Saint-Gobain: First-half 2016 Results

Jul 28, 2016, 14:22 ET from Saint-Gobain

PARIS, July 28, 2016 /PRNewswire/ --

Organic growth in all three business sectors and in all regions  

Significant improvement in results across the board 

  • Organic growth at 2.9% with a sharp 3.5% improvement in volumes buoyed partly by the positive impact of a greater number of working days
  • Negative 0.6% price impact in a still deflationary environment in terms of prices and raw material and energy costs
  • Negative 3.5% currency impact on sales and negative 1.0% Group structure impact
  • Operating income up 7.3% on a reported basis and up 10.2% like-for-like
  • Significant 13.0% rise in recurring net income and free cash flow
  • Buyback and cancellation of around 11 million shares in the first half
  • Recurring EPS[1] up 16.5%
  • Objectives for full-year 2016 confirmed; like-for-like improvement in operating income expected in the second half versus second-half 2015

   
                                                          Change

    (EURm)                    H1 2015 H1 2016  Change  like-for-like

    Sales                      19,860  19,549   -1.6%      +2.9%

    EBITDA                      1,886   1,957   +3.8%

    Operating income            1,275   1,368   +7.3%     +10.2%

    Recurring net income[2]      552     624   +13.0%

    Free cash flow[3]            728     823   +13.0%

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

"Saint-Gobain's sales for first-half 2016 confirm our February forecasts, with France stabilizing and all regions making a strong contribution to growth. Our strategy of investing in emerging markets provides us with a diversified platform for profitable growth. Our first-half results also benefited from efforts to optimize our operations, particularly in Western Europe, and from upbeat trading in the US. The results are in line with our objectives and we expect a like-for-like improvement in operating income for second-half 2016 versus second-half 2015. While the June 23 Brexit vote in the UK has created a climate of uncertainty, it does not affect our objectives." 

  1. Recurring earnings per share from continuing operations. 
  2. Recurring net income from continuing operations excluding capital gains and losses on disposals, asset write-downs and material non-recurring provisions. 
  3. 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 

Operating performance 

First-half sales came in at €19,549 million, including a significant 3.5% negative currency impact resulting namely from the depreciation of Latin American currencies - and to a lesser extent the pound sterling - against the euro.

The negative 1.0% Group structure impact is a result of the disposals carried out in 2015 aimed at optimizing the Building Distribution portfolio.

On a like-for-like basis, sales were up 2.9% on the back of 3.5% volume growth driven partly by the positive impact of a greater number of working days in the second quarter (estimated impact of just over +1% in the first half). All Business Sectors and regions delivered volume growth. In a still deflationary environment in terms of raw material and energy costs, prices remained slightly down, losing 0.6% over the six months to June 30.

The Group's operating income climbed 7.3% on a reported basis and 10.2% like-for-like. The Group's operating margin[1] rallied to 7.0%, gaining 0.6 percentage points compared to first-half 2015. All Business Sectors reported margin growth, particularly in industry and to a lesser extent Building Distribution, which was hit by the deflationary environment.

Performance of Group Business Sectors 

Innovative Materials like-for-like sales moved up 4.4%, powered by Flat Glass. There was a further significant improvement in the Business Sector's operating margin, which came in at 11.2% versus 10.2% one year earlier.

  • The second quarter confirmed the upbeat trends seen early in the year in Flat Glass, which posted 6.5% organic growth over the first half. Automotive glass continued to enjoy good momentum in all regions except Brazil. Construction markets remained upbeat in Asia and emerging countries and benefited from the upturn in volumes in Western Europe and a rise in float glass prices. The operating margin continued to recover, at 8.8% versus 7.4% in first-half 2015, buoyed by additional volumes and improved operating leverage.
  • High-Performance Materials (HPM) like-for-like sales rose 2.0% over the first six months of 2016. Plastics and Textile Solutions performed well; Abrasives delivered organic growth led by prices. Ceramics contracted in the three months to June 30 after a first quarter boosted by high levels in refractories. The operating margin widened to 14.0% from 13.5% in first-half 2015.

Construction Products (CP) like-for-like sales advanced 1.6% over the first half lifted by Interior Solutions, which drove a significant improvement in the Business Sector's operating margin, up to 9.4% compared to 8.7% for the same period in 2015.

  • Interior Solutions posted 5.2% organic growth in the first half on the back of strong market positions, which allowed it to benefit from good trading in all regions. In a still deflationary environment, volumes proved upbeat in Western Europe (partly helped by the positive impact of a greater number of working days) and in North America. Asia and emerging countries confirmed their good performance as well as the merits of the growth operations carried out in this region over the past few years. The operating margin climbed to 10.2% from 9.0% in first-half 2015.

  1. Operating margin = operating income expressed as a percentage of sales.

  • Exterior Solutions like-for-like sales retreated 2.0% over the first half, due solely to the expected decline in Pipe, which was hit by contracting markets in its main regions. However, Exterior Solutions stabilized in the second quarter, helped by an acceleration in volumes for Roofing in the US. Mortars reported organic growth led by Asia and emerging countries and by the improvement in Western Europe, which offset tougher conditions in Brazil. Overall, the operating margin steadied at 8.3%.

Building Distribution like-for-like sales rose 3.1%, with the second-quarter performance buoyed by the positive impact of a greater number of working days. Trading in France benefited from the first signs of an upturn in new-builds, while the renovation market remains sluggish. Germany, the UK and especially Nordic countries continued to report good volume trends. Amid a fall in the cost of goods sold in Europe, prices were down - particularly in France and the UK. The sharp economic slowdown in Brazil continued to take its toll on trading.

The operating margin came in at 2.8% versus 2.6% in first-half 2015, benefiting from an upturn in volumes in Europe but affected by a deflationary environment.

Analysis by region  

    The Group delivered organic growth in all of its regions in the first half, as trends observed earlier in the first quarter continued in the three months to June 30.

  • France saw confirmation of stabilizing business over the first half, posting organic growth of 0.6% buoyed by the positive impact of a greater number of working days in the second quarter. New-build activity showed the first signs of improvement, while the renovation market remains sluggish for the time being. The decline in Pipe weighed on first-half results. The operating margin narrowed slightly to 2.4%, hit by the deterioration in Pipe.
  • Other Western European countries advanced 4.3% over the six months to June 30, with organic growth picking up pace in the second quarter. Besides the positive impact of a greater number of working days, this advance reflects good market conditions in all of the Group's main countries. The region's operating margin continued to rally, at 5.9% versus 5.4% in first-half 2015.
  • North America reported a 3.6% rise in like-for-like sales in the first half, in line with the three months to March 31. Activity in the construction market again proved upbeat, while industrial markets remained uncertain. The operating margin rallied sharply, up to 11.6% versus 9.5% in first-half 2015, powered by the strong advance in Roofing.
  • Asia and emerging countries reported further good organic growth, at 4.9% for the first half, led by Eastern Europe and Latin America, despite the slowdown in Brazil. Asia was up, with trading bullish in India, despite a downturn in China. The operating margin continued to improve, at 10.6% of sales versus 10.0% one year earlier.

Analysis of the consolidated financial statements for first-half 2016 

The unaudited interim consolidated financial statements for first-half 2016 were subject to a limited review by the statutory auditors and were approved and adopted by the Board of Directors on July 28, 2016.


   
                                                                     %

                                                  H1 2015 H1 2016 change
    EURm                                            (A)     (B)   (B)/(A)

    Sales and ancillary revenue                    19,860  19,549   -1.6%

    Operating income                                1,275   1,368    7.3%
    Operating depreciation and amortization           611     589   -3.6%
    EBITDA (op. inc. + operating depr./amort.)      1,886   1,957    3.8%

    Non-operating costs                             (154)   (180)   16.9%
    Capital gains and losses on disposals, asset
    write-downs, corporate acquisition fees and
    earn-out payments                                (41)    (32)  -22.0%
    Business income                                 1,080   1,156    7.0%
    Net financial expense                           (328)   (287)  -12.5%
    Income tax                                      (236)   (261)   10.6%
    Share in net income of associates                   0       2    n.s.
    Net income from continuing operations             516     610   18.2%
    Net income from discontinued operations            69       0    n.s.
    Net income before minority interests              585     610    4.3%
    Minority interests                                 27      14  -48.1%
    Net attributable income                           558     596    6.8%
    Earnings per share[2] (in EUR)                   0.98    1.08   10.2%
    Net attributable income from continuing
    operations                                        493     596   20.9%

    Recurring net income from continuing
    operations[1]                                     552     624   13.0%
    Recurring earnings per share[2] from
    continuing operations[1] (in EUR)                0.97    1.13   16.5%

    Cash flow from operations[3]                    1,195   1,260    5.4%
    Cash flow from operations (excluding capital
    gains tax)[4]                                   1,185   1,251    5.6%
    Capital expenditure                               457     428   -6.3%

    Free cash flow[5]                                 728     823   13.0%

    Investments in securities                          92      68  -26.1%
    Net debt                                        7,995   6,624  -17.1%


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 (552,574,120 in 2016, versus 569,364,905 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) - tax impact of capital gains and losses on disposals, asset write-downs and material non-recurring provisions.

5. Free cash flow = (4) - capital expenditure of continuing operations.


Consolidated sales advanced 2.9% like-for-like, buoyed by volume growth and despite a negative 0.6% price effect in a deflationary environment. On a reported basis, sales were down 1.6%, with a negative 3.5% currency impact chiefly resulting from the depreciation of Latin America currencies - and to a lesser extent the pound sterling - against the euro. The negative 1.0% Group structure impact essentially reflected disposals carried out in the Building Distribution business in 2015.

Operating income climbed 7.3% based on reported figures, despite a negative currency impact. The operating margin improved to 7.0% of sales versus 6.4% in first-half 2015, buoyed by margin gains in all Business Sectors.

EBITDA (operating income + operating depreciation and amortization) was up 3.8% to €1,957 million, and the EBITDA margin came in at 10.0% of sales versus 9.5% in first-half 2015.

Non-operating costs totaled €180 million, with a rise in restructuring costs compared to the same period in 2015 owing to the roll-out of certain projects earlier than planned. The Group maintains its forecast of a slight decrease in restructuring costs for the year as a whole. The €45 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 an expense of just €32 million versus an expense of €41 million in first-half 2015. In line with the increase in operating income, business income climbed 7.0% to €1,156 million.

Net financial expense improved significantly, down 12.5% to €287 million from €328 million, mainly reflecting the decrease in net debt; the cost of gross debt remained at 3.9% at June 30, 2016, in line with end-2015.

The income tax rate on recurring net income remained stable at 30%. Income tax expense totaled €261 million (€236 million in first-half 2015).

Recurring net income (excluding capital gains and losses on disposals, asset write-downs and material non-recurring provisions) jumped 13.0% to €624 million.

Net attributable income was up 6.8% to €596 million but jumped 20.9% excluding net income relating to Verallia in 2015.

Capital expenditure fell to €428 million including a negative currency impact (€457 million for the same period in 2015). Capex represented 2.2% of sales compared to 2.3% in the same period one year earlier.

Cash flow from operations rose 5.4% to €1,260 million; before the tax impact of capital gains and losses on disposals, asset write-downs and material non-recurring provisions, cash flow from operations advanced 5.6% to €1,251 million and free cash flow rose 13.0% to €823 million (4.2% of sales versus 3.7% in first-half 2015).

The difference between EBITDA and capital expenditure improved, up 7.0% to €1,529 million (€1,429 million in first-half 2015), representing 7.8% of sales (7.2% in first-half 2015).

Operating working capital requirements (operating WCR) totaled €4,244 million (€4,448 million at June 30, 2015) and represented 39.1 days' sales, an improvement of 1.7 days  ear-on-year, owing chiefly to the decrease in inventories.

Investments in securities were limited, at €68 million (€92 million in first-half 2015) and correspond to small-scale acquisitions in the three business sectors.

Net debt fell 17.1% from €8.0 billion at June 30, 2015 to €6.6 billion at June 30, 2016, reflecting the favorable impact of the Verallia disposal in second-half 2015, partly offset by the dividend paid out in June 2016 compared to the payment in July 2015, and by the €857 million in share buybacks over the last two half-year periods. Net debt represents 36% of consolidated equity, compared to 40% at end-June 2015.

The net debt to EBITDA ratio on a rolling 12-month basis came in at 1.7, compared to 2.1 one year earlier.

Update on asbestos claims in the US                              

Some 1,700 claims were filed against CertainTeed in the first half of 2016 (versus 2,000 claims in first-half 2015).

At the same time, around 2,100 claims were settled (versus 2,000 in first-half 2015), bringing the total number of outstanding claims at June 30, 2016 to around 35,200, down slightly on December 31, 2015 (35,600 claims).

A total of USD 89 million in indemnity payments were made in the US in the 12 months to June 30, 2016, versus USD 65 million in the year to December 31, 2015, reflecting the catch-up in payments in respect of settlements still to be documented.

2016 outlook and action priorities 

After a first half in line with our forecasts, our outlook for the second half is as follows:

  • France should gradually benefit from the recovery in new-builds after stabilizing over the six months to June 30.
  • Other Western European countries should continue to deliver growth, even though the UK could be hit by uncertainties following the June 23 Brexit vote.
  • North America should advance despite uncertainty in industrial markets.
  • Asia and emerging countries should continue to see good organic growth for our businesses, despite the contraction in Brazil.

The Group confirms its action priorities for the year as a whole:

  • keep its priority focus on sales prices in a deflationary environment;
  • unlock additional savings of around €250 million (calculated on the 2015 cost base), including €150 million in the first half;
  • pursue a capital expenditure program of around 1,400 million;
  • renew its commitment to invest in R&D in order to support its strategy of differentiated, high value-added solutions;
  • keep its priority focus on high free cash flow generation;
  • pursue its plan to acquire a controlling interest in Sika.

In line with its long-term objectives, the Group bought back 10.9 million shares and canceled 11 million shares in the first six months of 2016.

The Group confirms its objectives for 2016 and expects a like-for-like improvement in operating income in the second half versus second-half 2015. 

Financial calendar 

- An information meeting will be held at 8:30am (GMT + 1) on July 29, 2016 and will be broadcast live on http://www.saint-gobain.com

- Sales for the first nine months of 2016: October 27, 2016, after close of trading on the Paris Bourse.

All indicators contained in this press release (not defined in the footnotes) are explained in the notes to the financial statements in the interim financial report, available by clicking here:  https://www.saint-gobain.com/en/finance/regulated-information/half-yearly-financial-report

The glossary below shows the note of the interim financial statements in which you can find an explanation of each indicator. 

Glossary: 

Cash flow from operations :Note 3  

Net debt :Note 7  

EBITDA :Note 3  

Non-operating costs :Note 3 

Operating income :Note 3  

Net financial expense :Note 7  

Recurring net income :Note 3  

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 (http://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 any further information, please visit http://www.saint-gobain.com


   
    Appendix 1 : Results by business sector and geographic area

                                                                                                   
                                                                                                   
                                                                                  
                                                                      
                                                        Change on  Change on a   Change on
                                    H1           H1     an actual   comparable  a comparable
                                   2015         2016    structure   structure  sturcture and
                                (in EUR m)   (in EUR m)   basis       basis   currency basis
    I. SALES

    By sector and division:
    Innovative Materials [1       4,922        4,912       -0.2%       -0.4%        +4.4%
    Flat Glass                    2,633        2,656       +0.9%       +0.8%        +6.5%
    High-Performance Material     2,297        2,264       -1.4%       -1.8%        +2.0%
    Construction Products [1]     6,079        6,008       -1.2%       -2.1%        +1.6%
    Interior Solutions            3,197        3,297       +3.1%       +2.0%        +5.2%
    Exterior Solutions            2,913        2,753       -5.5%       -6.2%        -2.0%
    Building Distribution         9,338        9,104       -2.5%       +0.6%        +3.1%
    Internal sales and mi          -479         -475        n.m.        n.m.         n.m.
    Group Total                  19,860       19,549       -1.6%       -0.6%        +2.9%
    [1] including intra-sector eliminations

    By geographic area:
    France                        5,282        5,270       -0.2%       +0.6%        +0.6%
    Other Western European        8,574        8,660       +1.0%       +1.6%        +4.3%
    countries
    North America                 2,738        2,674       -2.3%       +3.1%        +3.6%
    Emerging countries and Asia   4,219        3,956       -6.2%       -6.5%        +4.9%
    Internal sales                 -953       -1,011        n.m.        n.m.         n.m.
    Group Total                  19,860       19,549       -1.6%       -0.6%        +2.9%

                                                          Change on     H1          H1
                                    H1          H1        an actual    2015        2016
                                   2015        2016       structure  (in % of    (in % of
                                (in EUR m)  (in EUR m)      basis     sales)       sales)
    II. OPERATING INCOME

    By sector and division:
    Innovative Materials            504          552       +9.5%       10.2%        11.2%
    Flat Glass                      194          234      +20.6%        7.4%         8.8%
    High-Performance Materials      310          318       +2.6%       13.5%        14.0%
    Construction Products           529          564       +6.6%        8.7%         9.4%
    Interior Solutions              288          335      +16.3%        9.0%        10.2%
    Exterior Solutions              241          229       -5.0%        8.3%         8.3%
    Building Distribution           242          253       +4.5%        2.6%         2.8%
    Misc.                             0           -1        n.m.        n.m.         n.m.
    Group Total                   1,275        1,368       +7.3%        6.4%         7.0%

    By geographic area:
    France                          136          124       -8.8%        2.6%         2.4%
    Other Western European          460          513      +11.5%        5.4%         5.9%
    countries
    North America                   259          310      +19.7%        9.5%        11.6%
    Emerging countries and Asia     420          421       +0.2%       10.0%        10.6%
    Group Total                   1,275        1,368       +7.3%        6.4%         7.0%

                                                          Change on     H1            H1
                                      H1          H1      an actual    2015          2016
                                     2015        2016     structure  (in % of     (in % of
                                  (in EUR m)   (in EUR m)   basis      sales)       sales)
    III. BUSINESS INCOME

    By sector and division:
    Innovative Materials            463          462       -0.2%        9.4%         9.4%
    Flat Glass                      181          177       -2.2%        6.9%         6.7%
    High-Performance Materials      282          285       +1.1%       12.3%        12.6%
    Construction Products           475          528      +11.2%        7.8%         8.8%
    Interior Solutions              258          319      +23.6%        8.1%         9.7%
    Exterior Solutions              217          209       -3.7%        7.4%         7.6%
    Building Distribution           196          219      +11.7%        2.1%         2.4%
    Misc. (a)                       -54          -53        n.m.        n.m.         n.m.
    Group Total                   1,080        1,156       +7.0%        5.4%         5.9%

    By geographic area:
    France                          107           90      -15.9%        2.0%         1.7%
    Other Western European          393          465      +18.3%        4.6%         5.4%
    countries
    North America (a)               200          226      +13.0%        7.3%         8.5%
    Emerging countries and Asia     380          375       -1.3%        9.0%         9.5%
    Group Total                   1,080        1,156       +7.0%        5.4%         5.9%
    (a) after asbestos-related charge (before tax) of EUR45m in H1 2016 and in H1 2015

                                                         Change on       H1           H1
                                   H1            H1      an actual      2015         2016
                                  2015          2016     structure   (in % of     (in % of
                                (in EUR m)   (in EUR m)    basis       sales)       sales)
    IV. CASH FLOW

    By sector and division:
    Innovative Materials           465           502       +8.0%        9.4%        10.2%
    Flat Glass                     221           254      +14.9%        8.4%         9.6%
    High-Performance Materials     244           248       +1.6%       10.6%        11.0%
    Construction Products          415           420       +1.2%        6.8%         7.0%
    Building Distribution          188           191       +1.6%        2.0%         2.1%
    Misc. (a)                      127           147        n.m.        n.m.         n.m.
    Group Total                  1,195         1,260       +5.4%        6.0%         6.4%

    By geographic area:
    France                          90            89       -1.1%        1.7%         1.7%
    Other Western European         470           505       +7.4%        5.5%         5.8%
    countries
    North America (a)              200           211       +5.5%        7.3%         7.9%
    Emerging countries and Asia    435           455       +4.6%       10.3%        11.5%
    Group Total                  1,195         1,260       +5.4%        6.0%         6.4%
    (a) after asbestos-related charge (after tax) of EUR27m in H1 2016 and in H1 2015

                                                         Change on      H1            H1
                                   H1            H1      an actual     2015          2016
                                  2015          2016     structure  (in % of      (in % of
                               (in EUR m)    (in EUR m)    basis      sales)        sales)
    V. CAPITAL EXPENDITURE

    By sector and division:
    Innovative Materials          165           176        +6.7%       3.4%          3.6%
    Flat Glass                     91           102       +12.1%       3.5%          3.8%
    High-Performance Materials     74            74        +0.0%       3.2%          3.3%
    Construction Products         183           164       -10.4%       3.0%          2.7%
    Interior Solutions            110           111        +0.9%       3.4%          3.4%
    Exterior Solutions             73            53       -27.4%       2.5%          1.9%
    Building Distribution          82            69       -15.9%       0.9%          0.8%
    Misc.                          27            19         n.m.       n.m.          n.m.
    Group Total                   457           428        -6.3%       2.3%          2.2%

    By geographic area:
    France                         69            81       +17.4%       1.3%          1.5%
    Other Western European        107           108        +0.9%       1.2%          1.2%
    countries
    North America                 119            81       -31.9%       4.3%          3.0%
    Emerging countries and Asia   162           158        -2.5%       3.8%          4.0%
    Group Total                   457           428        -6.3%       2.3%          2.2%

                                                          Change on     H1            H1
                                   H1           H1        an actual    2015          2016
                                  2015         2016      structure  (in % of      (in % of
    VI. EBITDA                 (in EUR m)    (in EUR m)    basis      sales)        sales)

    By sector and division:
    Innovative Materials          731           768        +5.1%      14.9%         15.6%
    Flat Glass                    347           369        +6.3%      13.2%         13.9%
    High-Performance Materials    384           399        +3.9%      16.7%         17.6%
    Construction Products         765           795        +3.9%      12.6%         13.2%
    Interior Solutions            448           491        +9.6%      14.0%         14.9%
    Exterior Solutions            317           304        -4.1%      10.9%         11.0%
    Building Distribution         374           380        +1.6%       4.0%          4.2%
    Misc.                          16            14         n.m.       n.m.          n.m.
    Group Total                 1,886         1,957        +3.8%       9.5%         10.0%

    By geographic area:
    France                        287           265        -7.7%       5.4%          5.0%
    Other Western European        650           697        +7.2%       7.6%          8.0%
    countries
    North America                 349           399       +14.3%      12.7%         14.9%
    Emerging countries and Asia   600           596        -0.7%      14.2%         15.1%
    Group Total                 1,886         1,957        +3.8%       9.5%         10.0%


   
    Appendix 2: Sales by business sector and geographic area - Second Quarter

                                                                             Change on a
                                                                              comparable
                                                       Change on  Change on a  structure
                                                       an actual  comparable      and
                                Q2 2015     Q2 2016    structure   structure   currency
                              (in EUR m)  (in EUR m)     basis       basis       basis
    SALES

    By sector and division:
    Innovative Materials [1]    2,537       2,516       -0.8%       -0.9%       +4.5%
    Flat Glass                  1,348       1,380       +2.4%       +2.2%       +8.0%
    High-Performance Materials  1,193       1,141       -4.4%       -4.5%       +0.4%
    Construction Products [1]   3,246       3,211       -1.1%       -1.9%       +2.4%
    Interior Solutions          1,656       1,688       +1.9%       +0.9%       +4.8%
    Exterior Solutions          1,606       1,545       -3.8%       -4.4%       +0.1%
    Building Distribution       5,023       4,934       -1.8%       +1.8%       +4.6%
    Internal sales and misc.     -255        -248        n.m.        n.m.        n.m.
    Group Total                10,551      10,413       -1.3%       -0.1%       +3.8%
    [1] including intra-sector eliminations

    By geographic area:
    France                      2,743       2,756       +0.5%       +1.3%       +1.3%
    Other Western European      4,584       4,684       +2.2%       +2.8%       +6.3%
    countries
    North America               1,493       1,429       -4.3%       +1.7%       +4.3%
    Emerging countries and Asia 2,215       2,072       -6.5%       -6.2%       +3.9%
    Internal sales               -484        -528        n.m.        n.m.        n.m.
    Group Total                10,551      10,413       -1.3%       -0.1%       +3.8%


   
    Appendix 3: Consolidated balance sheet

                                                          June 30, 2016  Dec 31, 2015
    in EUR million

                                Assets
    Goodwill                                                     10,457       10,683
    Other intangible assets                                       2,641        2,748
    Property, plant and equipment                                11,373       11,587
    Investments in associates                                       331          319
    Deferred tax assets                                           1,548        1,337
    Other non-current assets                                        660          635

    Non-current assets                                           27,010       27,309

    Inventories                                                   5,964        5,715
    Trade accounts receivable                                     5,906        4,751
    Current tax receivable                                          264          296
    Other accounts receivable                                     1,522        1,405
    Cash and cash equivalents                                     2,900        5,380

    Current assets                                               16,556       17,547

    Total assets                                                 43,566       44,856

                 Liabilities and Shareholders' equity
    Capital stock                                                 2,219        2,244
    Additional paid-in capital and legal reserve                  6,081        6,341
    Retained earnings and net income for the year                10,591       10,805
    Cumulative translation adjustments                             -913         -528
    Fair value reserves                                             147          181
    Treasury stock                                                  -78          -87

    Shareholders' equity                                         18,047       18,956

    Minority interests                                              360          364

    Total equity                                                 18,407       19,320

    Long-term debt                                                5,829        7,330
    Provisions for pensions and other employee benefits           4,082        3,849
    Deferred tax liabilities                                        474          466
    Provisions for other liabilities and charges                  1,298        1,276

    Non-current liabilities                                      11,683       12,921

    Current portion of long-term debt                             2,933        2,231
    Current portion of provisions for other
    liabilities and charges                                         428          454
    Trade accounts payable                                        5,699        5,716
    Current tax liabilities                                         167          150
    Other accounts payable                                        3,487        3,448
    Short-term debt and bank overdrafts                             762          616

    Current liabilities                                          13,476       12,615

    Total equity and liabilities                                 43,566       44,856


   
    Appendix 4: Consolidated cash flow statement

                                                                                H1      H1
    (in EUR million)                                                           2015    2016

    Net income of continuing operations attributable to equity holders of the
    parent                                                                      493     596

    Minority interests in net income                                             23      14
    Share in net income of associates, net of dividends received                (12)     (8)
    Depreciation, amortization and impairment of assets                         633     608
    Gains and losses on disposals of assets                                      10       9
    Unrealized gains and losses arising from changes in fair value
    and share-based payments                                                     21      34
    Changes in inventories                                                     (250)   (300)
    Changes in trade accounts receivable and payable, and other accounts    
    receivable and payable                                                   (1,128) (1,081)
    Changes in tax receivable and payable                                        24      55
    Changes in deferred taxes and provisions for other liabilities and charges   43     (29)
    Net cash from operating activities of continuing operations                (143)   (102)
    Net cash from operating activities of discontinued operations                61       0

    Net cash from operating activities                                          (82)   (102)

    Acquisitions of property, plant and equipment [ H1 2015: (457),
    H1 2016: (428)] and intangible assets                                      (511)   (480)
    Acquisitions of property, plant and equipment in finance leases              (8)     (9)
    Increase (decrease) in amounts due to suppliers of fixed assets            (135)   (111)
    Acquisitions of shares in consolidated companies [ H1 2015: (85), H1 2016:
    (56) ], net of debt acquired                                                (86)    (64)

    Acquisitions of other investments                                            (7)    (12)
    Increase in investment-related liabilities                                    4       2
    Decrease in investment-related liabilities                                  (14)     (2)
                                     Investments                               (757)   (676)
    Disposals of property, plant and equipment and intangible assets             73      31
    Disposals of shares in consolidated companies, net of net debt divested       7      25
    Disposals of other investments                                                0       1
                                     Divestments                                 80      57
    Increase in loans, deposits and short-term loans                            (84)    (72)
    Decrease in loans, deposits and short-term loans                             33      36
    Net cash from (used in) investment and divestment activities of continuing
    operations                                                                 (728)   (655)
    Net cash from (used in) investment and divestment activities of discontinued
    operations                                                                 (107)      0

    Net cash from (used in) investment and divestment activities               (835)   (655)

    Issues of capital stock                                                     394     137
    Minority interests' share in capital increases of subsidiaries               12       0
    (Increase) decrease in treasury stock                                      (104)   (416)
    Dividends paid                                                             (695)   (681)
    Increase (decrease) in dividends payable                                    455       2
    Dividends paid to minority shareholders by consolidated companies           (34)    (29)
    Net cash from (used in) financing activities of continuing operations        28    (987)
    Net cash from (used in) financing activities of discontinued operations      (1)      0

    Net Cash from (used in) financing activities                                 27    (987)

                                                                                            
    Increase (decrease) in net debt                                            (890) (1,744)

    Net effect of exchange rate changes on net debt                             (13)      1
    Net effect from changes in fair value on net debt                            33     (84)
    Net effect of exchange rate changes on net debt of discontinued operations   (3)      0
    Transfer of net debt in assets and liabilities of discontinued operations    99       0

                                                                                    
    Net debt at beginning of period                                          (7,221) (4,797)
                                                                                       
    Net debt at end of period                                                (7,995) (6,624)


   

    Appendix 5: Debt at June 30, 2016

    Amounts in EURbn                                                 Comments

    Amount and structure of net debt      EURbn

                                                  At end of June 2016, 77% of gross debt 
                                                  was at fixed interest rates and the 
    Gross debt                             9.5    average cost of gross debt was 3.9%
    Cash & cash equivalents                2.9
    Net debt                               6.6

    Breakdown of gross debt                9.5

    Bond debt and perpetual notes          7.7
    September 2016                         0.5
    December 2016                          0.4    (GBP 0.3bn)
    April 2017                             0.1    (YEN 5bn)
    April 2017                             1.2
    June 2017                              0.2
    March 2018                             0.1    (NOK 0.8bn)
    October 2018                           0.7
    September 2019                         0.9
    June 2021                              0.7
    After 2021                             2.9

    Other long-term debt                   0.5    (including EUR 0.2bn long-term
                                                   securitization)
    Short-term debt                        1.3    (excluding bonds)
    NEU CP (Negotiable European
    Commercial Paper < 3 month)            0.0    Maximum amount of bond issue: EUR3bn
    Securitization                         0.6    (EUR 0.3bn equivalent in USD + EUR 0.3bn)
                                                  

    Local debt and accrued interest        0.7    Annual rollover; several hundreds of
                                                  different sources of financing
    Credit lines, cash & cash equivalents  6.9

    Cash and cash equivalents              2.9
    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

                                      Expiry                               Covenants
    Syndicated line: EUR2.5bn         December 2020                        None
    Syndicated line: EUR1.5bn         December 2018                        None





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SOURCE Saint-Gobain