Full-Year Targets Close to 2007 Results
COURBEVOIE, France, July 24 /PRNewswire-FirstCall/ --
- Sales up 4.9% at constant exchange rates*
- Operating income close to high level of first-half 2007: -2.3% at
constant exchange rates*
- Moderate growth in recurring net income**: +3.2%
- Expansion of cost cutting program: EUR300 million in cost savings in
2008, including EUR215 million in additional measures to adapt to the
economic downturn
- Full-year 2008 targets: operating income (at constant exchange
rates***) and recurring net income** close to 2007
First-half 2008 key figures
Amount Change H1 2008/H1 2007
In EUR at constant
millions reported exchange rates*
Sales 22,141 +1.7% +4.9%
Operating income 2,005 -4.2% -2.3%
Recurring net income** 1,101 +3.2%
* based on average exchange rates for first-half 2007
** excluding capital gains and losses, asset write-downs and Flat Glass
fines (European Commission)
*** based on average exchange rates for full-year 2007
Performance of Group sectors
The Group's performance held firm in first-half 2008 amid a difficult
economic climate and an unfavorable basis for comparison after a
particularly strong first-half 2007.
All sectors reported advances in like-for-like sales over the first six
months of the year. The Group's organic growth came in at +2.2%, including
a +3.1% price impact and a -0.9% volume effect. In the second quarter
alone, organic growth was +3.4% (versus +0.9% in the three months to March
30, 2008), reflecting higher sales price increases in the second quarter
(+3.5% versus +2.6% in the first quarter of the year).
Residential construction continued to slow in the US throughout the
first half of the year. Overall, the market held up well in western Europe,
despite the sharp downturn in the UK and Spanish markets during the second
quarter. In line with the first quarter, household consumption, industrial
production and capital expenditure in both the US and Europe remained
robust. Business remained vigorous in Asia and emerging countries for all
of the Group's sectors, with organic growth of +11.7%.
The Flat Glass Sector delivered robust +4.7% organic growth on the back
of a satisfactory rise in sales prices (+2.7%) and volumes (+2.0%) across
all of its activities. Organic growth was very robust in Asia & emerging
countries. Helped also by the ongoing improvement in the product mix, the
operating margin posted a further rise, up to 14.2% versus 13.1% in
first-half 2007.
On a like-for-like basis, the High-Performance Materials Sector
reported +3.0% sales growth in the first half of the year, including +5.0%
growth during the second quarter alone, powered by healthy capital spending
markets. Excluding divested businesses (Reinforcements & Composites), the
operating margin jumped to 13.9% of sales compared with 13% in the same
year-ago period.
Construction Products (CP) delivered a +6.1% rise in sales, driven by
the positive +8.9% impact of acquisitions carried out in the last 12 months
- particularly Norandex and Maxit (consolidated on September 1, 2007 and
March 1, 2008, respectively) - which largely offsets the negative -4.3%
exchange rate impact. Organic growth came in at +1.5% thanks to significant
price rises (+3.1%) in all geographic areas barring the US, and the
continued strong growth momentum in Asia and emerging countries (+17.0%).
The sector's operating margin came in at 10.1% versus 13.1% in the
year-earlier period.
- Interior Solutions suffered a -3.4% drop in like-for-like sales, on
account of weaker activity in North America. Increasing energy and
commodity prices impacted the sector's operating margin, which fell
back to 12.0% versus 15.9% in first-half 2007.
- By contrast, Exterior Solutions saw like-for-like sales surge +8.9%,
chiefly powered by a strong rise in sales prices (+6.6%) and robust
trading by the Pipe and Industrial Mortars businesses. In the second
quarter alone, the Exterior Products business in North America posted
organic growth of +6.8%. The division's operating margin held firm at
7.9% (versus 8.7% in the year-earlier period).
The Building Distribution Sector posted +5.4% sales growth on a
reported basis, buoyed by acquisitions carried out in 2007 and the first
half of 2008. The moderate +1.2% organic growth recorded by this sector in
the first half of the year compares with the very vigorous +8.7% organic
growth recorded in the first six months of 2007, and is the result of
vigorous demand in France and Scandinavia, partly offset by a fall in sales
in the UK and Spain. The sector's operating margin dropped to 4.7%
(compared to a record high of 5.2% in the same year-ago period), due mainly
to a decline in profitability of the UK business and the impact of the
acquisition of Norandex.
The Packaging Sector saw sales climb +6.5% on a like-for-like basis,
driven by continuing favorable trading conditions in Europe and emerging
countries. Excluding divested businesses (SG Desjonqueres), operating
income advanced +23.9% while operating margin gained almost two points, up
to 13.4% in first-half 2008 from 11.3% for the first six months of 2007.
Analysis of the interim consolidated financial statements for
first-half 2008
The interim consolidated financial statements set out below were
authorized for issue by the Board of Directors on July 24, 2008:
H1 2007 H1 2008 %
In EUR millions In EUR change
millions
(1) (2) (2)/(1)
Sales and ancillary revenue 21,779 22,141 +1.7%
Operating income 2,093 2,005 -4.2%
Non-operating costs* (126)* (79)* -37.3%
Provision for Flat Glass fines (650) 0
Capital gains and losses and 3 (31)
exceptional asset write-downs
Dividends received 1 2
Business income 1,321 1,897 +43.6%
Net financial expense (351) (352) +0.3%
Income tax (491) (444) -9.6%
Share in net income of associates 8 6 -25.0%
Income before minority interests 487 1,108 +127.5%
Minority interests (22) (32) +45.4%
Recurring net income** 1,067 1,101 +3.2%
Recurring** earnings per share (in 2.85 2.88 +1.0%
EUR)
Net income 465 1,076
Earnings per share (in EUR) 1.24 2.81
Cash flow from operations 1,932 1,894 -2.0%
Cash flow from operations excluding 1,883 1,887 +0.2%
capital gains tax
Depreciation and amortization 1,005*** 778 -22.6%
Capital expenditure 822 872 +6.1%
Investments in securities 432 2,178
Net debt 12,007 13,321 +10.9%
* excluding the provision for Flat Glass fines (European
Commission)
** excluding capital gains and losses, asset write-downs and Flat Glass
fines (European Commission)
*** including EUR216 million in depreciation, amortization and
exceptional asset write-downs in respect to the sale of the
Reinforcements & Composites business
Sales edged up +1.7%, or +4.9% at constant exchange rates*. Changes in
Group structure had a positive +2.6% impact, more than offset by the
negative -3.1% currency effect, sparked by fresh falls in the dollar, and
to a lesser extent in the pound sterling. On a like-for-like basis*, Group
sales climbed +2.2%, including a positive +3.1% price impact and a negative
-0.9% volume effect.
The breakdown of sales by geographic area reveals a continued but
slowing decline in North America (down -3.4%) and a good trading
environment in France (up +2.9%). Business in other western European
countries leveled out over the period, with like-for-like sales rising
+0.6%. The UK and Spain lost ground, while other countries (in particular
Scandinavia) are still enjoying satisfactory growth. Business remains
buoyant in the emerging countries & Asia region, which continues to
spearhead the Group's organic growth performance (11.7% in first-half
2008).
* based on average exchange rates for first-half 2007
By major geographic area, France represented 29.5% of first-half 2008
sales; other western European countries 44%; North America 11.5%; and the
emerging countries & Asia region 15%.
Operating income shrank -4.2%, or -2.3% at constant exchange rates*.
Falling profitability in North America squeezed the Group's operating
margin, which came in at 9.1% of sales (12.1% excluding Building
Distribution), versus 9.6% in first-half 2007 (12.6% excluding Building
Distribution) and 8.8% in first-half 2006. Profitability improved in France
and the Asia & emerging countries region, but narrowed slightly in other
western European countries.
Non-operating costs came in at EUR79 million, compared with EUR126
million in first-half 2007. They include EUR41.5 million in net
restructuring costs, and a charge of EUR37.5 million for asbestos-related
litigation involving CertainTeed in the US (EUR47.5 million in first-half
2007).
The net total of capital gains and losses and exceptional asset
write-downs was a negative EUR31 million, including a positive EUR12
million in capital gains and a negative EUR43 million in exceptional asset
write-downs.
Business income was up +43.6% after taking into account the factors
mentioned above (non-operating costs, capital gains and losses and
exceptional asset write-downs), and the provision for Flat Glass fines
(EUR650 million), which had a strongly adverse impact on the interim
consolidated accounts for first-half 2007.
Net financial expense remained virtually flat, at EUR352 million versus
EUR351 million in first-half 2007. This reflects the year-on-year stability
of average net debt. The interest cover ratio (operating income over
interest expense) is in line with first half 2007, at a satisfactory 5.7.
Recurring net income (excluding capital gains and losses, exceptional
asset write-downs and Flat Glass fines) advanced +3.2% to EUR1,101 million
versus EUR1,067 million in first-half 2007. Based on the number of shares
outstanding at June 30, 2008 (382,489,099 shares versus 373,824,232 shares
at June 30, 2007), recurring earnings per share came in at EUR2.88, up
+1.0% on June 30, 2007 (EUR2.85).
Net income came in at EUR1,076 million, up +131% on first-half 2007
which was hit by the one-off provision for Flat Glass fines. Based on the
number of shares outstanding at June 30, 2008 (382,489,099 shares versus
373,824,232 shares at June 30, 2007), earnings per share came in at
EUR2.81, up +126.6% on June 30, 2007 (EUR1.24).
Cash flows from operations totaled EUR1,894 million, down -2.0% on the
first half of 2007. Before the tax impact of capital gains and losses and
asset write-downs, cash flows from operations inched forward +0.2% to
EUR1,887 million, compared with EUR1,883 million in the six months to June
30, 2007.
Capital expenditure rose +6.1% to EUR872 million (3.9% of sales) versus
EUR822 million (3.8% of sales) in first-half 2007. This result stems
entirely from the Group's continued investment in Asia and emerging
countries, which accounted for 36% of its total capital expenditure in the
first half of 2007 (42% excluding Building Distribution).
Investments in securities totaled EUR2,178 million for the six months
to June 30, 2008. Investments came to EUR1,555 million for the Construction
Products Sector (chiefly Maxit) and EUR503 million for Building
Distribution, representing a total of 46 acquisitions for EUR840 million in
full-year sales.
Net debt came in at EUR13,321 million at June 30, 2008, climbing +34.2%
over December 31, 2007 (EUR9,928 million) and +10.9% over June 30, 2007,
due mainly to the Maxit acquisition on March 1, 2008 for an enterprise
value of EUR2.1 billion. Net debt represents 86% of consolidated equity
compared with 80% at June 30, 2007.
* based on average exchange rates for first-half 2007
Update on asbestos claims in the United States
Some 3,000 claims were filed against CertainTeed in the first half of
2008, compared with 4,000 claims in first-half 2007. Over the period, 4,000
claims were settled (5,000 in first-half 2007), bringing the total number
of outstanding claims down to 73,000 at June 30, 2008 (74,000 at December
31, 2007). A total of USD 70 million in indemnity payments were made over
the last 12 months, compared to USD 73 million at end-December 2007.
2008 outlook and objectives
Faced with the gradual deterioration in the international economic
environment since summer 2007, the Group stepped up the cost cutting
program put in place for the US in the second half of 2006 and for certain
European countries at the end of 2007. In total, these programs will lead
to additional full-year workforce reductions of 6,000, including 4,000 in
2008, and generate full-year cost savings of EUR435 million, of which
EUR300 million for 2008. Most of these savings (EUR350 million and EUR215
million, respectively) relate to restructuring measures implemented to
adapt to the economic downturn. The balance (EUR85 million) relates to
structural cost saving programs (an estimated EUR300 million by 2010)
initiated in the context of the Group's strategic focus on construction
markets as outlined by the Group in summer 2007.
The Group does not expect the US economy to stage a recovery in the six
months to December 31, 2008, and assumes that the construction market in
western Europe will continue to lose steam - particularly in the UK and
Spain - while commodity and energy prices pursue their upward trend.
Against this backdrop, and despite a continuing strong growth outlook
in Asia and emerging countries, the Group has adjusted its full-year
objectives slightly and is now aiming to maintain high levels of operating
income (at constant exchange rates*) and recurring net income**, close to
those recorded in 2007.
* average exchange rates for 2007
** excluding capital gains and losses, asset write-downs and Flat Glass
fines (European Commission)
Forthcoming results announcements
As from publication of the 2008 results, the Saint-Gobain Group will
only publish its annual results in definitive form, and will no longer
publish estimated results. In view of this, forthcoming results
announcements will take place on the following dates:
Sales for the first nine months of 2008: October 22, 2008, after close
of trading on the Paris Bourse.
Sales for full-year 2008: January 22, 2009, after close of trading on
the Paris Bourse.
Final results for 2008: February 19, 2009, after close of trading on
the Paris Bourse.
Appendix 1 : Results by business sector and geographic area
Change on Change on a Change on a
H1 H1 an actual comparable comparable
I. SALES 2007 2008 structure structure structure and
(in EUR (in EUR basis basis currency
m) m)
basis
By sector and
division:
Flat Glass 2,797 2,885 +3.1% +2.7% +4.7%
High Performance 2,486 2,123 -14.6% -2.4% +3.0%
Materials (1) (2)
Construction 5,644 5,988 +6.1% -2.8% +1.5%
Products (1)
Interior Solutions 3,393 3,170 -6.6% -7.3% -3.4%
Exterior Solutions 2,267 2,835 +25.1% +4.0% +8.9%
Building 9,522 10,039 +5.4% -0.8% +1.2%
Distribution
Packaging (3) 1,871 1,733 -7.4% +2.0% +6.5%
Internal sales and (541) (627) n.m. n.m. n.m.
misc.
GROUP TOTAL 21,779 22,141 +1.7% -0.9% +2.2%
By geographic area:
France 6,706 6,806 +1.5% +2.9% +2.9%
Other Western 9,920 10,244 +3.3% -2.5% +0.6%
European countries
North America 2,981 2,649 -11.1% -15.5% -3.4%
Emerging countries 3,289 3,552 +8.0% +10.6% +11.7%
and Asia
Internal sales (1,117) (1,110) n.m. n.m. n.m.
GROUP TOTAL 21,779 22,141 +1.7% -0.9% +2.2%
(1) including intra-sector eliminations
(2) of which Reinforcements and Composites businesses (sold on
November 1st, 2007): EUR347m in H1 2007 before inter businesses
eliminations
(3) of which Desjonqueres (sold on March 31, 2007): EUR148m in H1 2007
before inter businesses eliminations
H1 H1 Change on H1 H1
II. OPERATING INCOME 2007 2008 an actual 2007 2008
(in EUR (in EUR structure (in % of (in % of
m) m) basis sales) sales)
By sector and division:
Flat Glass 366 410 +12.0% 13.1% 14.2%
High Performance Materials 300 296 -1.3% 12.1% 13.9%
(2)
Construction Products 739 604 -18.3% 13.1% 10.1%
Interior Solutions 541 379 -29.9% 15.9% 12.0%
Exterior Solutions 198 225 +13.6% 8.7% 7.9%
Building Distribution 494 470 -4.9% 5.2% 4.7%
Packaging (3) 212 233 +9.9% 11.3% 13.4%
Miscellaneous (18) (8) n.m. n.m. n.m.
GROUP TOTAL 2,093 2,005 -4.2% +9.6% +9.1%
By geographic area :
France 565 576 +1.9% 8.4% 8.5%
Other Western European 926 893 -3.6% 9.3% 8.7%
countries
North America 234 122 -47.9% 7.8% 4.6%
Emerging countries and Asia 368 414 +12.5% 11.2% 11.7%
GROUP TOTAL 2,093 2,005 -4.2% +9.6% +9.1%
(2) of which Reinforcements and Composites businesses (sold on November
1st, 2007): EUR22m in H1 2007
(3) of which Desjonqueres (sold on March 31, 2007): EUR24m in H1 2007
H1 H1 Change on H1 H1
III. BUSINESS INCOME 2007 2008 an actual 2007 2008
(in EUR (in EUR structure (in % of (in % of
m) m) basis sales) sales)
By sector and division:
Flat Glass (328)(a) 394 n.m. -11.7% 13.7%
High Performance Materials 43(b) 261 n.m. 1.7% 12.3%
(2)
Construction Products 727 599 -17.6% 12.9% 10.0%
Interior Solutions 540 383 -29.1% 15.9% 12.1%
Exterior Solutions 187 216 +15.5% 8.2% 7.6%
Building Distribution 494 473 -4.3% 5.2% 4.7%
Packaging (3) 462(c) 231 -50.0% 24.7% 13.3%
Miscellaneous (77)(d) (61)(d) n.m. n.m. n.m.
GROUP TOTAL 1,321 1,897 +43.6% 6.1% 8.6%
(a) after a provision of EUR650m for the flat glass fines (European
Commission)
(b) after EUR190 m of asset write-downs related to the disposal of the
Reinforcements & Composites businesses
(c) after EUR253m of capital gains following the disposal of
Desjonqueres
(d) after asbestos-related charge (before tax) of EUR 37.5m in H1 2008
versus EUR47.5m in H1 2007
(2) of which Reinforcements and Composites businesses (sold on November
1st, 2007): EUR28m in H1 2007
(3) of which Desjonqueres (sold on March 31, 2007): EUR23m in H1 2007
By geographic area :
France (36)(a) 579 n.m. -0.5% 8.5%
Other Western European 928 834 -10.1% 9.4% 8.1%
countries
North America 160(b) 82(b) -48.8% 5.4% 3.1%
Emerging countries and Asia 269 402 +49.4% 8.2% 11.3%
GROUP TOTAL 1,321 1,897 +43.6% 6.1% 8.6%
(a) after a provision of EUR650m for the flat glass fines (European
Commission)
(b) after asbestos-related charge (before tax) of EUR 37.5m in H1 2008
versus EUR47.5m in H1 2007
H1 H1 Change on H1 H1
IV. CASH FLOW 2007 2008 an actual 2007 2008
(in EUR (in EUR structure (in % of (in % of
m) m) basis sales) sales)
By sector and division:
Flat Glass 347 412 +18.7% 12.4% 14.3%
High Performance Materials 304 249 -18.1% 12.2% 11.7%
(2)
Construction Products 577 479 -17.0% 10.2% 8.0%
Interior Solutions 392 276 -29.6% 11.6% 8.7%
Exterior Solutions 185 203 +9.7% 8.2% 7.2%
Building Distribution 380 335 -11.8% 4.0% 3.3%
Packaging (3) 211 259 +22.7% 11.3% 14.9%
Miscellaneous 113(a) 160(a) n.m. n.m. n.m.
GROUP TOTAL 1,932 1,894 -2.0% 8.9% 8.6%
By geographic area :
France 494 403 -18.4% 7.4% 5.9%
Other Western European 852 913 +7.2% 8.6% 8.9%
countries
North America 224(a) 143(a) -36.2% 7.5% 5.4%
Emerging countries and Asia 362 435 +20.2% 11.0% 12.2%
GROUP TOTAL 1,932 1,894 -2.0% 8.9% 8.6%
(a) after asbestos-related charge (after tax) of EUR 23m in H1 2008
versus EUR29m in H1 2007
(2) of which Reinforcements and Composites businesses (sold on November
1st, 2007): EUR21m in H1 2007
(3) of which Desjonqueres (sold on March 31, 2007): EUR14m in H1 2007
H1 H1 Change on H1 H1
V. CAPITAL EXPENDITURE 2007 2008 an actual 2007 2008
(in EUR (in EUR structure (in % of (in % of
m) m) basis sales) sales)
By sector and division:
Flat Glass 166 220 +32.5% 5.9% 7.6%
High Performance Materials 73 86 +17.8% 2.9% 4.1%
(2)
Construction Products 301 314 +4.3% 5.3% 5.2%
Interior Solutions 230 231 +0.4% 6.8% 7.3%
Exterior Solutions 71 83 +16.9% 3.1% 2.9%
Building Distribution 147 129 -12.2% 1.5% 1.3%
Packaging (3) 125 115 -8.0% 6.7% 6.6%
Miscellaneous 10 8 n.m. n.m. n.m.
GROUP TOTAL 822 872 +6.1% 3.8% 3.9%
By geographic area :
France 167 195 +16.8% 2.5% 2.9%
Other Western European 259 271 +4.6% 2.6% 2.6%
countries
North America 161 96 -40.4% 5.4% 3.6%
Emerging countries and Asia 235 310 +31.9% 7.1% 8.7%
GROUP TOTAL 822 872 +6.1% 3.8% 3.9%
(2) of which Reinforcements and Composites businesses (sold on November
1st, 2007): EUR10m in H1 2007
(3) of which Desjonqueres (sold on March 31, 2007): EUR14m in H1 2007
Appendix 2: Consolidated Balance Sheet
in EUR millions June 30, 2008 Dec 31, 2007
Assets
Goodwill 10,778 9,240
Other intangible assets 3,043 3,125
Property, plant and equipment 13,147 12,753
Investments in associates 111 123
Deferred tax assets 332 328
Other non-current assets 585 472
Non-current assets 27,996 26,041
Inventories 6,467 5,833
Trade accounts receivable 7,553 6,211
Current tax receivable 90 173
Other accounts receivable 1,589 1,481
Assets held for sale (*) 104 105
Cash and cash equivalents 1,722 1,294
Current assets 17,525 15,097
Total assets 45,521 41,138
Liabilities and Shareholders' equity
Capital stock 1,530 1,497
Additional paid-in capital and legal 3,937 3,617
reserve
Retained earnings and net income for 10,890 10,625
the year
Cumulative translation adjustments (1,102) (564)
Fair value reserves 106 8
Treasury stock (210) (206)
Shareholders' equity 15,151 14,977
Minority interests 267 290
Total equity 15,418 15,267
Long-term debt 10,726 8,747
Provisions for pensions and other 1,815 1,807
employee benefits
Deferred tax liabilities 1,269 1,277
Provisions for other liabilities and 918 923
charges
Non-current liabilities 14,728 12,754
Current portion of long-term debt 687 971
Current portion of provisions for 1,024 1,107
other liabilities and charges
Trade accounts payable 6,146 5,752
Current tax liabilities 395 317
Other accounts payable 3,450 3,425
Liabilities held for sale (*) 43 41
Short-term debt and bank overdrafts 3,630 1,504
Current liabilities 15,375 13,117
Total equity and liabilities 45,521 41,138
(*) SG VTX America Plastic
Investor Relations Department
Florence Triou-Teixera +33-1-47-62-45-19
Alexandre Etuy +33-1-47-62-37-15
Vivien Dardel +33-1-47-62-44-29
Press contact
Sophie Chevallon +33-1-47-62-30-48-19
| |
SOURCE Saint-Gobain
 back to top
CONTACT:
Investor Relations Department: Florence
Triou-Teixera, +33-1-47-62-45-19; Alexandre Etuy,
+33-1-47-62-37-15; Vivien Dardel, +33-1-47-62-44-29; Press
contact, Sophie Chevallon, +33-1-47-62-30-48-19
| |
|
