations Department Florence Triou-Teixeira Tel.: +33 1 47 62 45 19 Alexandre Etuy Tel.: +33 1 47 62 37 15 Fax: +33 1 47 62 50 62 Appendix 1: Results by Business Sector and Geographic Area Change on Change on a Change on a H1 H1 an actual comparable comparableI. SALES 2004 2005 structure structure structure and (in • m) (in • m) basis basis currency basisby Sector and Division: Building Distribution 6,474 7,364 +13.7% +2.2% +2.3%High-Performance Materials (1) 2,383 2,415 +1.3% +0.1% +1.4%Ceramics and Plastics & Abrasives 1,752 1,788 +2.1% +1.6% +3.3%Reinforcements 644 638 -0.9% -4.3% -4.2%Flat Glass 2,236 2,329 +4.2% +2.1% +0.8%Packaging 1,978 1,977 -0.1% -0.5% +0.9%Construction Products (1) 2,973 3,096 +4.1% +2.6% +3.9%Building Materials 1,293 1,361 +5.3% +4.2% +6.4%Insulation 964 1,045 +8.4% +5.2% +6.1%Pipe 726 700 -3.6% -3.8% -3.9% Internal sales and misc. (276) (304) n.m. n.m. n.m.Group Total 15,768 16,877 +7.0% +1.5% +2.0% by geographic area: France 5,506 5,826 +5.8% +3.6% +3.6%Other Western European Countries 6,580 7,135 +8.4% -1.7% -1.3%North America 2,851 2,876 +0.9% +0.6% +5.1%Emerging countries and Asia 1,672 1,978 +18.3% +11.3% +6.0%Internal sales (841) (938) n.m. n.m. n.m.Group Total 15,768 16,877 +7.0% +1.5% +2.0% (1) including intra-sector eliminations H1 H1 Change on H1 H1II. OPERATING INCOME 2004 2005 an actual 2004 2005 (in • m) (in • m) structure (in % of sales) (in % of sales) basisby Sector and Division: Building Distribution 311 363 +16.7% 4.8% 4.9%High-Performance Materials 249 271 +8.8% 10.4% 11.2%Ceramics and Plastics & Abrasives 207 240 +15.9% 11.8% 13.4%Reinforcements 42 31 -26.2% 6.5% 4.9%Flat Glass 240 233 -2.9% 10.7% 10.0%Packaging 246 221 -10.2% 12.4% 11.2%Construction Products 267 283 +6.0% 9.0% 9.1%Building Materials 97 103 +6.2% 7.5% 7.6%Insulation 110 121 +10.0% 11.4% 11.6%Pipe 60 59 -1.7% 8.3% 8.4%Miscellaneous (1) 1 n.m.Group Total 1,312 1,372 +4.6% 8.3% 8.1% by geographic area: France 417 440 +5.5% 7.6% 7.6%Other Western European Countries 436 490 +12.4% 6.6% 6.9%North America 259 269 +3.9% 9.1% 9.4%Emerging countries and Asia 200 173 -13.5% 12.0% 8.7%Group Total 1,312 1,372 +4.6% 8.3% 8.1% H1 H1 Change on H1 H1III. BUSINESS INCOME 2004 2005 an actual 2004 2005 (in • m) (in • m) structure (in % of sales) (in % of sales) basisby Sector and Division: Building Distribution 307 358 +16.6% 4.7% 4.9%High-Performance Materials 223 242 +8.5% 9.4% 10.0%Ceramics and Plastics & Abrasives 189 216 +14.3% 10.8% 12.1%Reinforcements 34 26 -23.5% 5.3% 4.1%Flat Glass 215 229 +6.5% 9.6% 9.8%Packaging 236 233 -1.3% 11.9% 11.8%Construction Products 218 267 +22.5% 7.3% 8.6%Building Materials 86 99 +15.1% 6.7% 7.3%Insulation 94 122 +29.8% 9.8% 11.7%Pipe 38 46 +21.1% 5.2% 6.6%Miscellaneous (51)* (61)* n.m.Group Total 1,148 1,268 +10.5% 7.3% 7.5% by geographic area: France 389 435 +11.8% 7.1% 7.5%Other Western European Countries 368 490 +33.2% 5.6% 6.9%North America 195* 174* -10.8% 6.8% 6.1%Emerging countries and Asia 196 169 -13.8% 11.7% 8.5%Group Total 1,148 1,268 +10.5% 7.3% 7.5% * after asbestos-related charge (before tax) of €54m in H1 2005 and €50m in H1 2004 H1 H1 Change on H1 H1IV. CASH FLOW 2004 2005 an actual 2004 2005 (in • m) (in • m) structure (in % of sales) (in % of sales) basisby Sector and Division: Building Distribution 214 258 +20.6% 3.3% 3.5%High-Performance Materials 240 254 +5.8% 10.1% 10.5%Ceramics and Plastics & Abrasives 173 195 +12.7% 9.9% 10.9%Reinforcements 67 59 -11.9% 10.4% 9.2%Flat Glass 256 260 +1.6% 11.4% 11.2%Packaging 263 233 -11.4% 13.3% 11.8%Construction Products 258 274 +6.2% 8.7% 8.9%Building Materials 96 97 +1.0% 7.4% 7.1%Insulation 114 122 +7.0% 11.8% 11.7%Pipe 48 55 +14.6% 6.6% 7.9%Miscellaneous 32* 76* n.m.Group Total 1,263 1,355 +7.3% 8.0% 8.0% by geographic area: France 424 480 +13.2% 7.7% 8.2%Other Western European Countries 395 448 +13.4% 6.0% 6.3%North America 225* 224* -0.4% 7.9% 7.8%Emerging countries and Asia 219 203 -7.3% 13.1% 10.3%Group Total 1,263 1,355 +7.3% 8.0% 8.0% * after asbestos-related charge (after tax) of €36m in H1 2005 and €34m in H1 2004 H1 H1 Change on H1 H1V. CAPITAL EXPENDITURE 2004 2005 an actual 2004 2005 (in • m) (in • m) structure (in % of sales) (in % of sales) basisby Sector and Division: Building Distribution 107 131 +22.4% 1.7% 1.8%High-Performance Materials 90 106 +17.8% 3.8% 4.4%Ceramics and Plastics & Abrasives 44 61 +38.6% 2.5% 3.4%Reinforcements 46 45 -2.2% 7.1% 7.1%Flat Glass 148 164 +10.8% 6.6% 7.0%Packaging 101 89 -11.9% 5.1% 4.5%Construction Products 106 104 -1.9% 3.6% 3.4%Building Materials 40 38 -5.0% 3.1% 2.8%Insulation 48 50 +4.2% 5.0% 4.8%Pipe 18 16 -11.1% 2.5% 2.3%Miscellaneous 2 4 n.m.Group Total 554 598 +7.9% 3.5% 3.5% by geographic area: France 115 125 +8.7% 2.1% 2.1%Other Western European Countries 183 184 +0.5% 2.8% 2.6%North America 106 93 -12.3% 3.7% 3.2%Emerging countries and Asia 150 196 +30.7% 9.0% 9.9%Group Total 554 598 +7.9% 3.5% 3.5% Appendix 2: CONSOLIDATED BALANCE SHEET(in • millions) ASSETS June 30, 2005 Dec. 31, 2004 Goodwill 5,402 5,203Other intangible assets, net 2,200 1,804Property, plant and equipment, net 10,016 9,367Investments in associates 54 64Available-for-sale and other securities 100 92Other non-current assets 316 321 Non-current assets 18,088 16,851 Inventories 5,426 4,817Trade accounts receivable 6,107 4,789Current income tax receivable 31 155Other accounts receivable 1,116 915Assets held for sale 143 0Cash and cash equivalents 1,684 2,898 Current assets 14,507 13,574 Total assets 32,595 30,425 LIABILITIES AND SHAREHOLDERS' EQUITY June 30, 2005 Dec. 31, 2004 Capital stock 1,381 1,364(made up of 345,255,470 €4 par value shares at 06/30/2005, and340,988,000 €4 par value shares at 12/31/2004)Additional paid-in capital and legal reserve 2,261 2,123Retained earnings and net income for the year 7,654 7,415Cumulative translation adjustments 535 (80)Fair value reserves 11 3Treasury stock (140) (152) Shareholders' equity 11,702 10,673 Minority interests 292 237 Net equity of consolidated entities 11,994 10,910 Pensions and other post-retirement benefits 2,708 2,750Deferred tax liability 361 238Provisions for long-term contingencies and charges 607 548Long-term debt 5,392 5,629 Non-current liabilities 9,068 9,165 Current portion of provisions for contingencies and charges 359 353Current portion of long-term debt 1,155 1,338Trade accounts payable 4,647 3,954Current income tax payable 126 249Other payables and accrued expenses 2,578 2,307Liabilities held for sale 68 0Short-term debt and bank overdrafts 2,600 2,149 Current liabilities 11,533 10,350 Total liabilities and shareholders' equity 32,595 30,425 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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