TIDMCOD
RNS Number : 4852U
Compagnie de Saint-Gobain
29 July 2015
Paris, July 29, 2015
First-half 2015 results
Upswing in results
Following the signature of the agreement with Apollo and in accordance
with IFRS 5, the Packaging business (including Verallia North America)
was reclassified within "Net income from discontinued operations" in the
2014 and 2015 income statement.
* Organic growth at 0.5% (including a positive 0.5%
price impact)
* Strong 4.6% positive currency impact on sales and
0.3% negative Group structure impact
* Operating income up 7.8% on a reported basis and up
1.2% like-for-like before the reclassification of
Verallia
* Net debt reduced by EUR0.5 billion compared to June
30, 2014
* Repurchase of around 4.6 million shares over the last
3 months
(EURm) H1 2014 H1 2015 Change
(restated)
Sales 18,946 19,860 +4.8%
EBITDA 1,767 1,886 +6.7%
Operating income 1,183 1,275 +7.8%
Recurring(1) net income 441 552 +25.2%
Net income(2) 671 558 -16.8%
Free cash flow(3) 647 728 +12.5%
Pierre-André de Chalendar, Chairman and Chief Executive Officer of
Saint-Gobain, commented:
"After a first quarter marked by a tough basis for comparison, second-quarter
sales returned to volume growth, driven by the rebound in North America
on the back of an upturn in Roofing and by good momentum in Asia, emerging
countries and Western Europe except France and Germany. First-half operating
income and our outlook for the rest of the year confirm our objective
of a further like-for-like improvement in operating income in 2015 along
with continuing high levels of free cash flow."
1. Recurring net income from continuing operations, excluding capital
gains and losses on disposals, asset write-downs and material non-recurring
provisions.
2. Consolidated net income attributable to the Group.
3. Free cash flow from continuing operations, excluding the tax impact
of capital gains and losses on disposals, asset write-downs and material
non-recurring provisions.
Operating performance
First-half sales were up 4.8% to EUR19,860 million, after
reclassification of the Packaging business (including Verallia
North America) within "Net income from discontinued operations" in
the income statement.
After this restatement (IFRS 5), changes in Group structure had
a negative 0.3% impact on sales. Exchange rates continued to have a
strong positive impact (4.6%), chiefly driven by the US dollar and
pound sterling.
On a like-for-like basis, sales edged up 0.5%. Volumes were
stable over the first half and rose 1.5% in the second quarter
alone. Amid low raw material cost inflation and energy cost
deflation, prices continued to rise slightly, up 0.5% over the
first half.
After a slight decline in the first quarter, the three months to
June 30 saw growth in all regions except France and Germany. By
business, the first half confirmed the upturn in Flat Glass and the
expected contraction in Exterior Solutions, related mainly to price
levels in the Roofing business.
The Group's operating income climbed 7.8% on a reported basis
and remained stable like-for-like versus first-half 2014 due to the
absence of volume growth. Before the reclassification of the
Packaging business and on a like-for-like basis, operating income
moved up 1.2%. The Group's operating margin widened 0.2 points
year-on-year, to 6.4%.
Performance of Group Business Sectors
Innovative Materials like-for-like sales continued to improve,
up 2.6% thanks to Flat Glass. The Business Sector's operating
margin moved up to 10.2% versus 9.1% in first-half 2014.
-- The second quarter confirmed the upbeat trends seen early in
the year in Flat Glass, which posted 5.6% organic growth over the
six months to June 30. Automotive Flat Glass continued to report
strong gains in all regions, excluding Brazil. Construction markets
remained upbeat in Asia and emerging countries, but retreated in
Western Europe where prices remained stable.
Rising volumes, together with the full impact of cost savings
and an improved product mix, helped drive renewed growth in the
operating margin at 7.4%.
-- High-Performance Materials (HPM) like-for-like sales slipped
0.8% over the first half, hit mainly by the downturn in ceramic
proppants. Other HPM businesses continued to deliver organic
growth.
Despite this decline in organic growth, the operating margin
came in at 13.5% versus 13.3% in the same period one year
earlier.
Construction Products (CP) like-for-like sales advanced 0.9%
over the first half. The operating margin narrowed to 8.7% versus
9.0% in first-half 2014, affected by Exterior Solutions.
-- Interior Solutions posted 2.2% organic growth over the
six-month period. In Western Europe, despite a slight improvement
in volumes, trading continued to be affected by the market
situation in France and Germany, coupled with a slight downward
pressure on prices. The US, Asia and emerging countries continued
to grow.
The operating margin moved up to 9.0% versus 8.5% in first-half
2014.
-- Exterior Solutions slipped 0.4% despite a 5.7% rally in the
second quarter, due mainly to the Roofing business, where volumes
rose sharply after a very weak start to the year. Prices for this
business were down significantly on the same year-ago period,
despite stabilizing quarter-on-quarter. Pipe continued to be buoyed
by export contracts, but was affected by anemic demand in
infrastructure markets in Western Europe and Brazil. Mortars
enjoyed good organic growth in Asia and emerging countries,
although growth continued to be hindered by Western Europe.
The operating margin fell to 8.3% from 9.5% in first-half 2014,
due chiefly to prices for Exterior Products in the US: Roofing
benefited from falling asphalt prices, mainly in the second
quarter.
Building Distribution like-for-like sales stabilized in the
second quarter, up 0.1%, limiting the decline over the six-month
period to 1.1%. France was once again impacted by the sharp
contraction in new-builds and by a renovation market yet to show
signs of improvement. Germany declined over the first half,
although the pace of decline slowed in the second quarter. In
contrast, the UK reported further organic growth and a particularly
upbeat trend emerged in the Nordic countries, the Netherlands,
Southern Europe and Brazil. Overall, despite the downturn in France
and Germany which together account for around half of the Business
Sector's sales, the operating margin proved resilient, at 2.6%
versus 2.9% in first-half 2014, thanks to the advances reported in
all other regions.
Analysis by region
The Group's organic growth and margins advanced, lifted by Asia
and emerging countries, and by countries in the "Other Western
Europe" region.
-- France was hit once again by the decline in the construction
market in the second quarter, reporting negative organic growth of
3.3% for the three months to June 30 and of 4.2% over the first
half. The operating margin narrowed as a result, at 2.6%.
-- Other Western European countries, up 2.4% over the quarter,
confirmed their organic growth, which came in at 1.7% for the first
half. This performance reflects good market conditions in the UK
and Scandinavia and an upturn in Southern European countries.
Germany, which was still slightly down in the second quarter,
retreated 3.7% on the back of sluggish renovation activity. The
operating margin for the region improved, at 5.4% versus 4.7% in
first-half 2014.
-- North America posted 4.9% like-for-like sales growth in the
second quarter, powered by the catch-up in Roofing volumes and to a
lesser extent by Interior Solutions. Over the six-month period, the
region posted negative organic growth of 2.2%, chiefly impacted by
subdued Roofing prices and a slower pace of growth in industrial
markets. The operating margin was therefore down, at 9.5% compared
to 10.9% in first-half 2014.
-- Asia and emerging countries continued to deliver good organic
growth, which came in at 4.8% for the first six months of the year.
Latin America advanced 8.2%, with Brazil proving resilient in a
tough macroeconomic environment. Eastern Europe was up 4.3%, buoyed
by brisk trading in the Czech Republic, while Asia advanced 0.8%,
lifted by India.
The operating margin rose to 10.0% of sales, compared to 8.8%
one year earlier.
Verallia
Packaging (Verallia) sales moved up 2.1% at constant exchange
rates excluding Verallia North America. Organic growth over the
first half was driven by small volume gains in Europe and by rising
prices in Latin America in an inflationary environment.
The operating margin came in at 9.7%.
Analysis of the consolidated financial statements for first-half
2015
The unaudited interim consolidated financial statements were
subject to a limited review by the statutory auditors. They were
approved and adopted by the Board of Directors on July 29,
2015.
Following the signature of the agreement with Apollo on June 6,
2015 (involving a firm and binding offer from Apollo regarding the
Packaging business and exclusive talks with Apollo) and in
accordance with IFRS 5, the Packaging business (including Verallia
North America) is shown within "Net income from discontinued
operations" in the income statement for 2014 and 2015.
H1 2014 H1 2015 % change H1 2014
Restated* Published
-----------
EURm (A) (B) (B)/(A)
----------- -------- --------- -----------
Sales and ancillary revenue 18,946 19,860 4.8% 20,446
Operating income 1,183 1,275 7.8% 1,330
Operating depreciation and amortization 584 611 4.6% 667
EBITDA (op.inc. + operating depr./amort.) 1,767 1,886 6.7% 1,997
Non-operating costs (12) (154) n.s. (16)
Capital gains and losses on disposals,
asset write-downs, corporate acquisition
fees and earn-out payments (51) (41) -19.6% (54)
Business income 1,120 1,080 -3.6% 1,260
Net financial expense (336) (328) -2.4% (354)
Income tax (158) (236) 49.4% (212)
Share in net income (loss) of non-core
business equity-accounted companies (1) 0 n.s. (1)
Net income from continuing operations 625 516 -17.4% 693
Net income from discontinued operations 68 69 1.5% 0
Net income before minority interests 693 585 -15.6% 693
Minority interests 22 27 22.7% (22)
Net attributable income 671 558 -16.8% 671
Earnings per share(2) (in EUR) 1.19 0.98 -17.6% 1.19
Recurring(1) net income from continuing
operations 441 552 25.2% 511
Recurring(1) earnings per share(2)
from continuing operations (in EUR) 0.78 0.97 24.4% 0.91
Cash flow from continuing operations(3) 1,045 1,195 14.4% 1,198
Cash flow from continuing operations
excl. cap. gains tax(4) 1,010 1,185 17.3% 1,162
Capital expenditure of continuing operations 363 457 25.9% 449
Free cash flow from continuing operations 647 728 12.5% 713
(excluding capital gains tax)(4)
Investments in securities of continuing
operations 48 92 91.7% 48
Net debt 8,519 7,995 -6.2% 8,519
* First-half 2014 figures have been restated to reflect the impacts of IFRS 5.
1 Excluding capital gains and losses on disposals, asset
write-downs and material non-recurring provisions.
2 Calculated based on the number of shares outstanding
(excluding treasury shares) at June 30 (569,364,905 shares in 2015,
including the increase in capital following payment of the stock
dividend on July 3, 2015, versus 564,079,733 shares in 2014).
3 Excluding material non-recurring provisions.
4 Excluding the tax impact of capital gains and losses on
disposals, asset write-downs and material non-recurring
provisions.
The comments below make reference to the restated financial
statements for 2014, after reclassification of the Packaging
business (including Verallia North America) within "Net income from
discontinued operations" in the income statement.
Consolidated sales advanced 4.8% on a reported basis. Exchange
rates had a positive 4.6% impact on sales, mainly due to gains in
the US dollar and pound sterling against the euro. Changes in Group
structure had a negative 0.3% impact, primarily reflecting sales of
small, non-core businesses. Like-for-like (comparable structure and
exchange rates), sales were up 0.5%, lifted by the price
effect.
Operating income climbed 7.8% on a reported basis, driven
chiefly by the currency effect. The operating margin improved to
6.4% of sales versus 6.2% in first-half 2014, buoyed by an improved
margin in Innovative Materials.
EBITDA (operating income + operating depreciation and
amortization) was up 6.7%. The Group's EBITDA margin came out at
9.5% of sales versus 9.3% of sales in first-half 2014.
Non-operating costs totaled EUR154 million, with a decrease in
restructuring costs compared to the same period in 2014. The
first-half 2014 basis for comparison (EUR12 million) included the
EUR202 million write-back from the provision to reflect the
reduction in the automotive Flat Glass fine. The EUR45 million
accrual to the provision for asbestos-related litigation involving
CertainTeed in the US is unchanged from the last few half-year
periods.
The net balance of capital gains and losses on disposals, asset
write-downs and corporate acquisition fees was a negative EUR41
million versus a negative EUR51 million in first-half 2014, which
had benefited from the EUR375 million capital gain on the disposal
of Verallia North America. Asset write-downs also represented
EUR452 million in first-half 2014 compared to EUR24 million in the
six months to June 30, 2015. Business income for the period fell to
EUR1,080 million (down 3.6% on first-half 2014 which included the
one-off EUR202 million provision write-back).
Net financial expense improved, down 2.4% to EUR328 million from
EUR336 million one year earlier, reflecting the decrease in the
cost of gross debt to 3.7% at June 30, 2015 (4.4% at June 30,
2014). The improvement came despite the increase in other financial
expenses mainly due to the discounting of provisions with no cash
impact.
The income tax rate on recurring net income remained stable at
30%. Income tax expense totaled EUR236 million, up from the
exceptionally low EUR158 million in first-half 2014 resulting from
asset write-downs in the period, capital gains on the disposal of
Verallia North America and the write-back of the provision for the
Flat Glass fine.
Recurring net income from continuing operations (excluding
capital gains and losses on disposals, asset write-downs and
material non-recurring provisions) jumped 25.2% to EUR552
million.
Net attributable income was down 16.8% to EUR558 million and
includes net income relating to Verallia (attributable to the
Group) for EUR65 million (EUR67 million in first-half 2014).
Capital expenditure totaled EUR457 million (EUR363 million in
first-half 2014), representing 2.3% of sales compared to a
particularly low 1.9% of sales in the same period one year
earlier.
Cash flow from operations rose 14.4% to EUR1,195 million; before
the tax impact of capital gains and losses on disposals, asset
write-downs and material non-recurring provisions, cash flow from
operations was up 17.3% to EUR1,185 million, while free cash flow
(cash flow from operations less capital expenditure) advanced 12.5%
to EUR728 million (3.7% of sales versus 3.4% of sales in first-half
2014).
The difference between EBITDA and capital expenditure improved,
up 1.8% to EUR1,429 million (EUR1,404 million in the six months to
June 30, 2014), representing 7.2% of sales (7.4% in first-half
2014).
Operating working capital requirements (WCR) totaled EUR4,448
million at June 30, 2015 (EUR4,888 million in the same year-ago
period), representing 40.8 days' sales, an improvement of 2.5 days
year-on-year (an improvement of around 1 day excluding the impact
of Verallia and exchange rates).
Investments in securities were limited, at EUR92 million (EUR48
million in first-half 2014) and correspond to small-scale
acquisitions in the three business sectors.
Net debt continues to improve gradually, down 6.2% year-on-year
to EUR8.0 billion. Net debt represents 40% of consolidated equity,
compared to 46% at June 30, 2014.
The net debt to EBITDA ratio came in at 2.1 (1.9 before the
reclassification of the Packaging business), compared to 2.0 at
end-June 2014.
Update on asbestos claims in the US
Some 2,000 claims were filed against CertainTeed in the first
half of 2015 (as in first-half 2014). At the same time, around
2,000 claims were settled (versus 3,000 in first-half 2014),
bringing the total number of outstanding claims to around 37,000 at
June 30, 2015, unchanged from December 31, 2014.
A total of USD 71 million in indemnity payments were made in the
US in the 12 months to June 30, 2015, versus USD 68 million in the
year to December 31, 2014.
2015 outlook and action plan priorities
After a first half penalized by tough prior-year comparatives,
the Group will benefit from a more favorable climate in the six
months to December 31:
- France should gradually stabilize.
- Regarding other Western European countries, the outlook in
Germany remains uncertain; the UK and Nordic countries should
continue to deliver good growth in the second half, and Spain
should continue to improve significantly.
- In North America, trading should improve in the second
half.
- In Asia and emerging countries, our businesses should continue
to post good organic growth over the full year, despite the
slowdown in Brazil.
The Group confirms its action plan priorities:
- keep its priority focus on increasing sales prices amid low
raw material cost inflation and energy cost deflation;
- unlock additional cost savings of EUR360 million excluding
Verallia (calculated on the 2014 cost base), of which EUR190
million in the first half;
- pursue a capital expenditure program of around EUR1,500
million excluding Verallia;
- renew its commitment to invest in R&D in order to support
its differentiated, high value-added strategy;
- finalize the divestment of Verallia, which should be effective
before the end of the year;
- pursue its plan to acquire a controlling interest in Sika.
In line with its long-term objectives, Saint-Gobain repurchased
4.6 million shares over the last three months. To date, this almost
entirely offsets the 2015 dilution resulting from the Group Savings
Plan and the exercise of stock options.
Lastly, Saint-Gobain confirms its objectives and expects a
further like-for-like improvement in operating income for 2015 and
a continuing high level of free cash flow.
Financial calendar
- Sales for the first nine months of 2015: October 28, 2015,
after close of trading on the Paris Bourse.
Analyst/Investor relations Press relations
--------------------------------------- ---------------------------------------------------------------
+33 1 47 62
32 52
+33 1 47 62 +33 1 47 62 30
Gaetano Terrasini 44 29 48
Vivien Dardel +33 1 47 62 Sophie Chevallon +33 1 47 62 43
Marine Huet 30 93 Susanne Trabitzsch 25
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An information meeting for analysts and investors will be held
at 8:30am (GMT+1) on July 30, 2015 and will be broadcast live on
www.saint-gobain.com.
Important disclaimer - forward-looking statements:
This press release contains forward-looking statements with
respect to Saint-Gobain's financial condition, results, business,
strategy, plans and outlook. Forward-looking statements are
generally identified by the use of the words "expect",
"anticipate", "believe", "intend", "estimate", "plan" and similar
expressions. Although Saint-Gobain believes that the expectations
reflected in such forward-looking statements are based on
reasonable assumptions as at the time of publishing this document,
investors are cautioned that these statements are not guarantees of
its future performance. Actual results may differ materially from
the forward-looking statements as a result of a number of known and
unknown risks, uncertainties and other factors, many of which are
difficult to predict and are generally beyond the control of
Saint-Gobain, including but not limited to the risks described in
Saint-Gobain's registration document available on its website
(www.saint-gobain.com). Accordingly, readers of this document are
cautioned against relying on these forward-looking statements.
These forward-looking statements are made as of the date of this
document. Saint-Gobain disclaims any intention or obligation to
complete, update or revise these forward-looking statements,
whether as a result of new information, future events or
otherwise.
This press release does not constitute any offer to purchase or
exchange, nor any solicitation of an offer to sell or exchange
securities of Saint-Gobain.
For further information, please visit www.saint-gobain.com.
This information is provided by RNS
The company news service from the London Stock Exchange
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