Saint-Gobain 2015 Results: Operating Income up 2.2% on a Like-for-like Basis

Feb 25, 2016, 15:33 ET from Saint-Gobain

PARIS, February 25, 2016 /PRNewswire/ --

Following the sale of the Packaging business and in accordance with IFRS 5, the business (including Verallia North America) was reclassified within "Net income from discontinued operations" in the 2014 and 2015 income statement.

  • Organic growth at 0.4% with stable volumes (up 0.1%)
  • Positive 3.0% currency impact on sales, positive impact of only 1.4% in H2; minimal Group structure impact after reclassification of the Packaging business
  • Further strong growth in net income, up 36%
  • Sharp decrease in net debt, down to €4.8 billion
  • 2015 dividend: stable at €1.24, to be paid wholly in cash


   (EURm)                           2014     2015     Change     Change
                                                               like-for-like

    Sales                          38,349    39,623     3.30%     0.40%

    EBITDA                          3,709     3,844     3.60%     0.80%

    Operating income                2,522     2,636     4.50%     2.20%

    Recurring[1] net income           973     1,165    19.70%

    Net income[2]                     953     1,295    35.90%

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

"Saint-Gobain delivered improved earnings in 2015 in a sharply contrasted economic climate. The improvement was dampened by continued weak trading in France, hurt in particular by the sharp contraction in Pipe in the second half of the year, despite the first signs of an upturn in construction indicators.

The Group completed a key stage in the reorganization of its business portfolio, with the sale of Verallia on very favorable terms, and continues to pursue its plan to acquire a controlling interest in Sika after obtaining all antitrust approvals prior to closing the deal.

In a still very volatile macroeconomic environment, we will continue to adapt in 2016 and are targeting a further like-for-like improvement in operating income."

  1. Recurring net income from continuing operations excluding capital gains and losses on disposals, asset write-downs and material non-recurring provisions.
  2. Consolidated net income attributable to the Group.
  3. Free cash flow from continuing operations excluding the tax impact of capital gains and losses on disposals, asset write-downs and material non-recurring provisions.

Operating performance 

2015 sales came in at €39,623 million, up 3.3% on a reported basis driven by the positive 3.0% currency impact, and up 0.4% like-for-like. Optimization of the Group's portfolio in terms of acquisitions and disposals led to a negative 0.1% Group structure impact after reclassification of the Packaging business.

Volumes failed to recover during the year (up 0.1%), due chiefly to the sharp decline in France which continued over the second half. Amid falling raw material and energy costs, prices were stable in the fourth quarter but edged up 0.3% over the year as a whole.

Over the full year, the Group was buoyed by good growth from Flat Glass and upbeat momentum in Interior Solutions. Ceramic proppants in the oil and gas industry continued to weigh on High-Performance Materials. Exterior Solutions retreated due to a sharp contraction in Pipe in the second half and Building Distribution was down slightly over the full year but improved in the fourth quarter.

The Group's operating margin came in at 6.7% (6.6% in 2014) and at 6.9% for the six months to December 31, 2015. Operating income climbed 2.2% on a like-for-like basis, partly helped by favorable weather conditions in Europe towards the end of the year.

In 2015 the Group met its capital expenditure target of1.35 billion and cost savings target of 360 million compared to 2014. Industrial optimization efforts rolled out over the past few years have notably enabled Flat Glass to continue delivering a strong rally in its performance. The Group also exceeded its operating working capital requirement target, with a reduction of two days' sales (one day based on constant exchange rates) to 26 days, a record low for the Group and a reflection of its ongoing efforts to maintain cash discipline.

In line with the goal of optimizing its business portfolio, a number of businesses were divested, primarily in Building Distribution, representing around €700 million in full-year sales.

The disposal of Verallia in October was carried out on very favorable financial terms and marks a decisive step in the Group's strategic refocus.

The Group also continued to pursue its acquisition strategy with the aim of growing the share of industrial assets in the US and emerging countries, investing in new technological niches, and strengthening Building Distribution in its key regions. These acquisitions represent around €300 million in full-year sales.

Performance of Group Business Sectors 

Innovative Materials sales climbed 2.2% like-for-like over the year as a whole and 1.7% in the second half. The operating margin for the Business Sector widened to 10.5% from 9.4% (10.7% in the second half), driven by the rally in Flat Glass and a resilient performance from HPM.

  • Like-for-like, Flat Glass sales advanced 5.1% over the year and 4.4% in the second half. In Western Europe, construction markets remained fragile with both prices and volumes beginning to recover towards the end of the year, while the automotive Flat Glass business recorded strong gains and outpaced already good market growth. Healthy trading was confirmed in Asia and emerging countries with the exception of Brazil, hit by a slowdown in automotive and, at the end of the year, in the construction market.

Additional volumes linked to improved operating leverage over the past few years helped fuel strong gains in the operating margin, up from 5.9% to 7.9%, and to 8.5% in second-half 2015.

  • High-Performance Materials (HPM) sales slipped 1.0% on a like-for-like basis, with the full-year performance affected by the decline in ceramic proppants. The other HPM businesses continued to deliver organic growth.

Despite the downturn in volumes, the operating margin for the year held firm, at 13.4%.

Construction Products (CP) reported 0.5% organic growth, but slipped 0.1% in the second half due chiefly to the downturn in Pipe, which reduced the Business Sector's operating margin for the year from 9.0% to 8.5%.

  • Interior Solutions posted 1.9% organic growth for the year (1.8% in the second half). The downturn in volumes and prices on the French market put the brakes on growth in Western Europe, although this impact eased in the fourth quarter. Trading in North America was dented by a slight dip in prices in the second half and by the decline in the Canadian market. Asia and emerging countries continued to deliver growth.

The operating margin came in at 8.9% versus 8.8% in 2014.

  • Exterior Solutions retreated 1.0% like-for-like, with the 2.0% decline in the second half due solely to Pipe. This business was affected by the economic situation in Brazil, a weak infrastructure market in Western Europe and China, and fewer contracts in the Middle East owing to the decline in the oil industry. Exterior Products in the US reported good volume gains buoyed by the strong second-half performance, although prices remained down. Mortars continued to be affected by the economic climate in Western Europe, although the business saw an improvement in the three months to December 31. Mortars delivered further good organic growth in Asia and emerging countries, despite its exposure to the Brazilian market.

The operating margin fell to 8.0% from 9.1% in 2014, as the rally in Exterior Products in the second half failed to offset the decline in Pipe.

Building Distribution sales slipped 0.6% (down 0.1% over the second half) in a construction market that declined sharply in France but showed the first signs of stabilizing towards the end of the year. After disappointing first-half trading, Germany returned to growth in the six months to December 31. The UK saw small gains in the year, with less traction in the second half. Led by Sweden and Norway, Scandinavia confirmed its robust momentum over the full year, as did Spain and the Netherlands. Brazil delivered good growth as a whole, despite the more pronounced economic slowdown in the fourth quarter. Trading in Switzerland was hit by the impact of an exchange rate boosting imports.

The operating margin was affected by slack volumes in France, coming in at 3.2% for the full year (3.8% in the second half), versus 3.5% in 2014.

Analysis by region 

    Over the year as a whole, the Group's organic growth and profitability gains were dented mainly by France.

  • Construction volumes in France remained sharply down throughout the year, although there were signs that activity was stabilizing towards the end of the year. The second half was affected by the downturn in Pipe. With negative 4.1% organic growth for the year (negative 3.9% organic growth in the second half), the operating margin narrowed sharply to 2.9% from 4.3% one year earlier.
  • Other Western European countries saw 2.1% like-for-like sales growth, led by a stronger second half at 2.4%. Nordic countries and to a lesser extent the UK continued to advance in the year. After posting a 1.3% decline for the full year, Germany returned to growth in the second half. Trading in Southern Europe and Benelux countries rebounded, particularly in Spain and the Netherlands. The operating margin saw strong gains, coming in at 5.7% in 2015 compared to 4.9% in 2014.
  • North America retreated 2.0%, hit mainly by the contraction in proppants and also by sluggish industrial markets. Organic growth in construction was dampened by Roofing prices and by the downturn in the Canadian market. The operating margin was 9.1% versus 10.1% in 2014.
  • Asia and emerging countries delivered solid 4.1% organic growth over the year and 3.1% in the second half, with declines in Brazil and China and advances in all other regions. The operating margin continued to strengthen, up to 10.3% in 2015 versus 9.4% in the year-earlier period.

Analysis of the 2015 consolidated financial statements 

The 2015 consolidated financial statements were approved and adopted by Saint-Gobain's Board of Directors at its meeting of February 25, 2016. The consolidated financial statements were audited and certified by the statutory auditors.

Following the sale of the Packaging business and in accordance with IFRS 5, Verallia (including Verallia North America) is shown within "Net income from discontinued operations" in the 2014 and 2015 income statement, including capital gains on the sale of Verallia North America in 2014 and on Verallia in 2015.

Key consolidated data are shown below:

 


   
                                                     2014             %        2014
                                                   Restated  2015  change    Published
    EURm                                             (A)     (B)   (B)/(A)

    Sales and ancillary revenue                      38,349 39,623    3.3%      41,054

    Operating income                                  2,522  2,636    4.5%       2,797
    Operating depreciation and amortization           1,187  1,208    1.8%       1,354
    EBITDA (operating income + operating
    depr./amort.)                                     3,709  3,844    3.6%       4,151

    Non-operating costs                               (183)  (344)    n.s.       (190)
    Capital gains and losses on disposals, asset
    write-downs, corporate acquisition fees and
    earn-out payments                                 (759)  (998)   31.5%       (398)
    Business income                                   1,580  1,294  -18.1%       2,209
    Net financial expense                             (663)  (629)   -5.1%       (696)
    Income tax                                        (398)  (248)  -37.7%       (513)
    Share in net income of associates                     0      0    n.s.           0
    Net income from continuing operations               519    417  -19.7%       1,000
    Net income from discontinued operations             481    929   93.1%           0
    Net income before minority interests              1,000  1,346   34.6%       1,000
    Minority interests                                   47     51    8.5%          47
    Net attributable income                             953  1,295   35.9%         953
    Earnings per share2 (in EUR)                       1.70   2.32   36.5%        1.70

    Recurring1 net income from continuing
    operations                                          973  1,165   19.7%       1,103
    Recurring1 earnings per share2 from continuing
    operations (in EUR)                                1.74   2.09   20.1%        1.97

    Cash flow from continuing operations3             2,225  2,562   15.1%       2,510
    Cash flow from continuing operations
    (excluding capital gains tax)4                    2,139  2,321    8.5%       2,439
    Capital expenditure of continuing operations      1,223  1,346   10.1%       1,437
    Free cash flow from continuing operations           916    975    6.4%       1,002
    (excluding capital gains tax)4

    Investments in securities of continuing
    operations                                           95    227    n.s.          95
    Net debt of continuing operations                 7,221  4,797  -33.6%       7,221


  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 December 31 (558,607,521 shares in 2015 versus 560,385,966 shares in 2014).                    
  3. Excluding material non-recurring provisions.
  4. Excluding the tax impact of capital gains and losses on disposals, asset write-downs and material non-recurring provisions.    

The comments below make reference to the restated financial statements for 2014.

Consolidated sales advanced 3.3%. Exchange rates had a positive 3.0% impact on sales, mainly due to gains in the US dollar and pound sterling against the euro. The positive currency impact was less in the second half (+1.4%), in particular as Latin American currencies weakened sharply against the euro. After reclassification of the Packaging business, divestments (mainly in Building Distribution) and bolt-on acquisitions (particularly in the US and in emerging markets) had an offsetting impact, resulting in a negative Group structure impact of 0.1%. Like-for-like (comparable Group structure and exchange rates), sales inched up 0.4% with slack volumes.

Despite the lack of volume growth, operating income was up 4.5%, or 2.2% like-for-like, representing 6.7% of sales versus 6.6% of sales in 2014.

EBITDA (operating income plus operating depreciation and amortization) advanced 3.6% to €3,844 million, or 9.7% of sales.

Despite lower restructuring charges, non-operating costs increased to €344 million from €183 million in 2014, owing to the write-back of the provision linked to the reduction in the automotive Flat Glass fine in 2014. Non-operating costs also include a €90 million accrual to the provision for asbestos-related litigation involving CertainTeed in the US, unchanged from 2014.

The net balance of capital gains and losses on disposals, asset write-downs and corporate acquisition fees was a negative €998 million, versus a negative €759 million in 2014. In accordance with IFRS 5, these figures do not include capital gains on the disposal of Verallia North America in 2014 (€375 million) and Verallia in 2015 (€811 million). In 2015, this caption includes €65 million in losses on asset disposals, chiefly in Building Distribution, along with €933 million in asset write-downs before the tax reversal, or €712 million net of tax: namely €300 million net of tax booked against Lapeyre (Building Distribution) in France and write-downs in Flat Glass, Pipe and proppants. Business income was therefore 18.1% down on the previous year.

Net financial expense improved, at €629 million versus €663 million in 2014, reflecting the fall in the cost of gross debt to 3.9% at December 31, 2015 from 4.2% at end-2014, and lower gross debt over the last two months.

The tax rate on recurring net income was 29% compared to 32% in 2014, in line with the decrease in the tax rate in certain countries and a positive geographical mix. Income tax expense fell from €398 million to €248 million, reduced by reversals 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) jumped 19.7% to €1,165 million.

Net income from discontinued operations totaled €929 million in 2015 including the capital gain on the sale of Verallia, compared to €481 million in 2014 which also included the reclassified capital gain on the Verallia North America sale.

Net attributable income including net income from discontinued operations surged 35.9% at €1,295 million.

Capital expenditure amounted to €1,346 million, in line with forecasts, and represented 3.4% of sales (3.2% of sales in 2014).

Cash flow from operations rose to €2,562 million (€2,225 million in 2014). Before the tax impact of capital gains and losses on disposals, asset write-downs and material non-recurring provisions, cash flow from operations advanced 8.5% to €2,321 million.

Despite the increase in capex, free cash flow (cash flow from operations less capital expenditure) was up 21.3% to €1,216 million. Before the tax impact of capital gains and losses on disposals, asset write-downs and material non-recurring provisions, free cash flow stood 6.4% higher year-on-year, at €975 million, or 2.5% of sales (2.4% of sales in 2014).

Operating working capital requirements (WCR) continued to improve in value terms (down €172 million to €2,835 million), representing a record low of 26 days' sales (27 days at constant exchange rates) and reflecting the Group's ongoing efforts to maintain strict cash discipline.

Investments in securities represented €227 million (€95 million in 2014) and correspond to small-scale acquisitions aligned with the Group's strategic focuses, chiefly within the Construction Products and High-Performance Materials businesses.

As a result of the Verallia sale and sound financial management, net debt fell to €4.8 billion from €7.2 billion at end-2014. Net debt represents 25% of consolidated equity, compared to 39% at December 31, 2014.

The net debt to EBITDA ratio came out at 1.2 versus 1.8 at end-2014.

Update on asbestos claims in the US                              

Some 3,200 claims were filed against CertainTeed in 2015, fewer than the 4,000 claims filed in 2014. At the same time, around 4,600 claims were settled (versus 6,500 in 2014), bringing the total number of outstanding claims to around 35,600 at December 31, 2015, a decrease of around 1,400 compared to end-2014.

A total of USD 65 million in indemnity payments were made in the 12 months to December 31, 2015, versus USD 68 million in 2014. In light of these trends and of the €90 million provision accrual in 2015, the total provision for CertainTeed's asbestos-related claims amounted to USD 581 million at December 31, 2015 compared to USD 571 million at December 31, 2014.

Share buyback and dividend 

In line with its objectives, the Group bought back 13,863,858 shares for €545 million during the year. This exceeds the number of shares created in connection with the Group Savings Plan, stock option plans, bonus share plans and the stock dividend payment.

At today's meeting, Compagnie de Saint-Gobain's Board of Directors decided to recommend to the June 2, 2016 Shareholders' Meeting a return to a full cash dividend policy, with the dividend stable at €1.24 per share. This represents 59% of recurring net income, and a dividend yield of 3.1% based on the closing share price at December 31, 2015 (€39.85). The ex-date has been set at June 6 and the dividend will be paid on June 8, 2016.

2016 strategic priorities 

The Group will pursue its internal optimization efforts and its acquisitions and divestments strategy. This will allow it to improve the Group's growth potential by focusing on high value-added and less capital-intensive businesses and on activities outside Western Europe.

Saint-Gobain is pursuing its plan to acquire a controlling interest in Sika. During 2015 it obtained the antitrust authorities' unconditional approval for the transaction and various legal decisions were handed down in favor of the deal's completion. The last obstacle remains the limitation of the voting rights of the SWH holding company, on which a decision in first instance is expected from the Zug court in summer 2016.

A new €800 million cost-cutting program for 2016-2018 will be launched as part of ongoing cost savings initiatives. This program will focus more extensively on operational excellence and purchasing, and will include new initiatives in terms of logistics optimization, sales excellence and the digital transformation of industrial plants.

The digital shift remains an important focus. Thanks to its presence at several levels of the value chain (production and distribution), Saint-Gobain is particularly well placed to leverage the opportunities resulting from the digital transformation of its markets.

Saint-Gobain has reaffirmed its commitment to fighting climate change by introducing an internal carbon price which will be factored into all assessments of future investments. Climate change represents both a major challenge for society and a growth opportunity for Saint-Gobain's products.

2016 outlook 

In 2016 the Group should benefit from more vibrant trading in Western Europe, with France stabilizing. North America should continue to see slight growth on construction markets but is expected to face a more uncertain outlook in industry. Our operations in Asia and emerging countries should deliver satisfactory growth overall, albeit affected by the slowdown in Brazil.

Saint-Gobain will continue to keep a close watch on cash management and financial strength. In particular, it will:

  • keep its priority focus on sales prices in a still deflationary environment;
  • unlock additional savings of around €250 million (calculated on the 2015 cost base) thanks to its ongoing cost-cutting program;
  • pursue a capital expenditure program (around €1,400 million) focused primarily on growth capex outside Western Europe;
  • 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.

In line with its strategy, Saint-Gobain is confidently pursuing its plan to acquire a controlling interest in Sika.

In a still very volatile macroeconomic environment, we will continue to adapt in 2016 and are targeting a further like-for-like improvement in operating income.

Financial calendar 

          - Sales for the first quarter of 2016: April 27, 2016, after close of trading on the Paris Bourse.

          - First-half 2016 results: July 28, 2016, after close of trading on the Paris Bourse.

An information meeting will be held at 8:30am (GMT+1) on February 26, 2016 and will be broadcast live on http://www.saint-gobain.com

Important disclaimer - forward-looking statements: 

This press release contains forward-looking statements with respect to Saint-Gobain's financial condition, results, business, strategy, plans and outlook. Forward-looking statements are generally identified by the use of the words "expect", "anticipate", "believe", "intend", "estimate", "plan" and similar expressions. Although Saint-Gobain believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions as at the time of publishing this document, investors are cautioned that these statements are not guarantees of its future performance. Actual results may differ materially from the forward-looking statements as a result of a number of known and unknown risks, uncertainties and other factors, many of which are difficult to predict and are generally beyond the control of Saint-Gobain, including but not limited to the risks described in Saint-Gobain's registration document available on its website (www.saint-gobain.com). Accordingly, readers of this document are cautioned against relying on these forward-looking statements. These forward-looking statements are made as of the date of this document. Saint-Gobain disclaims any intention or obligation to complete, update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

This press release does not constitute any offer to purchase or exchange, nor any solicitation of an offer to sell or exchange securities of Saint-Gobain.  


   
    Appendix 1 : Results by business sector and geographic area - Full Year

                                                                   Change on a
                                                                    comparable
                                              Change on  Change on a  structure
                         2014                 an actual  comparable    and
                       Restated      2015     structure   structure  currency
                      (in EUR m)  (in EUR m)    basis       basis     basis      2014
    I. SALES
                                                                           Published  Impact

    by sector
    and division:
    Innovative
    Materials 1           9,115       9,703       +6.5%       +6.2%   +2.2%   9,115
    Flat Glass            4,893       5,217       +6.6%       +6.7%   +5.1%   4,893
    High-Performance
    Materials             4,232       4,502       +6.4%       +5.8%   -1.0%   4,232
    Construction
    Products 1           11,361      12,012       +5.7%       +5.2%   +0.5%  11,361
    Interior Solutions    6,056       6,485       +7.1%       +6.3%   +1.9%   6,056
    Exterior Solutions    5,370       5,599       +4.3%       +4.1%   -1.0%   5,370
    Building
    Distribution         18,806      18,849       +0.2%       +0.6%   -0.6%  18,806
    Packaging (Verallia)      0                                               2,705   -2,705
    Internal sales
    and misc.              -933        -941        n.s.        n.s.    n.s.    -933
    Group Total          38,349      39,623       +3.3%       +3.4%   +0.4%  41,054   -2,705
    1 including intra-sector eliminations

    by geographic area:
    France               10,776      10,326       -4.2%       -4.1%   -4.1%  11,526     -750
    Other Western
    European countries   16,668      17,414       +4.5%       +4.5%   +2.1%  17,971   -1,303
    North America         4,723       5,366      +13.6%      +16.1%   -2.0%   5,038     -315
    Emerging countries
    and Asia              8,065       8,375       +3.8%       +2.6%   +4.1%   8,455     -390
    Internal sales       -1,883      -1,858       n.s.        n.s.     n.s.  -1,936       53
    Group Total          38,349      39,623       +3.3%       +3.4%   +0.4%  41,054   -2,705

                                                Change on
                          2014                  an actual     2014       2015
                        Restated      2015      structure   (in % of   (in % of
                       (in EUR m)  (in EUR m)     basis      sales)     sales)    2014

    II. OPERATING INCOME                                                   Published  Impact

    by sector
    and division:
    Innovative
    Materials              854       1,015       +18.9%       9.4%    10.5%     854
    Flat Glass             289         413       +42.9%       5.9%     7.9%     289
    High-Performance
    Materials              565         602        +6.5%      13.4%    13.4%     565
    Construction
    Products             1,020       1,022        +0.2%       9.0%     8.5%   1,020
    Interior Solutions     533         576        +8.1%       8.8%     8.9%     533
    Exterior Solutions     487         446        -8.4%       9.1%     8.0%     487
    Building Distribution  661         603        -8.8%       3.5%     3.2%     661
    Packaging (Verallia)     0                                                  275    -275
    Misc.                  -13         -4          n.s.        n.s.    n.s.     -13
    Group Total          2,522       2,636        +4.5%       6.6%     6.7%   2,797    -275

    by geographic area:
    France                 466         297       -36.3%       4.3%     2.9%     540     -74
    Other Western
    European countries     817         984       +20.4%       4.9%     5.7%     946    -129
    North America          479         490        +2.3%      10.1%     9.1%     524     -45
    Emerging countries
    and Asia               760         865       +13.8%       9.4%    10.3%     787     -27
    Group Total          2,522       2,636        +4.5%       6.6%     6.7%   2,797    -275

                                              Change on
                         2014                  an actual     2014        2015
                       Restated      2015      structure   (in % of    (in % of
                      (in EUR m)  (in EUR m)     basis      sales)      sales)    2014

    III. BUSINESS INCOME                                                   Published  Impact

    by sector
    and division:
    Innovative
    Materials              717         696        -2.9%       7.9%     7.2%     717
    Flat Glass             245         217       -11.4%       5.0%     4.2%     245
    High-Performance
    Materials              472         479        +1.5%      11.2%    10.6%     472
    Construction
    Products               769         762        -0.9%       6.8%     6.3%     769
    Interior Solutions     483         448        -7.2%       8.0%     6.9%     483
    Exterior Solutions     286         314        +9.8%       5.3%     5.6%     286
    Building
    Distribution           186         -46      -124.7%       1.0%    -0.2%     186
    Packaging (Verallia)     0                                                  629     -629
    Misc. (a)              -92        -118        n.s.        n.s.     n.s.     -92
    Group Total          1,580       1,294       -18.1%       4.1%     3.3%   2,209     -629

    by geographic area:
    France                 247        -317      -228.3%       2.3%    -3.1%     691     -444
    Other Western
    European countries     483         752       +55.7%       2.9%     4.3%     603     -120
    North America (a)      243         159       -34.6%       5.1%     3.0%     286      -43
    Emerging countries
    and Asia               607         700       +15.3%       7.5%     8.4%     629      -22
    Group Total          1,580       1,294       -18.1%       4.1%     3.3%   2,209     -629
    (a) after asbestos-related charge (before tax) of EUR90m in 2014 and in 2015

                      Change on
                        2014                  an actual     2014        2015
                      Restated      2015      structure   (in % of    (in % of
                     (in EUR m)  (in EUR m)     basis      sales)      sales)     2014

    IV. CASH FLOW                                                          Published  Impact

    by sector
    and division:
    Innovative
    Materials             717         931       +29.8%       7.9%     9.6%      717
    Flat Glass            237         449       +89.5%       4.8%     8.6%      237
    High-Performance
    Materials             480         482        +0.4%      11.3%    10.7%      480
    Construction
    Products              780         790        +1.3%       6.9%     6.6%      780
    Building
    Distribution          486         629       +29.4%       2.6%     3.3%      486
    Packaging (Verallia)    0                                                   274    -274
    Misc. (b)             242         212        n.s.        n.s.     n.s.      253     -11
    Group Total         2,225       2,562       +15.1%       5.8%     6.5%    2,510    -285

    by geographic area:
    France                283         382       +35.0%       2.6%     3.7%      345     -62
    Other Western
    European countries    726         941       +29.6%       4.4%     5.4%      900    -174
    North America (b)     382         412        +7.9%       8.1%     7.7%      409     -27
    Emerging countries
    and Asia              834         827        -0.8%      10.3%     9.9%      856     -22
    Group Total         2,225       2,562       +15.1%       5.8%     6.5%    2,510    -285
    (b) after asbestos-related charge (after tax) of EUR55m in 2014 and in 2015

                                             Change on
                       2014                  an actual     2014        2015
                     Restated      2015      structure   (in % of    (in % of
                    (in EUR m)  (in EUR m)     basis      sales)      sales)     2014

    V. CAPITAL EXPENDITURE                                                 Published  Impact

    by sector
    and division:
    Innovative
    Materials            418         529       +26.6%       4.6%        5.5%    418
    Flat Glass           235         311       +32.3%       4.8%        6.0%    235
    High-Performance
    Materials            183         218       +19.1%       4.3%        4.8%    183
    Construction
    Products             521         528        +1.3%       4.6%        4.4%    521
    Interior Solutions   282         312       +10.6%       4.7%        4.8%    282
    Exterior Solutions   239         216        -9.6%       4.5%        3.9%    239
    Building
    Distribution         264         231       -12.5%       1.4%        1.2%    264
    Packaging (Verallia)   0                                                    213    -213
    Misc.                 20          58         n.s.       n.s.        n.s.     21      -1
    Group Total        1,223       1,346       +10.1%       3.2%        3.4%  1,437    -214

    by geographic area:
    France               253         269        +6.3%       2.3%        2.6%    300     -47
    Other Western
    European countries   347         335        -3.5%       2.1%        1.9%    452    -105
    North America        200         282       +41.0%       4.2%        5.3%    220     -20
    Emerging countries
    and Asia             423         460        +8.7%       5.2%        5.5%    465     -42
    Group Total        1,223       1,346       +10.1%       3.2%        3.4%  1,437    -214

                                             Change on
                       2014                  an actual     2014        2015
                     Restated      2015      structure   (in % of    (in % of
                    (in EUR m)  (in EUR m)     basis      sales)      sales)      2014
    VI. EBITDA
                                                                            Published Impact

    by sector
    and division:
    Innovative
    Materials          1,302       1,457       +11.9%      14.3%       15.0%   1,302
    Flat Glass           586         701       +19.6%      12.0%       13.4%     586
    High-Performance
    Materials            716         756        +5.6%      16.9%       16.8%     716
    Construction
    Products           1,472       1,493        +1.4%      13.0%       12.4%   1,472
    Interior Solutions   839         896        +6.8%      13.9%       13.8%     839
    Exterior Solutions   633         597        -5.7%      11.8%       10.7%     633
    Building
    Distribution         920         868        -5.7%       4.9%        4.6%     920
    Packaging (Verallia)   0                                                     442    -442
    Misc.                 15          26         n.s.       n.s.        n.s.      15
    Group Total        3,709       3,844        +3.6%       9.7%        9.7%   4,151    -442

    by geographic area:
    France               765         595       -22.2%       7.1%        5.8%     883    -118
    Other Western
    European countries 1,192       1,361       +14.2%       7.2%        7.8%   1,410    -218
    North America        632         665        +5.2%      13.4%       12.4%     677     -45
    Emerging countries
    and Asia           1,120       1,223        +9.2%      13.9%       14.6%   1,181     -61
    Group Total        3,709       3,844        +3.6%       9.7%        9.7%   4,151    -442


   
    Appendix 2 : Results by business sector and geographic area - Second half

                                                                 Change on a
                                                                  comparable
                        H2                Change on  Change on a  structure
                       2014       H2       an actual  comparable      and
                     Restated    2015      structure   structure   currency
                    (in EUR m) (in EUR m)     basis       basis       basis        H2 2014
    I. SALES
                                                                           Published  Impact

    by sector
    and division:
    Innovative
    Materials 1        4,631     4,781       +3.2%       +2.9%       +1.7%   4,631
    Flat Glass         2,495     2,584       +3.6%       +3.5%       +4.4%   2,495
    High-Performance
    Materials          2,141     2,205       +3.0%       +2.4%       -1.2%   2,141
    Construction
    Products 1         5,718     5,933       +3.8%       +2.7%       -0.1%   5,718
    Interior Solutions 3,102     3,288       +6.0%       +4.7%       +1.8%   3,102
    Exterior Solutions 2,651     2,686       +1.3%       +0.7%       -2.0%   2,651
    Building
    Distribution       9,519     9,511       -0.1%       +0.5%       -0.1%   9,519
    Packaging (Verallia)   0                                                 1,205   -1,205
    Internal sales
    and misc.           -465      -462        n.s.        n.s.        n.s.    -465
    Group Total       19,403    19,763       +1.9%       +1.7%       +0.3%  20,608   -1,205
    1 including
    intra-sector eliminations

    by geographic
    area:
    France             5,229     5,044       -3.5%       -3.9%       -3.9%   5,578     -349
    Other Western
    European countries 8,464     8,840       +4.4%       +4.4%       +2.4%   9,136     -672
    North America      2,397     2,628       +9.6%      +13.1%       -1.8%   2,397        0
    Emerging countries
    and Asia           4,213     4,156       -1.4%       -3.2%       +3.1%   4,431     -218
    Internal sales      -900      -905        n.s.        n.s.        n.s.    -934       34
    Group Total       19,403    19,763       +1.9%       +1.7%       +0.3%  20,608   -1,205

                         H2                 Change on      H2          H2
                        2014       H2       an actual     2014        2015
                      Restated    2015      structure   (in % of    (in % of
                    (in EUR m) (in EUR m)     basis      sales)      sales)      H2 2014

    II. OPERATING INCOME                                                  Published  Impact

    by sector
    and division:
    Innovative
    Materials            445       511       +14.8%       9.6%       10.7%     445
    Flat Glass           158       219       +38.6%       6.3%        8.5%     158
    High-Performance
    Materials            287       292        +1.7%      13.4%       13.2%     287
    Construction
    Products             512       493        -3.7%       9.0%        8.3%     512
    Interior Solutions   282       288        +2.1%       9.1%        8.8%     282
    Exterior Solutions   230       205       -10.9%       8.7%        7.6%     230
    Building
    Distribution         396       361        -8.8%       4.2%        3.8%     396
    Packaging (Verallia)   0                                                   128    -128
    Misc.                -14        -4         n.s.        n.s.       n.s.     -14
    Group Total        1,339     1,361        +1.6%       6.9%        6.9%   1,467    -128

    by geographic area:
    France               257       161       -37.4%       4.9%        3.2%     293     -36
    Other Western
    European countries   435       524       +20.5%       5.1%        5.9%     504     -69
    North America        226       231        +2.2%       9.4%        8.8%     226       0
    Emerging countries
    and Asia             421       445        +5.7%      10.0%       10.7%     444     -23
    Group Total        1,339     1,361        +1.6%       6.9%        6.9%   1,467    -128

                       H2                  Change on      H2          H2
                      2014        H2       an actual     2014        2015
                    Restated     2015      structure   (in % of    (in % of
                   (in EUR m)  (in EUR m)     basis      sales)      sales)      H2 2014

    III. BUSINESS INCOME                                                  Published  Impact

    by sector
    and division:
    Innovative
    Materials            358       233       -34.9%       7.7%        4.9%     358
    Flat Glass           114        36       -68.4%       4.6%        1.4%     114
    High-Performance
    Materials            244       197       -19.3%      11.4%        8.9%     244
    Construction
    Products             446       287       -35.7%       7.8%        4.8%     446
    Interior Solutions   248       190       -23.4%       8.0%        5.8%     248
    Exterior Solutions   198        97       -51.0%       7.5%        3.6%     198
    Building
    Distribution          81      -242        n.s.        0.9%       -2.5%      81
    Packaging (Verallia)   0                                                   114     -114
    Misc. (a)            -50       -64        n.s.        n.s.        n.s.     -50
    Group Total          835       214       -74.4%       4.3%        1.1%     949     -114

    by geographic area:
    France               -38      -424        n.s.       -0.7%       -8.4%      -5      -33
    Other Western
    European countries   300       359       +19.7%       3.5%        4.1%     363      -63
    North America (a)    177       -41      -123.2%       7.4%       -1.6%     176        1
    Emerging countries
    and Asia             396       320       -19.2%       9.4%        7.7%     415      -19
    Group Total          835       214       -74.4%       4.3%        1.1%     949     -114
    (a) after asbestos-related charge (before tax) of EUR45m in H2-2014 and in H2-2015

                        H2                  Change on      H2          H2
                      2014         H2       an actual     2014        2015
                     Restated     2015      structure   (in % of    (in % of
                    (in EUR m) (in EUR m)     basis      sales)      sales)     H2 2014

    IV. CASH FLOW                                                         Published  Impact

    by sector
    and division:
    Innovative
    Materials            373       466       +24.9%       8.1%        9.7%     373
    Flat Glass           132       228       +72.7%       5.3%        8.8%     132
    High-Performance
    Materials            241       238        -1.2%      11.3%       10.8%     241
    Construction
    Products             411       375        -8.8%       7.2%        6.3%     411
    Building
    Distribution         287       441       +53.7%       3.0%        4.6%     287
    Packaging (Verallia)   0                                                   151     -151
    Misc. (b)             91        85         n.s.        n.s.        n.s.     90        1
    Group Total        1,162     1,367       +17.6%       6.0%        6.9%   1,312     -150

    by geographic area:
    France               166       292       +75.9%       3.2%        5.8%     211      -45
    Other Western
    European countries   367       471       +28.3%       4.3%        5.3%     461      -94
    North America (b)    173       212       +22.5%       7.2%        8.1%     173        0
    Emerging countries
    and Asia             456       392       -14.0%      10.8%        9.4%     467      -11
    Group Total        1,162     1,367       +17.6%       6.0%        6.9%   1,312     -150
    (b) after asbestos-related charge (after tax) of EUR28m in H2-2014 and in H2-2015

                        H2                  Change on      H2          H2
                       2014        H2       an actual     2014        2015
                     Restated     2015      structure  (in % of    (in % of
                    (in EUR m) (in EUR m)    basis      sales)      sales)      H2 2014

    V. CAPITAL EXPENDITURE                                                Published  Impact

    by sector
    and division:
    Innovative
    Materials            289       364       +26.0%       6.2%        7.6%     289
    Flat Glass           160       220       +37.5%       6.4%        8.5%     160
    High-Performance
    Materials            129       144       +11.6%       6.0%        6.5%     129
    Construction
    Products             371       345        -7.0%       6.5%        5.8%     371
    Interior Solutions   203       202        -0.5%       6.5%        6.1%     203
    Exterior Solutions   168       143       -14.9%       6.3%        5.3%     168
    Building
    Distribution         188       149       -20.7%       2.0%        1.6%     188
    Packaging (Verallia)   0                                                   127     -127
    Misc.                 12        31         n.s.       n.s.        n.s.      13       -1
    Group Total          860       889        +3.4%       4.4%        4.5%     988     -128

    by geographic area:
    France               180       200       +11.1%       3.4%        4.0%     220      -40
    Other Western
    European countries   253       228        -9.9%       3.0%        2.6%     313      -60
    North America        137       163       +19.0%       5.7%        6.2%     137        0
    Emerging countries
    and Asia             290       298        +2.8%       6.9%        7.2%     318      -28
    Group Total          860       889        +3.4%       4.4%        4.5%     988     -128

                      H2                    Change on      H2          H2
                      2014         H2       an actual     2014        2015
                    Restated      2015      structure   (in % of    (in % of
                   (in EUR m)  (in EUR m)     basis      sales)      sales)      H2 2014
    VI. EBITDA
                                                                          Published  Impact

    by sector
    and division:
    Innovative
    Materials            676       726        +7.4%       14.6%       15.2%    676
    Flat Glass           312       354       +13.5%       12.5%       13.7%    312
    High-Performance
    Materials            364       372        +2.2%       17.0%       16.9%    364
    Construction
    Products             740       728        -1.6%       12.9%       12.3%    740
    Interior Solutions   436       448        +2.8%       14.1%       13.6%    436
    Exterior Solutions   304       280        -7.9%       11.5%       10.4%    304
    Building
    Distribution         526       494        -6.1%        5.5%        5.2%    526
    Packaging (Verallia)   0                                                   212     -212
    Misc.                  0        10         n.s.        n.s.        n.s.      0
    Group Total        1,942     1,958        +0.8%       10.0%        9.9%  2,154     -212

    by geographic area:
    France               404       308       -23.8%        7.7%        6.1%    464      -60
    Other Western
    European countries   623       711       +14.1%        7.4%        8.0%    736     -113
    North America        305       316        +3.6%       12.7%       12.0%    305        0
    Emerging countries
    and Asia             610       623        +2.1%       14.5%       15.0%    649      -39
    Group Total        1,942     1,958        +0.8%       10.0%        9.9%  2,154     -212


   
    Appendix 3 : Results by business sector and geographic area - Fourth Quarter

                                                                  Change on a
                                                                   comparable
                      Q4                   Change on  Change on a  structure
                     2014         Q4       an actual  comparable      and
                   Restated      2015      structure   structure   currency
                  (in EUR m)  (in EUR m)     basis       basis       basis         Q4 2014
    SALES
                                                                           Published  Impact

    by sector
    and division:
    Innovative
    Materials 1      2,345       2,403       +2.5%       +2.1%       +1.2%       2,345
    Flat Glass       1,272       1,306       +2.7%       +2.5%       +3.3%       1,272
    High-Performance
    Materials        1,076       1,103       +2.5%       +2.0%       -1.0%       1,076
    Construction
    Products 1       2,818       2,896       +2.8%       +1.5%       -0.5%       2,818
    Interior
    Solutions        1,551       1,651       +6.4%       +4.9%       +2.3%       1,551
    Exterior
    Solutions        1,285       1,266       -1.5%       -2.3%       -3.5%       1,285
    Building
    Distribution     4,722       4,725       +0.1%       +1.2%       +0.7%       4,722
    Packaging
    (Verallia)           0                                                         589  -589
    Internal sales
    and misc.         -236        -227        n.s.        n.s.        n.s.        -236
    Group Total      9,649       9,797       +1.5%       +1.4%       +0.4%      10,238  -589
    1 including
    intra-sector
    eliminations

    by geographic area:
    France           2,681       2,615       -2.5%       -3.1%       -3.1%       2,854  -173
    Other Western
    European
    countries        4,127       4,352       +5.5%       +5.4%       +3.5%       4,463  -336
    North America    1,163       1,214       +4.4%       +9.8%       -2.4%       1,163     0
    Emerging
    countries
    and Asia         2,111       2,059       -2.5%       -4.6%       +1.3%       2,214  -103
    Internal sales    -433        -443        n.s.        n.s.        n.s.        -456    23
    Group Total      9,649       9,797       +1.5%       +1.4%       +0.4%      10,238  -589


   
    Appendix 4: Consolidated balance sheet

                                                                 Dec 31, 2014  Dec 31, 2015
    in EUR million

                                Assets
    Goodwill                                                           10,462       10,683
    Other intangible assets                                             3,085        2,748
    Property, plant and equipment                                      12,657       11,587
    Investments in associates                                             386          319
    Deferred tax assets                                                 1,348        1,337
    Other non-current assets                                              646          635

    Non-current assets                                                 28,584       27,309

    Inventories                                                         6,292        5,715
    Trade accounts receivable                                           4,923        4,751
    Current tax receivable                                                156          296
    Other accounts receivable                                           1,356        1,405
    Cash and cash equivalents                                           3,493        5,380

    Current assets                                                     16,220       17,547

    Total assets                                                       44,804       44,856

                 Liabilities and Shareholders' equity
    Capital stock                                                       2,248        2,244
    Additional paid-in capital and legal reserve                        6,437        6,341
    Retained earnings and net income for the year                      10,411       10,805
    Cumulative translation adjustments                                   -953         -528
    Fair value reserves                                                   -63          181
    Treasury stock                                                        -67          -87

    Shareholders' equity                                               18,013       18,956

    Minority interests                                                    405          364

    Total equity                                                       18,418       19,320

    Long-term debt                                                      8,713        7,330
    Provisions for pensions and other employee benefits                 3,785        3,849
    Deferred tax liabilities                                              634          466
    Provisions for other liabilities and charges                        1,225        1,276

    Non-current liabilities                                            14,357       12,921

    Current portion of long-term debt                                   1,389        2,231
    Current portion of provisions
    for other liabilities and charges                                     409          454
    Trade accounts payable                                              6,062        5,716
    Current tax liabilities                                                97          150
    Other accounts payable                                              3,460        3,448
    Short-term debt and bank overdrafts                                   612          616

    Current liabilities                                                12,029       12,615

    Total equity and liabilities                                       44,804       44,856


   
    Appendix 5: Consolidated cash flow statement

                                                             2014               2014
    (in EUR million)                                    Restated   2015    Published Impact

    Net income of continuing operations
    attributable to equity holders of the
    parent                                                   476     374         953    477

    Minority interests in net income                          43      43          47      4
    Share in net income of associates,
    net of dividends received                                (28)    (29)        (29)    (1)
    Depreciation, amortization and impairment of assets    1,965   2,085       2,132    167
    Gains and losses on disposals of assets                  (46)     70        (408)  (362)
    Unrealized gains and losses arising from
    changes in fair value and share-based
    payments                                                   2     (15)          2      0
    Changes in inventories                                  (260)     26        (270)   (10)
    Changes in trade accounts receivable
    and payable, and other accounts
    receivable and payable                                    81     192          70    (11)
    Changes in tax receivable and payable                     30    (134)         45     15
    Changes in deferred taxes and provisions
    for other liabilities and charges                     (1,191)   (143)     (1,179)    12
    Net cash from operating activities
    of continuing operations                               1,072   2,469       1,363    291
    Net cash from operating activities
    of discontinued operations                               291     140               (291)

    Net cash from operating activities                     1,363   2,609       1,363      0

    Purchases of property, plant and equipment
    [ in 2015: (1,346), in 2014: (1,47
    (1,223) ] and intangible assets                       (1,351)      5)     (1,568)  (217)
    Acquisitions of property, plant
    and equipment in finance leases                          (11)    (17)        (12)    (1)
    Increase (decrease) in amounts
    due to suppliers of fixed assets                          19       8          12     (7)
    Acquisitions of shares in consolidated companies
    [ in 2015: (201), in 2014:(69) ],
    net of debt acquired                                    (131)   (221)       (131)     0

    Acquisitions of other investments                         (7)    (26)         (7)     0
    Increase in investment-related liabilities                17      14          17      0
    Decrease in investment-related liabilities                (6)    (28)         (6)     0
   
                                     Investments          (1,470) (1,745)     (1,695)  (225)
    Disposals of property, plant
    and equipment and intangible assets                       96     122          93     (3)
    Disposals of shares in consolidated
    companies, net of net debt divested                    1,036   2,458       1,034     (2)
    Disposals of other investments and other divestments       0       2           0      0
                                     Divestments           1,132   2,582       1,127     (5)
    Increase in loans and deposits                          (154)   (136)       (157)    (3)
    Decrease in loans and deposits                            63      72          67      4
    Net cash from (used in) investment and
    divestment activities of continuing
    operations                                              (429)     773       (658)  (229)
    Net cash from (used in) investment and
    divestment activities of discontinued
    operations                                              (229)   (176)               229

    Net cash used in investment and divestment activities   (658)     597       (658)     0

    Issues of capital stock                                  412     412         412      0
    (Increase) decrease in treasury stock                   (137)   (545)       (137)     0
    Dividends paid                                          (685)   (695)       (685)     0
    Minority interests' share in
    capital increases of subsidiaries                         12      23          12      0
    Disposals of minority interests
    without loss of control                                  (19)      0         (19)     0
    Increase (decrease) in investment-related
    liabilities (put on minority interests)                    4      (8)          4      0
    Dividends paid to minority shareholders
    of consolidated subsidiaries                             (35)    (37)        (37)    (2)
    Net cash from (used in) financing
    activities of continuing operations                     (448)   (850)       (450)    (2)
    Net cash from (used in) financing
    activities of discontinued operations                     (2)     (1)                 2

    Net Cash from (used in) financing activities            (450)   (851)       (450)     0

    Net effect of exchange rate changes on net debt           11      13          30     19
    Net effect from changes in fair value on net debt          7      45           7      0
    Net effect of exchange rate changes
    on net debt of discontinued operations                    19      11           0    (19)

    Increase (decrease) in net debt                          292   2,424         292      0

                                                                                               
    Net debt at beginning of period                       (7,513) (7,221)     (7,513)     0
                                                                                               
    Net debt at end of period                             (7,221) (4,797)     (7,221)     0


   
    Appendix 6: Debt at December 31, 2015

    Amounts in EURbn                                                 Comments

    Amount and structure of net debt         EURbn

                                                   At end of December 2015, 79% of gross
                                                   debt was at fixed interest rates and the
    Gross debt                               10.2  average cost of gross debt was 3.9%
    Cash & cash equivalents                   5.4
    Net debt                                  4.8

    Breakdown of gross debt                  10.2

    Bond debt and perpetual notes             8.5
    May 2016                                  0.7
    September 2016                            0.5
    December 2016                             0.4  (GBP 0.3bn)
    April 2017                                1.3
    June 2017                                 0.2
    March 2018                                0.1  (NOK 0.8bn)
    October 2018                              0.7
    September 2019                            0.9
    After 2020                                3.7

                                                   (including EUR 0.2bn long-term
    Other long-term debt                      0.5  securitization)

    Short-term debt                           1.2  (excluding bonds)
    Commercial paper (< 3 months)             0.0  Maximum amount of bond issue: EUR 3bn
    Securitization                            0.6  (EUR 0.2bn equivalent in USD + EUR 0.4bn)
                                                   Frequent rollover; many different sources
    Local debt and accrued interest           0.6  of financing

    Credit lines, cash & cash equivalents     9.4

    Cash and cash equivalents                 5.4
    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


   
    Appendix 7: External sales by business sector and by geographic area
    FY 2015, in % of total sales

                                      Innovative  Construction   Building
                                      Materials     Products   Distribution    Total
    France                               2.5%         3.6%        18.6%        24.7%

    Germany - Austria                    2.3%         2.2%         5.0%         9.5%
    United Kingdom - Ireland             0.8%         2.4%         8.7%        11.9%
    Scandinavia                          0.6%         1.9%         9.3%        11.8%
    other Western European countries     2.8%         3.1%         3.3%         9.2%

    North America                        5.1%         7.3%         0.7%        13.1%

    Latin America                        3.3%         2.0%         1.0%         6.3%
    Asia                                 4.6%         2.6%            -         7.2%
    Eastern Europe                       2.1%         1.7%         0.8%         4.6%
    Middle East & Africa                 0.2%         1.5%            -         1.7%
    Total                               24.3%        28.3%        47.4%         100%


 

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SOURCE Saint-Gobain