Saint-Gobain - First-half 2012: The Group Rolls out a New Action Plan to Address the Deteriorating Economic Climate

PARIS, July 26, 2012 /PRNewswire/ --

Publication of first-half 2012 results.

    KEY FIGURES
 
    (EURm)                       H1 2011      H1 2012         Change
 
    Sales                         20,875       21,590           +3.4%
 
    EBITDA                         2,479        2,284           -7.9%
 
    Operating income               1,720        1,512          -12.1%
 
    Recurring[1] net income          902          651          -27.8%
 
    Net income                       768          506          -34.1%


First-half 2012highlights:

  • Organic growth: down 0.8% over the first half, down 2.3% in the second quarter
  • Sales prices: up 2.2% over the first half (up 2.6% excluding Flat Glass)
  • New cost cutting measures: savings of €170m in the first half; €500m in 2012; full-year impact: €750m
  • Sharp improvement in operating WCR[2] over 12 months: down 5.1 days, representing a gain of €340m
  • Free cash flow[3] after changes in operating WCR (over 12 months): up 21.0% to €1,367m
  • Ongoing strong balance sheet: net debt/EBITDA ratio at 2.1 and net debt/equity at 54%


 

Pierre-André de Chalendar, Chairman and Chief Executive Officer of Saint-Gobain, commented:

"Besides the impact of one less working day and of very average weather conditions in Europe, trading for the Group in the second quarter was also affected by the general slowdown in the economic environment in Western Europe - which the continued upturn in US construction markets could not wholly offset. In this tough climate, we maintained our priority focus on sales prices in order to pass on the rise in raw material and energy costs over the full year, and also rolled out a new cost cutting program.

We expect the business trends observed in the second quarter to continue through the second half, although Asia and emerging countries should witness timid growth. Against this backdrop, in the second half of 2012 we are firmly reinforcing our new action plan: focusing on sales prices, stepping up our cost cutting program and scaling back our capital spending and financial investments compared to second-half 2011, while maintaining a tight rein on operating working capital.

Overall, in view of the deterioration in the economic climate since the beginning of 2012,we are now expecting for the year as a whole a measured rise in our sales prices, a limited decline in our volumes, and second-half operating income to be moderately down on our first-half performance. In addition, we confirm our target of maintaining high levels of free cash flow and a strong balance sheet."

  1. Excluding capital gains and losses on disposals, asset write-downs and material non-recurring provisions.
  2. Working Capital Requirement.


 

Excluding the tax effect of capital gains and losses on disposals, asset write-downs and material non-recurring provisions.

Operating performance

Overall, after a broadly satisfactory first quarter in line with the economic scenario anticipated by the Group early in the year, the second quarter was hit by a deterioration in the economic climate in Western Europe. This was particularly pronounced from May onwards, and was exacerbated by fewer working days than in 2011 (one day less; three days less in France in May), and by very average weather conditions. Sales were down 2.3% on a like-for-like basis (down 4.2% in terms of volumes and up 1.9% in terms of prices). With the exception of High-Performance Materials (HPM) and Packaging (Verallia), all of the Group's Business Sectors and Divisions suffered from a slowdown in the residential new-build and automotive markets in Western Europe. In addition, Asia and emerging countries showed no tangible signs of recovery in this second quarter. Flat Glass - which generates almost all of its sales in Western Europe and in Asia and emerging countries - was particularly hard hit by these adverse market conditions.

On a more positive note, the gradual recovery in residential construction across North America continued apace, while industrial output and capital spending performed well.

Amid a tougher economic environment than at the beginning of 2012, and in view of the hike in raw material and energy costs in this first half, sales prices remained a clear priority for the Group throughout the six months to June 30, and gained 2.2% (2.6% excluding Flat Glass).

Overall, like-for-like sales for the Group slipped 0.8% in the first six months of 2012, with volumes down 3.0% and prices up 2.2%.

Despite profitability gains in North America, the Group's operating margin narrowed to 7.0% for first-half 2012 compared to 8.2% for the same period in 2011, due mainly to sluggish sales volumes (chiefly in Western Europe) and to a sharply negative price/cost spread in Flat Glass.

1) Performance of Group Business Sectors

Along the lines of the first quarter, Innovative Materials sales fell 3.1% on a like-for-like basis over the first half, reflecting challenging market conditions in Flat Glass. High-Performance Materials delivered timid growth gains amid robust trading on most industrial markets worldwide - except automotive in Western Europe and solar power. Hit by slack profitability in Flat Glass, the operating margin for the Business Sector narrowed to 8.4% from 12.5% one year earlier.

  • Flat Glass sales retreated 6.5% on a like-for-like basis over the first half owing to the combined adverse impact of several factors: a contraction in automotive production in Western Europe, the collapse of the solar market, a fall in prices (especially float glass) and a steep rise in raw material and energy costs. As a result, the operating margin for the business narrowed sharply, to 2.1% of sales from 9.5% in first-half 2011.

 

  • HPM delivered timid 1.4% organic growth over the first half - after an acceleration in the second quarter (up 2.6%) - thanks to the upward momentum in its sales prices. The operating margin - up against a record-high of 16.4% in the six months to June 30, 2011 - advanced compared to second-half 2011 (14.9%), at 15.6%.

 

Construction Products (CP) sales inched down 0.3% on a like-for-like basis, hit by the slowdown in sales volumes in Western Europe and in Asia, particularly in the second quarter. As a result, the operating margin fell to 8.8% from 9.7% in first-half 2011.

  • Interior Solutions saw organic growth creep up 0.7% over the first half, on the back of vigorous sales price momentum (especially in the US), which helped offset the earnings impact of rising energy and raw material costs. Volumes were upbeat in North - and especially South - America, but retreated in both Western and Eastern Europe, and to a lesser extent in Asia. The operating margin improved, up to 8.7% of sales from 7.9% in first-half 2011.

 

  • Exterior Solutions saw sales slip 1.2% on a like-for-like basis, hit by the steep decline in Pipe sales - which could not be offset by growth in other Exterior Solutions businesses. Exterior Products continued to benefit from the upturn in the US housing market, reporting a robust rise in sales, owing chiefly to moves by building merchants in the first quarter to build up inventories. Industrial Mortars sales were once again driven by Asia and emerging countries, where the business delivered double-digit organic growth over the first half. For the Division as a whole, sales prices remained upbeat over the six months to June 30, 2012, but failed to fully offset the hike in raw material and energy costs affecting the Pipe business. As a result, the operating margin narrowed, to 8.9% of sales versus 11.1% in the same year-ago period.

 

Building Distribution reported a slight 0.6% decrease in like-for-like sales as organic growth retreated in the second quarter (down 2.5%), with sales growth in Germany, Scandinavia and the US more than offset by sluggish trading in France and the UK along with persistent difficulties in Southern Europe and Benelux. The operating margin for the Business Sector improved, up to 3.9% from 3.6% in first-half 2011.

Packaging (Verallia) delivered 3.0% organic growth over the first half, spurred by bullish trends in sales prices in its main markets. Trading remained robust in the US, France and Germany, but slackened in Southern and Eastern Europe. The operating margin fell to 10.8% of sales versus 12.4% in first-half 2011, mainly reflecting difficulties in Southern Europe and the time needed to feel the full benefit of efforts to pass costs on to prices.

2) Analysis by geographic area

Along the lines of the first quarter, stark contrasts persisted and deepened between Western Europe, where trading slowed, and North America, which delivered buoyant organic growth over the first half. Trading in Asia and emerging countries was up slightly, concealing widely contrasting performances from one country to the next. Profitability improved in North America but retreated in Western Europe and in Asia and emerging countries.

  • France and other Western European countries reported a decline in like-for-like sales, of 2.9% and 3.2%, respectively, due mainly to a double-digit fall in Flat Glass and Pipe sales. Other Construction Products divisions were also impacted overall in the second quarter by the souring economic environment in Western Europe, exacerbated by very average weather conditions and by fewer working days than in first-half 2011. In contrast, HPM, Building Distribution and Packaging (Verallia) sales held firm. The operating margin slipped both in France and in other Western European countries, down to 5.7% and 6.0%, respectively (versus 7.2% and 6.2%, respectively, in first-half 2011).

 

  • North America delivered 4.7% organic growth. This reflects a positive contribution from all Business Sectors and particularly Construction Products (CP), lifted by the gradual recovery of the residential construction market. This upturn was especially strong in the first quarter, as builders' merchants built up their inventories. Sales prices advanced sharply over the first half, on the back of further price rises implemented since the beginning of the year. The operating margin continued to recover, up to 11.6% (from 11.2% in first-half 2011).

 

  • Sales for Asia and emerging countries inched up 1.2% on a like-for-like basis, as the downturn in our Asian operations - particularly Flat Glass and Pipe - was offset by a resilient performance from Latin America and by a timid recovery in Eastern Europe. The operating margin fell sharply, due mainly to challenging market conditions in Flat Glass, to stand at 6.1% of sales compared to 10.1% one year earlier.

 

Analysis of the interim consolidated financial statements for first-half 2012

The interim consolidated financial statements set out below were authorized for issue by the Board of Directors on July 26, 2012:

 
                                                     H1 2011 H1 2012 % change
                                                      EURm    EURm
 
    Sales and ancillary revenue                       20,875  21,590    +3.4%
 
    Operating income                                   1,720   1,512   -12.1%
 
    EBITDA (op. inc. + operating
    depreciation/amortization)                         2,479   2,284    -7.9%
    Non-operating costs                                 (150)   (224)  +49.3%
    Capital gains and losses on disposals, asset
    write-downs,
    corporate acquisition fees and earn-out payments    (114)   (135)  +18.4%
 
    Business income                                    1,456   1,153   -20.8%
 
    Net financial expense                               (298)   (356)  +19.5%
    Income tax                                          (352)   (285)  -19.0%
    Share in net income of associates                      4       4    +0.0%
    Income before minority interests                     810     516   -36.3%
    Minority interests                                   (42)    (10)  -76.2%
 
    Recurring[1] net income                              902     651   -27.8%
    Recurring[1] earnings per share[2] (in EUR)         1.68    1.23   -26.8%
    Net income                                           768     506   -34.1%
    Earnings per share[2] (in EUR)                      1.43    0.95   -33.6%
 
    Operating depreciation and amortization              759     772    +1.7%
    Cash flow from operations[3]                       1,721   1,462   -15.0%
    Cash flow from operations excluding capital
    gains tax[4]                                       1,697   1,424   -16.1%
    Capital expenditure                                  641     754   +17.6%
 
                                                       1,056
    Free cash flow (excluding capital gains tax)[4]              670   -36.6%
 
    Investments in securities                            182     277   +52.2%
    Net debt                                           9,055   9,828    +8.5%


(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 at June 30 (531,052,614 shares in 2012 versus 535,334,213 in 2011). Based on the weighted average number of shares outstanding (526,833,258 shares in first-half 2012 versus 526,306,335 shares in first-half 2011), recurring earnings per share comes out at €1.24 (versus €1.71 in first-half 2011), and earnings per share comes out at €0.96 (versus €1.46 in first-half 2011).

(3) Excluding material non-recurring provisions.

(4) Excluding the tax effect of capital gains and losses on disposals, asset write-downs and material non-recurring provisions.


 

Sales advanced 3.4% to €21,590 million, compared to €20,875 million in first-half 2011. Exchange rate fluctuations had a positive 1.6% impact, mainly resulting from gains in the US dollar and pound sterling against the euro. Changes in Group structure also had a positive 2.6% impact, chiefly reflecting the consolidation of Build Center and Brossette with effect from November 1, 2011 and April 1, 2012, respectively, and the acquisition of Solar Gard in October 2011.

On a like-for-like basis (constant Group structure and exchange rates), sales edged down 0.8%, with the 2.2% rise in sales prices failing to fully offset the 3.0% decline in volumes.

Operating income was down 12.1%, hurt by lower sales volumes and a sharply negative price/cost spread in Flat Glass. As a result, the operating margin narrowed, to 7.0% of sales (9.1% excluding Building Distribution), versus 8.2% (11.3% excluding Building Distribution) in first-half 2011.

EBITDA (operating income + operating depreciation and amortization) retreated 7.9%. The consolidated EBITDA margin came in at 10.6% of sales (14.1% excluding Building Distribution), versus 11.9% (16.4% excluding Building Distribution) in the first six months of 2011.

Non-operating costs rose almost 50%, driven by the rise in restructuring costs, up to €224 million from €150 million in first-half 2011. This amount includes a €45 million accrual to the provision for asbestos-related litigation at CertainTeed in the US (i.e., 50% of the 2011 accrual).

The net balance of capital gains and losses on disposals, asset write-downs, and corporate acquisition fees was a negative €135 million. This amount includes €66 million in gains on asset disposals and €193 million in asset write-downs. Most of these write-downs result from the restructuring plans and site closures implemented during the period, and chiefly concern Flat Glass (for €116 million) as well as certain Building Distribution and Construction Products businesses in Spain.

Business income fell 20.8% to €1,153 million after taking into account the items mentioned above (non-operating costs, capital gains and losses on disposals and asset write-downs).

Net financial expense increased 19.5% or €58 million to €356 million, up from €298 million in first-half 2011, due chiefly to the increase in average net debt over the period. The average cost of gross debt remained stable year-on-year, at 4.9%.

In line with pre-tax income trends, income tax was down 19.0%, from €352 million to €285 million. The tax rate applicable to recurring net income was 32.7%, versus 28% in first-half 2011.

Recurring net income (excluding capital gains and losses, asset write-downs and material non-recurring provisions) fell 27.8% on first-half 2011 to €651 million. Based on the number of shares outstanding at June 30, 2012 (531,052,614 shares versus 535,334,213 shares at June 30, 2011), recurring earnings per share came out at €1.23, down 26.8% on the same year-ago period (€1.68).

Net income totaled €506 million, a decline of 34.1% on first-half 2011. Based on the number of shares outstanding at June 30, 2012 (531,052,614 shares versus 535,334,213 shares at June 30, 2011), earnings per share came out at €0.95, down 33.6% on first-half 2011 (€1.43).

Capital expenditure climbed 17.6% to €754 million from €641 million in first-half 2011, representing 3.5% of sales (3.1% of sales in first-half 2011). Almost half of capital spending consisted of growth Capex, around 80% of which related to selective growth projects in Asia and emerging countries and to businesses related to energy efficiency markets.

Cash flow from operations came in at €1,462 million, down 15.0% on first-half 2011. Before the tax impact of capital gains and losses on disposals and asset write-downs, cash flow from operations contracted 16.1% to €1,424 million, from €1,697 million in first-half 2011.

Given the increase in capital spending:

- free cash flow (cash flow from operations less capital expenditure) was down 34.4% to €708 million. Before the tax impact of capital gains and losses on disposals and asset write-downs, free cash flow fell 36.6% to €670 million, or 3.1% of sales (versus 5.1% of sales in first-half 2011);

- the difference between EBITDA and capital expenditure was €1,530 million, 16.8% less than in first-half 2011 (€1,838 million), and represented 7.1% of sales (8.8% in the same period one year earlier).

Operating working capital requirements (WCR) improved sharply: amid a trading downturn, operating WCR fell 5.1 days over 12 months to stand at 41.5 days' sales at June 30, 2012, a figure never yet achieved by the Group at June 30. This represents a gain of €340 million over 12 months, primarily as a result of action taken on inventories in the six months to June 30.

Consequently, cash generation (free cash flow + change in operating WCR) jumped 21% over the last 12 months to €1,367 million, versus €1,129 million at June 30, 2011.

Investments in securities totaled €277 million, a 52.2% rise on first-half 2011 (€182 million), mainly reflecting selective acquisitions signed in late 2011 on energy efficiency markets and in Building Distribution.

Net debt came in 8.5% higher year-on-year at €9.8 billion. Over the last 12 months, although free cash flow generation (after changes in operating working capital requirements) was 21% up on first-half 2011, it was unable to fully finance financial investments, the 2011 dividend payment of €646 million, and share buybacks for €183 million. Net debt represented 54% of consolidated equity versus 50% at June 30, 2011. The net debt to EBITDA ratio came out at 2.1, compared to 1.8 at end-June 2011.

Update on asbestos claims in the US                             

Some 2,000 claims were filed against CertainTeed in the first half of 2012 (as in first-half 2011). At the same time, 7,000 claims were settled (versus 4,000 in first-half 2011), bringing the total number of outstanding claims to 47,000 at June 30, 2012 versus 52,000 at December 31, 2011.

A total of USD 70 million in indemnity payments were made in the US in the 12 months to June 30, 2012, versus USD 82 million in the 12 months to December 31, 2011.

Action plan to address the deteriorating economic environment    

To address the deterioration in the economic environment observed in the second quarter of 2012, Saint-Gobain:

  • continued to give priority to sales prices, which rose 2.2% over the first half (and 2.6% excluding Flat Glass);

 

  • rolled out new cost cutting measures (particularly in Flat Glass), with cost savings in the first half totaling €170 million in Western Europe and in Asia and emerging countries (chiefly in Flat Glass and Pipe). For the year as a whole, this program will lead to cost savings of €500 million, and its full-year impact (in 2013) will be €750 million (calculated on the 2011 cost base);

 

  • slashed its operating working capital requirements (WCR), with a gain of 5.1 days (€340 million) over the last 12 months, representing an improvement of 21% in cash generated (free cash flow + change in operating WCR) over the past 12 months, at €1,367 million;

 

  • put any new acquisition projects on hold (after having completed the acquisitions signed in late 2011 during the first half of 2012, for example Brossette).

 

This action plan will be pursued and firmly reinforced throughout the second half of 2012.

Outlook and objectives for full-year 2012

After a second quarter dampened by the deteriorating economic climate, especially in Europe, the Group expects the economic environment to remain tough overall in the second half of the year:

  • in Western Europe, the automotive market should remain sluggish, while trading on other industrial markets should hold firm. The new-build and renovation markets should continue to slow, with stark contrasts persisting from one country to the next;

 

  • in North America, industrial markets should enjoy further strong momentum, while construction markets look set to continue their gradual recovery;

 

  • in Asia and emerging countries, growth is expected to pick up slowly;

 

  • lastly, household consumption markets should hold firm across all regions.

 

Against this backdrop, trading for the Group is expected to remain subdued, despite a more favorable basis for comparison and positive seasonal effect than in the first six months of 2012.

In the second half, the Group will therefore press ahead with its action plan, by:

  • continuing to give priority to sales prices in order to pass on the rise in raw material and energy costs over the year as a whole;

 

  • pursuing its new cost cutting measures, with additional savings of €160 million in the second half, representing total cost savings of €500 million over the year as a whole and a full-year impact (in 2013) of €750 million (calculated on the 2011 cost base). This program will remain primarily focused on Europe;

 

  • maintaining a strict cash management policy, with a decrease in capital expenditure and financial investments (down €200 million and €350 million, respectively, in the second half compared to second-half 2011);

 

  • keeping a tight rein on operating working capital.

 

As a result of the above, and given the deterioration in the global economy since the start of the year, for full-year 2012 the Group is now expecting:

- a measured rise in its sales prices;

- a limited decline in its volumes;

-    second-half operating income to be moderately down on operating income for first-half 2012;

- continuing high levels of free cash flow and a strong balance sheet.

Forthcoming results announcement

- Sales for the first nine months of 2012: October 25, 2012, after close of trading on the Paris Bourse.

  *    *    *

    Appendix 1: Results by business sector and geographic area
 
                                                   Change on    Change on     Change on
    I. SALES                 H1 2011   H1 2012      an actual  a comparable  a comparable
                           (in EUR m) (in EUR m)   structure    structure  structure and
                                                     basis        basis     currency basis
    By sector and division:
    Innovative Materials (1)   4,827    4,853         +0.5%           -1.6%          -3.1%
    Flat Glass                 2,764    2,597         -6.0%           -6.7%          -6.5%
    High-Performance Materials 2,082    2,272         +9.1%           +5.1%          +1.4%
    Construction Products (1)  5,713    5,903         +3.3%           +1.9%          -0.3%
    Interior Solutions         2,721    2,846         +4.6%           +2.5%          +0.7%
    Exterior Solutions         3,017    3,084         +2.2%           +1.5%          -1.2%
    Building Distribution      9,043    9,456         +4.6%           +0.4%          -0.6%
    Packaging (Verallia)       1,818    1,908         +5.0%           +5.5%          +3.0%
    Internal sales and misc.    -526     -530          n.m.            n.m.           n.m.
    Group Total               20,875   21,590         +3.4%           +0.8%          -0.8%
    (1) including 
    intra-sector eliminations
 
    By geographic area:
    France                     6,138    6,148         +0.2%           -2.9%          -2.9%
    Other Western 
    European countries         8,828    8,901         +0.8%           -1.6%          -3.2%
    North America              2,772    3,192        +15.2%          +13.1%          +4.7%
    Emerging countries 
    and Asia                   4,149    4,263         +2.7%           +0.2%          +1.2%
    Internal sales            -1,012     -914          n.m.            n.m.           n.m.
    Group Total               20,875   21,590         +3.4%           +0.8%          -0.8%
 
                                                                                    H1 2012
                            H1 2011   H1 2012                       H1 2011        (in % of
                          (in EUR m) (in EUR m)    Change on    (in % of sales)     sales)
    II. OPERATING INCOME                           an actual
                                                 structure basis
    By sector and division:
    Innovative Materials         602      408         -32.2%          12.5%           8.4%
    Flat Glass                   261       54         -79.3%           9.5%           2.1%
    High-Performance Materials   341      354          +3.8%          16.4%          15.6%
    Construction Products        552      520          -5.8%           9.7%           8.8%
    Interior Solutions           216      247         +14.4%           7.9%           8.7%
    Exterior Solutions           336      273         -18.8%          11.1%           8.9%
    Building Distribution        327      370         +13.1%           3.6%           3.9%
    Packaging (Verallia)         226      207          -8.4%          12.4%          10.8%
    Miscellaneous                 13        7           n.m.           n.m.           n.m.
    Group Total                1,720    1,512         -12.1%           8.2%           7.0%
 
    By geographic area:
    France                       442      349         -21.0%           7.2%           5.7%
    Other Western 
    European countries           551      534          -3.1%           6.2%           6.0%
    North America                310      370         +19.4%          11.2%          11.6%
    Emerging countries 
    and Asia                     417      259         -37.9%          10.1%           6.1%
    Group Total                1,720    1,512         -12.1%           8.2%           7.0%
 
                                                                                   H1 2012
                            H1 2011   H1 2012                       H1 2011       (in % of
                          (in EUR m) (in EUR m)    Change on    (in % of sales)     sales)
    III. BUSINESS INCOME                           an actual
                                                structure basis
    By sector and division:
    Innovative Materials         475      265         -44.2%           9.8%           5.5%
    Flat Glass                   189      -76        -140.2%           6.8%          -2.9%
    High-Performance Materials   286      341         +19.2%          13.7%          15.0%
    Construction Products        504      452         -10.3%           8.8%           7.7%
    Interior Solutions           195      205          +5.1%           7.2%           7.2%
    Exterior Solutions           309      247         -20.1%          10.2%           8.0%
    Building Distribution        267      275          +3.0%           3.0%           2.9%
    Packaging (Verallia)         220      201          -8.6%          12.1%          10.5%
    Miscellaneous              -10(a)   -40(a)          n.m.           n.m.           n.m.
    Group Total                1,456    1,153         -20.8%           7.0%           5.3%
 
    By geographic area:
    France                       418      329         -21.3%           6.8%           5.4%
    Other Western 
    European countries           432      320         -25.9%           4.9%           3.6%
    North America              208(a)   308(a)        +48.1%           7.5%           9.6%
    Emerging countries 
    and Asia                     398      196         -50.8%           9.6%           4.6%
    Group Total                1,456    1,153         -20.8%           7.0%           5.3%
    (a) after asbestos-related charge (before tax) 
    of EUR48.5m in H1 2011 and EUR45m in H1 2012
 
                                                                                   H1 2012
                             H1 2011    H1 2012                       H1 2011     (in % of
                           (in EUR m)  (in EUR m)    Change on    (in % of sales)   sales)
    IV. CASH FLOW                                    an actual
                                                   structure basis
    By sector and division:
    Innovative Materials         600      392         -34.7%          12.4%           8.1%
    Flat Glass                   285      102         -64.2%          10.3%           3.9%
    High-Performance Materials   315      290          -7.9%          15.1%          12.8%
    Construction Products        424      377         -11.1%           7.4%           6.4%
    Building Distribution        252      255          +1.2%           2.8%           2.7%
    Packaging (Verallia)         261      248          -5.0%          14.4%          13.0%
    Miscellaneous              184(a)   190(a)          n.m.           n.m.           n.m.
    Group Total                1,721    1,462         -15.0%           8.2%           6.8%
 
    By geographic area:
    France                       333      219         -34.2%           5.4%           3.6%
    Other Western 
    European countries           645      634          -1.7%           7.3%           7.1%
    North America              291(a)   321(a)        +10.3%          10.5%          10.1%
    Emerging countries 
    and Asia                     452      288         -36.3%          10.9%           6.8%
    Group Total                1,721    1,462         -15.0%           8.2%           6.8%
    (a) after asbestos-related charge (after tax) 
    of EUR30m in H1 2011 and EUR27m in H1 2012
 
                                                                                    H1 2012
                             H1 2011   H1 2012                       H1 2011       (in % of
                           (in EUR m) (in EUR m)    Change on    (in % of sales)     sales)
    V. CAPITAL EXPENDITURE                          an actual
                                                  structure basis
    By sector and division:
    Innovative Materials         323      325          +0.6%           6.7%            6.7%
    Flat Glass                   251      245          -2.4%           9.1%            9.4%
    High-Performance Materials    72       80         +11.1%           3.5%            3.5%
    Construction Products        147      203         +38.1%           2.6%            3.4%
    Interior Solutions            88      121         +37.5%           3.2%            4.3%
    Exterior Solutions            59       82         +39.0%           2.0%            2.7%
    Building Distribution         69       97         +40.6%           0.8%            1.0%
    Packaging (Verallia)          92      116         +26.1%           5.1%            6.1%
    Miscellaneous                 10       13           n.m.           n.m.            n.m.
    Group Total                  641      754         +17.6%           3.1%            3.5%
 
    By geographic area:
    France                        78      119         +52.6%           1.3%            1.9%
    Other Western 
    European countries           191      174          -8.9%           2.2%            2.0%
    North America                113      133         +17.7%           4.1%            4.2%
    Emerging countries 
    and Asia                     259      328         +26.6%           6.2%            7.7%
    Group Total                  641      754         +17.6%           3.1%            3.5%
 
                                                                                    H1 2012
                              H1 2011   H1 2012                       H1 2011      (in % of
                            (in EUR m) (in EUR m)    Change on    (in % of sales)     sales)
    VI. EBITDA                                       an actual
                                                  structure basis
    By sector and division:
    Innovative Materials         842      651         -22.7%           17.4%          13.4%
    Flat Glass                   421      214         -49.2%           15.2%           8.2%
    High-Performance Materials   421      437          +3.8%           20.2%          19.2%
    Construction Products        803      775          -3.5%           14.1%          13.1%
    Interior Solutions           374      407          +8.8%           13.7%          14.3%
    Exterior Solutions           429      368         -14.2%           14.2%          11.9%
    Building Distribution        462      505          +9.3%            5.1%           5.3%
    Packaging (Verallia)         347      333          -4.0%           19.1%          17.5%
    Miscellaneous                 25       20           n.m.            n.m.           n.m.
    Group Total                2,479    2,284          -7.9%           11.9%          10.6%
 
    By geographic area:
    France                       622      530         -14.8%           10.1%           8.6%
    Other Western 
    European countries           819      805          -1.7%            9.3%           9.0%
    North America                425      485         +14.1%           15.3%          15.2%
    Emerging countries 
    and Asia                     613      464         -24.3%           14.8%          10.9%
    Group Total                2,479    2,284          -7.9%           11.9%          10.6%



   
    Appendix 2: Sales by business sector and geographic area - Second Quarter                                                  Change on     Change on       Change on
    SALES                   Q2 2011    Q2 2012    an actual    a comparable   a comparable
                          (in EUR m) (in EUR m)   structure     structure    structure and
                                                    basis          basis     currency basis
    By sector and division:
    Innovative Materials (1)  2,441      2,472         +1.3%           -0.8%          -2.9%
    Flat Glass                1,406      1,307         -7.0%           -7.6%          -7.2%
    High-Performance 
    Materials                 1,042      1,168        +12.1%           +7.9%          +2.6%
    Construction Products (1) 3,055      3,086         +1.0%           -0.8%          -3.7%
    Interior Solutions        1,375      1,438         +4.6%           +1.0%          -1.6%
    Exterior Solutions        1,694      1,664         -1.8%           -2.2%          -5.5%
    Building Distribution     4,892      5,113         +4.5%           -1.2%          -2.5%
    Packaging (Verallia)        966       1,028        +6.4%           +7.7%          +4.3%
    Internal sales and misc.   -278       -271          n.m.            n.m.           n.m.
    Group Total              11,076     11,428         +3.2%           -0.2%          -2.3%
    (1) including intra
    -sector eliminations
 
    By geographic area:
    France                    3,228      3,252         +0.7%           -4.9%          -4.9%
    Other Western 
    European countries        4,732      4,721         -0.2%           -2.5%          -4.6%
    North America             1,471      1,673        +13.7%          +11.6%          +0.1%
    Emerging countries 
    and Asia                  2,170      2,236         +3.0%           +0.3%          +1.7%
    Internal sales             -525       -454          n.m.            n.m.           n.m.
    Group Total              11,076     11,428         +3.2%           -0.2%          -2.3%


    Appendix 3: Consolidated balance sheet
 
    (in EUR million)                                            June 30, 2012 Dec 31, 2011
 
                                ASSETS
    Goodwill                                                           11,281       11,041
    Other intangible assets                                             3,177        3,148
    Property, plant and equipment                                      14,261       14,225
    Investments in associates                                             180          167
    Deferred tax assets                                                 1,086          949
    Other non-current assets                                              329          347
 
    Non-current assets                                                 30,314       29,877
 
    Inventories                                                         6,777        6,477
    Trade accounts receivable                                           6,516        5,341
    Current tax receivable                                                139          182
    Other accounts receivable                                           1,500        1,408
    Cash and cash equivalents                                           3,488        2,949
 
    Current assets                                                     18,420       16,357
 
    Total assets                                                       48,734       46,234
 
                 Liabilities and Shareholders' equity
    Capital stock                                                       2,124        2,142
    Additional paid-in capital and legal reserve                        5,698        5,920
    Retained earnings and net income for the year                      10,431       10,654
    Cumulative translation adjustments                                   (238)        (476)
    Fair value reserves                                                    (4)         (22)
    Treasury stock                                                       (217)        (403)
 
    Shareholders' equity                                               17,794       17,815
 
    Minority interests                                                    405          403
 
    Total equity                                                       18,199       18,218
 
    Long-term debt                                                      9,746        8,326
    Provisions for pensions and other employee benefits                 3,538        3,458
    Deferred tax liabilities                                              840          893
    Provisions for other liabilities and charges                        2,156        2,143
 
    Non-current liabilities                                            16,280       14,820
 
    Current portion of long-term debt                                   1,174        1,656
    Current portion of provisions for other liabilities and charges       545          733
    Trade accounts payable                                              6,528        6,018
    Current tax liabilities                                               165          165
    Other accounts payable                                              3,447        3,562
    Short-term debt and bank overdrafts                                 2,396        1,062
 
    Current liabilities                                                14,255       13,196
 
    Total equity and liabilities                                       48,734       46,234


    Appendix 4: Consolidated cash flow statement
 
    (in EUR million)                                          H1 2012  H1 2011
 
    Net income attributable to equity holders of the parent     506      768
 
    Minority interests in net income                             10       42
    Share in net income of associates, net of dividents
    received                                                     (2)      (1)
    Depreciation, amortization and impairment of assets         964      886
    Gains and losses on disposals of assets                     (66)     (21)
    Unrealized gains and losses arising from changes in fair
    value and share-based payments                               (1)       4
    Changes in inventories                                     (117)    (692)
    Changes in trade accounts receivable and payable, and
    other accounts receivable and payable                      (679)  (1,267)
    Changes in tax receivable and payable                        38       49
    Changes in deferred taxes and provisions for other
    liabilities and charges                                    (448)    (127)
 
    Net cash from operating activities                          205     (359)
 
    Purchases of property, plant and equipment [ H1-2012:
    (754), H1-2011: (641) ] and intangible assets              (792)    (676)
    Acquisitions of property, plant and equipment in finance
    leases                                                       (7)      (4)
    Increase (decrease) in amounts due to suppliers of fixed
    assets                                                     (193)    (173)
    Acquisitions of shares in consolidated companies [
    H1-2012: (276), H1-2011: (172) ], net of debt acquired     (291)    (183)
    Acquisitions of other investments                            (1)     (10)
    Increase in investment-related liabilities                   46        2
    Decrease in investment-related liabilities                   (4)      (6)
                          Investments                        (1,242)  (1,050)
    Disposals of property, plant and equipment and
    intangible assets                                            51       65
    Disposals of shares in consolidated companies, net of
    net debt divested                                            67       (2)
    Disposals of other investments and other divestments          1        3
                          Divestments                           119       66
    Increase in loans and deposits                              (48)     (19)
    Decrease in loans and deposits                               37       19
 
    Net cash used in investing activities / divestments      (1,134)    (984)
 
    Issues of capital stock                                     125      150
    Minority interests' share in capital increases of
    subsidiaries                                                 7         1
    Increase (decrease) in investment-related liabilities
    (put on minority interests)                                (27)      (12)
    (Increase) decrease in treasury stock                     (183)     (122)
    Dividends paid                                            (646)     (603)
    Dividends paid to minority shareholders of consolidated
    subsidiaries and increase (decrease) in dividends
    payable                                                    (51)      (14)
 
    Net Cash from (used in) financing activities              (775)     (600)
 
    Increase (decrease) in net debt                         (1,704)   (1,943)
 
    Net effect of exchange rate changes on net debt            (39)       37
    Net effect from changes in fair value on net debt           10        19
 
    Net debt at beginning of period                         (8,095)   (7,168)
    Net debt at end of period                               (9,828)   (9,055)


    Appendix 5: Debt at June 30, 2012
 
    Amounts in EURbn                                           Comments
 
    Amount and structure 
    of net debt                EURbn
 
                                      At June 30, 77% of debt was at fixed interest rates;
                                      the average cost of gross debt at June 30, 2011 was
    Gross debt                 13.3                          4.9%.
    Cash & cash equivalents     3.5
    Net debt                    9.8
 
    Breakdown of gross debt    13.3
 
    Bond debt and 
    perpetual notes            10.0   Amounts and maturities below
    May 2013                    0.6
    September 2013              0.6
    April 2014                  0.5
    July 2014                   0.7
    September 2015              1.0
    May 2016                    0.7
    December 2016               0.4   (GBP 0.3bn)
    April 2017                  1.3
    June 2017                   0.2
    After 2017                  4.0
 
    Other long-term debt        0.3
 
    Short-term debt             3.0   (excluding bonds)
    Commercial paper                  
    (<3 months)                 1.4   Maximum amount of bond issue: EUR3bn
    Securitization              0.3   USD (0.35bn)
    Local debt and                    Annual rollover; several hundred different sources
    accrued interest            1.3   of financing

 
    Credit lines, cash 
    & cash equivalents          7.5
 
    Cash & cash equivalents     3.5
    Back-up credit lines        4.0   See breakdown below
 
    Breakdown of 
    back-up credit lines        4.0
 
    All lines are confirmed and undrawn with no Material Adverse Change (MAC) clause
 
                                                                             Position at
                                    Expiry            Covenants             end-June 2012
    Syndicated line: EUR3.0bn    December 2015          N/A
    Syndicated line: EUR1.0bn     June 2013      Net debt/EBITDA < 3.75          2.1


 

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