TIDMCOD
RNS Number : 7342X
Compagnie de Saint-Gobain
23 February 2017
PRESS RELEASE
Paris, February 23, 2017
2016 Results
Strong progress in results
-- Organic growth of 2.6% led by volumes; prices stable, with a progression of 0.6% in H2
-- Negative 2.9% currency impact on sales (with a negative 2.3%
impact in H2); negative 1.0% Group structure impact
-- Further rise in operating income up 10.8% like-for-like, and
operating margin up to 7.2% from 6.7%
-- Further strong 20.0% increase in recurring net income(1)
-- 29.0% increase in free cash flow(2) to EUR1,258 million
-- Acceleration of acquisitions in H2, totaling EUR362 million over the full year
-- Increase in net debt to EUR5.6 billion, due namely to
optimization of pension costs; buyback and cancelation of 11
million shares during the year
-- 2016 dividend increased to EUR1.26, to be paid wholly in cash
(EURm) 2015 2016 Change Change
like-for-like
Sales 39,623 39,093 -1.3% +2.6%
EBITDA 3,844 3,998 +4.0% +7.4%
Operating income 2,636 2,818 +6.9% +10.8%
Recurring net income(1) 1,165 1,398 +20.0%
Net attributable income 1,295 1,311 +1.2%
Free cash flow(2) 975 1,258 +29.0%
Pierre-André de Chalendar, Chairman and Chief Executive Officer
of Saint-Gobain, commented:
"Saint-Gobain showed strong progress in its 2016 results. We saw
the benefits of our optimisation efforts and of our development in
emerging markets, in a more supportive economic environment than
2015. As expected, France stabilized over the year as new-build
activities recovered. All other regions enjoyed good momentum. The
Group also benefited from its focus on pricing against a backdrop
of lower energy and raw material costs.
In 2017, Saint-Gobain will maintain focus on its operational and
strategic priorities. We expect both costs and prices to begin to
rise again. The economic environment should be positive overall,
although uncertainties remain in some of our markets. In this
context, we are targeting a further like-for-like increase in
operating income in 2017."
1. Recurring net income: net attributable income from continuing
operations excluding capital gains and losses on disposals, asset
write-downs and material non-recurring provisions.
2. Cash flow from continuing operations excluding the tax impact
of capital gains and losses on disposals, asset write-downs and
material non-recurring provisions, less capital expenditure of
continuing operations.
Operating performance
The Group reported 2016 sales of EUR39,093 million, including a
significant 2.9% negative currency impact due namely to the
depreciation of the pound sterling - and to a lesser extent Latin
American currencies - against the euro.
The negative 1.0% Group structure impact reflects the time-lag
between the impact of disposals made to optimize the Building
Distribution portfolio in late 2015/early 2016 and the acquisitions
carried out mostly at the end of the period.
On a like-for-like basis, sales were up 2.6%, driven by volume
growth in all of our Business Sectors and regions. Based on a
constant number of working days (negative calendar effect in the
second half), volumes continued to increase in the six months to
December 31, at the same pace as the first half. Prices stabilized
over the year, gaining 0.6% in the second half amid an uptick in
inflation.
The Group's operating margin(1) increased to 7.2% from 6.7% in
2015, with 7.4% for the second half (versus 6.9% in second-half
2015). In line with our objectives, we saw a further like-for-like
increase in operating income, up 11.5% in the second half, bringing
growth over the full year to 10.8%.
In 2016, the Group's capital expenditure was EUR1.37 billion, in
line with our objective; we made EUR270 million in cost savings
(versus 2015), exceeding our EUR250 million target.
Free cash flow jumped 29% to EUR1,258 million, in line with the
Group's operating performance.
Operating working capital requirements remained at a good level
of 28 days, despite a rise of 1.7 days' sales, after the record low
of 2015.
The Group continued to pursue its acquisitions strategy,
representing close to EUR300 million in full-year sales.
Regarding the plan to acquire a controlling interest in Sika,
the Group is confident that SWH's rights will be restored.
Performance of Group Business Sectors
Innovative Materials sales climbed 4.5% like-for-like over the
year, in line with the first half. The operating margin for the
Business Sector widened to 11.2% from 10.5%, driven by the rebound
in Flat Glass and a good performance from HPM.
-- Flat Glass like-for-like sales increased 6.5% over the year,
in line with the first half, led by both construction and
automotive in Asia and emerging countries. In Western Europe,
construction volumes and prices both improved, benefiting from
higher float prices and, as from the second half, from a rise in
the price of downstream glass; automotive glass stabilized at a
good level.
This organic growth, combined with the optimization of operating
leverage over recent years, resulted in a further increase in
operating margin, up from 7.9% to 9.1%, and 9.5% in second-half
2016.
-- High-Performance Materials (HPM) sales rose 2.2% on a
like-for-like basis. Despite the decline in industrial markets in
the US, all HPM businesses advanced in the second half, led by Asia
and emerging countries. Plastics also benefited from robust
momentum in Europe. Ceramics stabilized over the year, with a less
favorable mix in the second half. Textile Solutions were buoyed by
the sharp rise in Roofing volumes in the US.
The operating margin for the year widened to 13.7% from 13.4%,
and stood at 13.3% for the second half (13.2% in second-half
2015).
1. Operating margin = Operating income expressed as a percentage
of sales.
Construction Products (CP) reported 1.4% organic growth,
including 1.1% in the second half. The operating margin improved,
up to 9.3% from 8.5% despite the decline in Pipe.
-- Interior Solutions showed good organic growth, at 3.7% (2.2%
in the second half owing to the negative calendar impact). Sales
were up in Western Europe; the price effect was slightly negative
but neutral in the second half. Trading in North America continued
to advance, albeit at a slower rate than the first half; prices
remained negative over the year but improved in the six months to
December 31. Asia and emerging countries continued to deliver
growth.
Good volume levels coupled with productivity gains and a fall in
costs - particularly energy - drove a sharp improvement in the
operating margin, which reached 10.3% in 2016 compared to 8.9% in
2015.
-- Exterior Solutions like-for-like sales stabilized over the
second half (slipping 0.1%) and were down by 1.1% over the year,
hit by the downturn in Pipe. This business continued to suffer from
contracting markets in its main regions except Brazil, where the
comparison basis was particularly weak. Exterior Products in the US
reported strong volume growth, boosted especially by favorable
weather impacts; prices remained down over the year but to a lesser
extent in the second half. Mortars posted like-for-like growth
powered by Asia and emerging countries, despite their exposure to
the Brazilian market.
The operating margin was 7.9% versus 8.0% in 2015.
Building Distribution reported 2.7% organic sales growth for the
year, with 2.2% in the second half, slightly up on the first half
based on a comparable number of working days. Trading in France
benefited from the upturn in new-builds, while renovation
stabilized at a low level in a still deflationary environment,
including at the end of the year. Scandinavia confirmed its good
momentum over the full year, as did Spain and the Netherlands. The
UK has not shown signs of weakness since the Brexit vote and
continued to advance in line with the first half. Germany enjoyed
good growth, although momentum slowed in the second half. Brazil
continued to suffer from the market downturn.
The operating margin was 3.4% for the year versus 3.2% in 2015
(4.0% in the second half compared to 3.8% in second-half 2015),
impacted by the negative price effect which stabilized in the six
months to December 31.
Analysis by region
-- In line with our expectations, France stabilized over the
year (slipping 0.1% like-for-like). Trading edged down 0.7% in the
second half, hit by an unfavorable calendar impact. The decline in
Pipe was offset by an improvement in the new-build market, while
renovation stabilized at a low level in a still deflationary
environment. The operating margin leveled off at 2.9%.
-- Other Western European countries saw like-for-like sales
growth of 3.6%, with 2.9% growth in the second half (impacted by a
negative calendar impact). This reflects upbeat market conditions
in all of our main countries, including in the second half. Only
Germany posted a slowdown in growth in the six months to December
31, related in particular to Interior Solutions. The operating
margin climbed to 6.2% in 2016 from 5.7% in 2015.
-- North America reported 2.0% like-for-like sales growth,
buoyed by volumes in both Exterior Products and Interior Solutions,
mainly in the first half. Industrial markets were down slightly.
Prices continued to have a negative impact, although this eased in
the second half. The operating margin rose to 10.5% from 9.1% in
2015, driven mainly by volumes.
-- Asia and emerging countries continued to advance, reporting
6.1% organic growth (7.3% in the second half). Trading remained
robust in all regions despite the slowdown in Brazil. The region
delivered further growth in its operating margin, up to 10.9% from
10.3% in 2015.
Analysis of the 2016 consolidated financial statements
The 2016 consolidated financial statements were approved and
adopted by Saint-Gobain's Board of Directors at its meeting of
February 23, 2017. The consolidated financial statements were
audited and certified by the statutory auditors.
2015 2016 %
change
EURm (A) (B) (B)/(A)
------- ------- --------
Sales and ancillary revenue 39,623 39,093 -1.3%
Operating income 2,636 2,818 6.9%
Operating depreciation and
amortization 1,208 1,180 -2.3%
EBITDA (operating income +
operating depr./amort.) 3,844 3,998 4.0%
Non-operating costs (344) (312) -9.3%
Capital gains and losses on
disposals, asset write-downs,
corporate acquisition fees
and earn-out payments (998) (202) -79.8%
Business income 1,294 2,304 78.1%
Net financial expense (629) (541) -14.0%
Income tax (248) (416) 67.7%
Share in net income of associates 0 5 n.s.
Net income from continuing
operations 417 1,352 224.2%
Net income from discontinued
operations 929 0 n.s.
Net income before minority
interests 1,346 1,352 0.4%
Minority interests 51 41 -19.6%
Net attributable income 1,295 1,311 1.2%
Earnings per share(2) (in
EUR) 2.32 2.36 1.7%
Recurring(1) net income from
continuing operations 1,165 1,398 20.0%
Recurring(1) earnings per
share(2) from continuing operations
(in EUR) 2.09 2.53 21.1%
Cash flow from operations(3) 2,562 2,749 7.3%
Cash flow from operations
excluding capital gains tax(4) 2,321 2,628 13.2%
Capital expenditure(5) 1,346 1,370 1.8%
Free cash flow(6) 975 1,258 29.0%
Investments in securities 227 362 59.5%
Net debt 4,797 5,644 17.7%
1. Recurring net income: net attributable income from continuing
operations excluding capital gains and losses, asset write-downs
and material non-recurring provisions.
2. Calculated based on the number of shares outstanding at
December 31 (553,388,403 shares in 2016, versus 558,607,521 in
2015).
3. Cash flow from operations = operating cash flow from
continuing operations excluding material non-recurring
provisions.
4. Cash flow from operations excluding capital gains tax = (3)
less the tax impact of capital gains and losses, asset write-downs
and material non-recurring provisions.
5. Capital expenditure: investments in property, plant and equipment.
6. Free cash flow = (4) less capital expenditure of continuing operations.
Consolidated sales advanced 2.6% like-for-like, led by volume
growth (stable price effect). On a reported basis, sales were down
1.3%, with a negative 2.9% currency impact due namely to the
depreciation of the pound sterling - and to a lesser extent Latin
American countries - against the euro. The negative 1.0% Group
structure impact essentially reflects disposals carried out in the
Building Distribution Sector.
Operating income increased 6.9% on a reported basis despite a
negative currency impact and by 10.8% like-for-like. The operating
margin stood at 7.2% of sales versus 6.7% of sales in 2015. EBITDA
(operating income plus operating depreciation and amortization)
climbed 4.0% to EUR3,998 million, or 10.2% of sales (9.7% of sales
in 2015).
Non-operating costs fell to EUR312 million from EUR344 million
in 2015, driven by lower restructuring costs thanks to a decrease
in the second half. This amount also includes a EUR90 million
accrual to the provision for asbestos-related litigation involving
CertainTeed in the US, unchanged from 2015.
The net balance of capital gains and losses on disposals, asset
write-downs and corporate acquisition fees was an expense of EUR202
million, compared to an expense of EUR998 million one year earlier.
In 2016, this item includes EUR190 million in asset write-downs,
chiefly in Interior Solutions and proppants. Business income rose
78.1%.
Net financial expense improved sharply, down 14.0% to EUR541
million from EUR629 million in 2015. This primarily reflects the
decrease in average net debt over 12 months, compared to a decrease
only late in the year in 2015 (disposal of Verallia in October
2015). The cost of gross debt also fell, to 3.4% at December 31,
2016 versus 3.9% at end-December 2015, due mainly to the September
2016 bond issue for EUR1 billion, at 0% and maturing in three and a
half years.
The tax rate on recurring net income was 27%, compared to 29% in
2015, owing mainly to a favorable geographical mix and lower tax
rates in certain countries. Income tax expense was EUR416 million
compared to EUR248 million in 2015, which had seen the reversal of
deferred tax liabilities linked to intangible asset
write-downs.
Recurring net income (excluding capital gains and losses, asset
write-downs and material non-recurring provisions) rose 20.0% to
EUR1,398 million.
Net attributable income, which in 2015 included net income from
discontinued operations (Verallia), climbed 1.2% in 2016 to
EUR1,311 million.
Capital expenditure totaled EUR1,370 million, in line with our
objective, representing 3.5% of sales (3.4% of sales in 2015).
Cash flow from operations rose 7.3% to EUR2,749 million
(EUR2,562 million in 2015). Before the tax impact of capital gains
and losses on disposals, asset write-downs and material
non-recurring provisions, cash flow from operations climbed 13.2%
to EUR2,628 million and free cash flow increased 29.0% to EUR1,258
million (3.2% of sales versus 2.5% of sales in 2015).
Operating working capital requirements (WCR) remained at a good
level of 28 days' sales, a rise of 1.7 days from the record low
recorded in 2015 and representing an increase of EUR175 million in
value terms (to EUR3,010 million).
Investments in securities totaled EUR362 million (EUR227 million
in 2015) and relate to targeted acquisitions in Asia and emerging
countries, technological niche markets, and efforts to consolidate
the Group's positions in Building Distribution, especially in
Nordic countries.
Net debt rose from EUR4.8 billion to EUR5.6 billion, due mainly
to share buybacks of EUR418 million and a one-off contribution of
USD 640 million to US pension funds (USD 422 million after the tax
credit effective in 2017). This contribution will enable the Group
to save around USD 20 million in finance costs each year. Net debt
represents 29% of consolidated equity, compared to 25% at December
31, 2015.
The net debt to EBITDA ratio came out at 1.4 versus 1.2 at
end-2015.
Update on asbestos claims in the US
Some 3,200 claims were filed against CertainTeed in 2016, in
line with 2015. At the same time, around 3,700 claims were settled
(versus 4,600 in 2015), bringing the total number of outstanding
claims to around 35,100 at December 31, 2016, a decrease of around
500 compared to end-2015.
A total of USD 97 million in indemnity payments were made in the
12 months to December 31, 2016, compared to USD 65 million in 2015
due to the catch-up in payments on settlements pending
documentation and settlement payments in certain important cases.
In light of these trends and of the EUR90 million provision accrual
in 2016, the total provision for CertainTeed's asbestos-related
claims amounted to USD 562 million at December 31, 2016, compared
to USD 581 million at December 31, 2015.
Share buyback and dividend
In line with its objectives, in 2016 the Group bought back and
later canceled around 11 million shares for EUR418 million,
resulting in a decrease in the number of shares outstanding to
553.4 million shares at end-December 2016 (compared to 558.6
million shares at end-December 2015).
At today's meeting, Compagnie de Saint-Gobain's Board of
Directors decided to recommend to the June 8, 2017 Shareholders'
Meeting to pay in cash an increased dividend of EUR1.26 per share
(versus EUR1.24 in 2015), demonstrating our focus on shareholder
returns in the context of our strong 2016 results and confidence
looking ahead. This dividend represents 50% of recurring net income
and a dividend yield of 2.85% based on the closing share price at
December 30, 2016 (EUR44.255). The ex-dividend date has been set at
June 12 and the dividend will be paid on June 14, 2017.
2017 outlook
In 2017 the Group should benefit from a gradual improvement in
France, despite a still uncertain renovation market. Western Europe
should deliver organic growth, despite less visibility in the UK.
North America should continue to advance in construction markets,
excluding the exceptional weather impacts of 2016, but will
continue to face uncertainty in industry. Our operations in Asia
and emerging countries should enjoy robust growth.
Saint-Gobain will continue its disciplined approach towards cash
management and financial strength. In particular, it will
pursue:
- its focus on sales prices amid an uptick in inflation;
- its cost savings program, with the aim of unlocking additional
savings of around EUR270 million (calculated on the 2016 cost
base);
- its capital expenditure program (around EUR1,600 million in
2017), with a focus on growth capex outside Western Europe and also
on productivity and digital transformation;
- its commitment to invest in R&D to support its differentiated, high value-added strategy;
- its focus on high levels of free cash flow generation.
The Group is targeting a further like-for-like increase in
operating income in 2017.
On May 17, 2017, the Group will hold an Investor Day to discuss
its strategy.
Financial calendar
- An information meeting for analysts and investors will be held
at 8:30am (GMT+1) on February 24, 2017 and will be broadcast live
on www.saint-gobain.com
- Sales for the first quarter of 2017: April 26, 2017, after
close of trading on the Paris Bourse.
- Investor Day: May 17, 2017.
- First-half 2017 results: July 27, 2017, after close of trading
on the Paris Bourse.
Analyst/Investor relations Press relations
-------------------------------------- ------------------------------------------------------------
+33 1 47
62 44 29
+33 1 47 +33 1 47 62
Vivien Dardel 62 30 93 30 10
Florent Nouveau +33 1 47 Charles Hufnagel +33 1 47 62
Floriana Michalowska 62 35 98 Susanne Trabitzsch 43 25
------------------------ ------------ -------------------------------------------- --------------
Data on organic growth and like-for-like changes in sales or
operating income reflect the Group's underlying performance,
excluding the impact of:
-- changes in Group structure, by calculating indicators for the
year under review based on the scope of consolidation of the
previous year (Group structure impact);
-- changes in foreign exchange rates, by calculating the
indicators for the year under review and those for the previous
year based on identical foreign exchange rates for the previous
year (currency impact);
-- changes in applicable accounting policies.
All indicators contained in this press release (not defined in
the footnotes) are explained in the notes to the 2016 consolidated
financial statements, available by clicking here:
www.saint-gobain.com/en/full-year-2016-results
The glossary below shows the note of the financial statements in
which you can find an explanation of each indicator.
Glossary:
Cash flow from operations Note 3
Net debt Note 8
EBITDA Note 3
Non-operating costs Note 3
Operating income Note 3
Net financial expense Note 8
Recurring net income Note 3
Net income from discontinued operations Note 2
Business income Note 3
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 of purchase or
exchange, nor any solicitation of an offer to sell or exchange
securities of Saint-Gobain.
For any further information, please visit
www.saint-gobain.com
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view the associated PDF document.
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END
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