Saint-Gobain: First-half 2015 Results

Upswing in results

Jul 29, 2015, 15:04 ET from Saint-Gobain

PARIS, July 29, 2015 /PRNewswire/ --

Following the signature of the agreement with Apollo and in accordance with IFRS 5, the Packaging business (including Verallia North America) was reclassified within "Net income from discontinued operations" in the 2014 and 2015 income statement.
 
- Organic growth at 0.5% (including a positive 0.5% price impact)
 
- Strong 4.6% positive currency impact on sales and 0.3% negative Group structure impact
 
- Operating income up 7.8% on a reported basis and up 1.2% like-for-like before the reclassification of Verallia
 
- Net debt reduced by EUR0.5 billion compared to June 30, 2014
 
- Repurchase of around 4.6 million shares over the last 3 months
 


   

    (EURm)                                 H1 2014    H1 2015     Change
    (restated)

    Sales                                   18,946     19,860      +4.8%

    EBITDA                                   1,767      1,886      +6.7%

    Operating income                         1,183      1,275      +7.8%

    Recurring[1] net income                    441        552     +25.2%

    Net income[2]                              671        558     -16.8%

    Free cash flow[3]                          647        728     +12.5%

Operating performance 

First-half sales were up 4.8% to €19,860 million, after reclassification of the Packaging business (including Verallia North America) within "Net income from discontinued operations" in the income statement.

After this restatement (IFRS 5), changes in Group structure had a negative 0.3% impact on sales. Exchange rates continued to have a strong positive impact (4.6%), chiefly driven by the US dollar and pound sterling.

On a like-for-like basis, sales edged up 0.5%. Volumes were stable over the first half and rose 1.5% in the second quarter alone. Amid low raw material cost inflation and energy cost deflation, prices continued to rise slightly, up 0.5% over the first half.

After a slight decline in the first quarter, the three months to June 30 saw growth in all regions except France and Germany. By business, the first half confirmed the upturn in Flat Glass and the expected contraction in Exterior Solutions, related mainly to price levels in the Roofing business.

The Group's operating income climbed 7.8% on a reported basis and remained stable like-for-like versus first-half 2014 due to the absence of volume growth. Before the reclassification of the Packaging business and on a like-for-like basis, operating income moved up 1.2%. The Group's operating margin widened 0.2 points year-on-year, to 6.4%.

Performance of Group Business Sectors  

Innovative Materials like-for-like sales continued to improve, up 2.6% thanks to Flat Glass. The Business Sector's operating margin moved up to 10.2% versus 9.1% in first-half 2014.

  • The second quarter confirmed the upbeat trends seen early in the year in Flat Glass, which posted 5.6% organic growth over the six months to June 30. Automotive Flat Glass continued to report strong gains in all regions, excluding Brazil. Construction markets remained upbeat in Asia and emerging countries, but retreated in Western Europe where prices remained stable.

Rising volumes, together with the full impact of cost savings and an improved product mix, helped drive renewed growth in the operating margin at 7.4%.

  • High-Performance Materials (HPM) like-for-like sales slipped 0.8% over the first half, hit mainly by the downturn in ceramic proppants. Other HPM businesses continued to deliver organic growth.

Despite this decline in organic growth, the operating margin came in at 13.5% versus 13.3% in the same period one year earlier.

Construction Products (CP) like-for-like sales advanced 0.9% over the first half. The operating margin narrowed to 8.7% versus 9.0% in first-half 2014, affected by Exterior Solutions.

  • Interior Solutions posted 2.2% organic growth over the six-month period. In Western Europe, despite a slight improvement in volumes, trading continued to be affected by the market situation in France and Germany, coupled with a slight downward pressure on prices. The US, Asia and emerging countries continued to grow.

The operating margin moved up to 9.0% versus 8.5% in first-half 2014.

  • Exterior Solutions slipped 0.4% despite a 5.7% rally in the second quarter, due mainly to the Roofing business, where volumes rose sharply after a very weak start to the year. Prices for this business were down significantly on the same year-ago period, despite stabilizing quarter-on-quarter. Pipe continued to be buoyed by export contracts, but was affected by anemic demand in infrastructure markets in Western Europe and Brazil. Mortars enjoyed good organic growth in Asia and emerging countries, although growth continued to be hindered by Western Europe.

The operating margin fell to 8.3% from 9.5% in first-half 2014, due chiefly to prices for Exterior Products in the US: Roofing benefited from falling asphalt prices, mainly in the second quarter.

Building Distribution like-for-like sales stabilized in the second quarter, up 0.1%, limiting the decline over the six-month period to 1.1%. France was once again impacted by the sharp contraction in new-builds and by a renovation market yet to show signs of improvement. Germany declined over the first half, although the pace of decline slowed in the second quarter. In contrast, the UK reported further organic growth and a particularly upbeat trend emerged in the Nordic countries, the Netherlands, Southern Europe and Brazil. Overall, despite the downturn in France and Germany which together account for around half of the Business Sector's sales, the operating margin proved resilient, at 2.6% versus 2.9% in first-half 2014, thanks to the advances reported in all other regions.

Analysis by region  

    The Group's organic growth and margins advanced, lifted by Asia and emerging countries, and by countries in the "Other Western Europe" region.

  • France was hit once again by the decline in the construction market in the second quarter, reporting negative organic growth of 3.3% for the three months to June 30 and of 4.2% over the first half. The operating margin narrowed as a result, at 2.6%.
  • Other Western European countries, up 2.4% over the quarter, confirmed their organic growth, which came in at 1.7% for the first half. This performance reflects good market conditions in the UK and Scandinavia and an upturn in Southern European countries. Germany, which was still slightly down in the second quarter, retreated 3.7% on the back of sluggish renovation activity. The operating margin for the region improved, at 5.4% versus 4.7% in first-half 2014.
  • North America posted 4.9% like-for-like sales growth in the second quarter, powered by the catch-up in Roofing volumes and to a lesser extent by Interior Solutions. Over the six-month period, the region posted negative organic growth of 2.2%, chiefly impacted by subdued Roofing prices and a slower pace of growth in industrial markets. The operating margin was therefore down, at 9.5% compared to 10.9% in first-half 2014.
  • Asia and emerging countries continued to deliver good organic growth, which came in at 4.8% for the first six months of the year. Latin America advanced 8.2%, with Brazil proving resilient in a tough macroeconomic environment. Eastern Europe was up 4.3%, buoyed by brisk trading in the Czech Republic, while Asia advanced 0.8%, lifted by India.

The operating margin rose to 10.0% of sales, compared to 8.8% one year earlier.

Verallia  

Packaging (Verallia) sales moved up 2.1% at constant exchange rates excluding Verallia North America. Organic growth over the first half was driven by small volume gains in Europe and by rising prices in Latin America in an inflationary environment.

The operating margin came in at 9.7%.

Analysis of the consolidated financial statements for first-half 2015 

The unaudited interim consolidated financial statements were subject to a limited review by the statutory auditors. They were approved and adopted by the Board of Directors on July 29, 2015.


Following the signature of the agreement with Apollo on June 6, 2015 (involving a firm and binding offer from Apollo regarding the Packaging business and exclusive talks with Apollo) and in accordance with IFRS 5, the Packaging business (including Verallia North America) is shown within "Net income from discontinued operations" in the income statement for 2014 and 2015.


                                                  H1 2014                       H1 2014
                                                 Restated* H1 2015 % change    Published
    EURm                                            (A)      (B)    (B)/(A)

    Sales and ancillary revenue                     18,946  19,860      4.8%      20,446

    Operating income                                 1,183   1,275      7.8%       1,330
    Operating depreciation and amortization            584     611      4.6%         667
    EBITDA (op.inc. + operating depr./amort.)        1,767   1,886      6.7%       1,997

    Non-operating costs                               (12)   (154)      n.s.        (16)
    Capital gains and losses on disposals, asset
    write-downs, corporate acquisition fees and
    earn-out payments                                 (51)    (41)    -19.6%        (54)
    Business income                                  1,120   1,080     -3.6%       1,260
    Net financial expense                            (336)   (328)     -2.4%       (354)
    Income tax                                       (158)   (236)     49.4%       (212)
    Share in net income (loss) of non-core
    business equity-accounted companies                (1)       0      n.s.         (1)
    Net income from continuing operations              625     516    -17.4%         693
    Net income from discontinued operations             68      69      1.5%           0
    Net income before minority interests               693     585    -15.6%         693
    Minority interests                                  22      27     22.7%        (22)
    Net attributable income                            671     558    -16.8%         671
    Earnings per share[2] (in EUR)                    1.19    0.98    -17.6%        1.19

    Recurring[1] net income from continuing
    operations                                         441     552     25.2%         511
    Recurring[1] earnings per share[2] from
    continuing operations (in EUR)                    0.78    0.97     24.4%        0.91

    Cash flow from continuing operations[3]          1,045   1,195     14.4%       1,198
    Cash flow from continuing operations excl.
    cap. gains tax[4]                                1,010   1,185     17.3%       1,162
    Capital expenditure of continuing operations       363     457     25.9%         449
    Free cash flow from continuing operations          647     728     12.5%         713
    (excluding capital gains tax)[4]

    Investments in securities of continuing
    operations                                          48      92     91.7%          48
    Net debt                                         8,519   7,995     -6.2%       8,519


*      First-half 2014 figures have been restated to reflect the impacts of IFRS 5.

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

2      Calculated based on the number of shares outstanding (excluding treasury shares) at June 30 (569,364,905 shares in 2015, including the increase in capital following payment of the stock dividend on July 3, 2015, versus 564,079,733 shares in 2014).

3      Excluding material non-recurring provisions.

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

The comments below make reference to the restated financial statements for 2014, after reclassification of the Packaging business (including Verallia North America) within "Net income from discontinued operations" in the income statement.

Consolidated sales advanced 4.8% on a reported basis. Exchange rates had a positive 4.6% impact on sales, mainly due to gains in the US dollar and pound sterling against the euro. Changes in Group structure had a negative 0.3% impact, primarily reflecting sales of small, non-core businesses. Like-for-like (comparable structure and exchange rates), sales were up 0.5%, lifted by the price effect.

Operating income climbed 7.8% on a reported basis, driven chiefly by the currency effect. The operating margin improved to 6.4% of sales versus 6.2% in first-half 2014, buoyed by an improved margin in Innovative Materials.

EBITDA (operating income + operating depreciation and amortization) was up 6.7%. The Group's EBITDA margin came out at 9.5% of sales versus 9.3% of sales in first-half 2014.

Non-operating costs totaled €154 million, with a decrease in restructuring costs compared to the same period in 2014. The first-half 2014 basis for comparison (€12 million) included the €202 million write-back from the provision to reflect the reduction in the automotive Flat Glass fine. 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 a negative €41 million versus a negative €51 million in first-half 2014, which had benefited from the €375 million capital gain on the disposal of Verallia North America. Asset write-downs also represented €452 million in first-half 2014 compared to €24 million in the six months to June 30, 2015. Business income for the period fell to €1,080 million (down 3.6% on first-half 2014 which included the one-off €202 million provision write-back).

Net financial expense improved, down 2.4% to €328 million from €336 million one year earlier, reflecting the decrease in the cost of gross debt to 3.7% at June 30, 2015 (4.4% at June 30, 2014). The improvement came despite the increase in other financial expenses mainly due to the discounting of provisions with no cash impact.

The income tax rate on recurring net income remained stable at 30%. Income tax expense totaled €236 million, up from the exceptionally low €158 million in first-half 2014 resulting from asset write-downs in the period, capital gains on the disposal of Verallia North America and the write-back of the provision for the Flat Glass fine.

Recurring net income from continuing operations (excluding capital gains and losses on disposals, asset write-downs and material non-recurring provisions) jumped 25.2% to €552 million.

Net attributable income was down 16.8% to €558 million and includes net income relating to Verallia (attributable to the Group) for €65 million (€67 million in first-half 2014).

Capital expenditure totaled €457 million (€363 million in first-half 2014), representing 2.3% of sales compared to a particularly low 1.9% of sales in the same period one year earlier.

Cash flow from operations rose 14.4% to €1,195 million; before the tax impact of capital gains and losses on disposals, asset write-downs and material non-recurring provisions, cash flow from operations was up 17.3% to €1,185 million, while free cash flow (cash flow from operations less capital expenditure) advanced 12.5% to €728 million (3.7% of sales versus 3.4% of sales in first-half 2014).

The difference between EBITDA and capital expenditure improved, up 1.8% to €1,429 million (€1,404 million in the six months to June 30, 2014), representing 7.2% of sales (7.4% in first-half 2014).

Operating working capital requirements (WCR) totaled €4,448 million at June 30, 2015 (€4,888 million in the same year-ago period), representing 40.8 days' sales, an improvement of 2.5 days year-on-year (an improvement of around 1 day excluding the impact of Verallia and exchange rates).

Investments in securities were limited, at €92 million (€48 million in first-half 2014) and correspond to small-scale acquisitions in the three business sectors.

Net debt continues to improve gradually, down 6.2% year-on-year to €8.0 billion. Net debt represents 40% of consolidated equity, compared to 46% at June 30, 2014.

The net debt to EBITDA ratio came in at 2.1 (1.9 before the reclassification of the Packaging business), compared to 2.0 at end-June 2014.

Update on asbestos claims in the US                              

Some 2,000 claims were filed against CertainTeed in the first half of 2015 (as in first-half 2014). At the same time, around 2,000 claims were settled (versus 3,000 in first-half 2014), bringing the total number of outstanding claims to around 37,000 at June 30, 2015, unchanged from December 31, 2014.

A total of USD 71 million in indemnity payments were made in the US in the 12 months to June 30, 2015, versus USD 68 million in the year to December 31, 2014.

2015 outlook and action plan priorities  

After a first half penalized by tough prior-year comparatives, the Group will benefit from a more favorable climate in the six months to December 31:

  • France should gradually stabilize.
  • Regarding other Western European countries, the outlook in Germany remains uncertain; the UK and Nordic countries should continue to deliver good growth in the second half, and Spain should continue to improve significantly.
  • In North America, trading should improve in the second half.
  • In Asia and emerging countries, our businesses should continue to post good organic growth over the full year, despite the slowdown in Brazil.

The Group confirms its action plan priorities:

  • keep its priority focus on increasing sales prices amid low raw material cost inflation and energy cost deflation;
  • unlock additional cost savings of €360 million excluding Verallia (calculated on the 2014 cost base), of which €190 million in the first half;
  • pursue a capital expenditure program of around €1,500 million excluding Verallia;
  • renew its commitment to invest in R&D in order to support its differentiated, high value-added strategy;
  • finalize the divestment of Verallia, which should be effective before the end of the year;
  • pursue its plan to acquire a controlling interest in Sika.

In line with its long-term objectives, Saint-Gobain repurchased 4.6 million shares over the last three months. To date, this almost entirely offsets the 2015 dilution resulting from the Group Savings Plan and the exercise of stock options.

Lastly, Saint-Gobain confirms its objectives and expects a further like-for-like improvement in operating income for 2015 and a continuing high level of free cash flow.

Financial calendar 

 - Sales for the first nine months of 2015: October 28, 2015, after close of trading on the Paris Bourse.

An information meeting for analysts and investors will be held at 8:30am (GMT+1) on July 30, 2015 and will be broadcast live on 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 (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 further information, please visit http://www.saint-gobain.com.


    Appendix 1: Results by business sector and geographic area
    H1 2014: restated accounts including IFRS 5 impact

                                                                   Change on
                                                                       a
                                                         Change on comparable
                                                             a
                              H1              Change on comparable structure
                             2014       H1     an actual             and
                           Restated    2015    structure structure currency
                          (in EUR m)(in EUR m)   basis     basis     basis      H1 2014
    I. SALES
                                                                           Published  Impact

    By sector and division:
    Innovative
    Materials [1]            4,484     4,922    +9.8%     +9.6%     +2.6%      4,484
    Flat Glass               2,398     2,633    +9.8%    +10.0%     +5.6%      2,398
    High-Performance
    Materials                2,091     2,297    +9.9%     +9.3%     -0.8%      2,091
    Construction
    Products [1]             5,643     6,079    +7.7%     +7.8%     +0.9%      5,643
    Interior Solutions       2,954     3,197    +8.2%     +7.9%     +2.2%      2,954
    Exterior Solutions       2,719     2,913    +7.1%     +7.5%     -0.4%      2,719
    Building Distribution    9,287     9,338    +0.5%     +0.8%     -1.1%      9,287
    Packaging (Verallia)         0         0                                   1,500  -1,500
    Internal sales and misc.  -468      -479     n.m.      n.m.      n.m.       -468
    Group Total             18,946    19,860    +4.8%     +5.1%     +0.5%     20,446  -1,500
    [1] including intra-sector eliminations

    By geographic area:
    France                   5,547     5,282    -4.8%     -4.2%     -4.2%      5,948    -401
    Other Western
    European countries       8,204     8,574    +4.5%     +4.6%     +1.7%      8,835    -631
    North America            2,326     2,738   +17.7%    +19.1%     -2.2%      2,641    -315
    Emerging countries
    and Asia                 3,851     4,219    +9.6%     +9.0%     +4.8%      4,024    -173
    Internal sales            -982      -953     n.m.      n.m.      n.m.     -1,002      20
    Group Total             18,946    19,860    +4.8%     +5.1%     +0.5%     20,446  -1,500

                               H1              Change on    H1        H1
                              2014       H1    an actual   2014      2015
                            Restated    2015   structure (in % of  (in % of
                           (in EUR m)(in EUR m)  basis    sales)    sales)       H1 2014
    II. OPERATING INCOME
                                                                           Published  Impact

    By sector and division:
    Innovative Materials       409       504   +23.2%     9.1%     10.2%        409
    Flat Glass                 131       194   +48.1%     5.5%      7.4%        131
    High-Performance
    Materials                  278       310   +11.5%    13.3%     13.5%        278
    Construction Products      508       529    +4.1%     9.0%      8.7%        508
    Interior Solutions         251       288   +14.7%     8.5%      9.0%        251
    Exterior Solutions         257       241    -6.2%     9.5%      8.3%        257
    Building Distribution      265       242    -8.7%     2.9%      2.6%        265
    Packaging (Verallia)         0         0                                    147     -147
    Misc.                        1         0     n.m.     n.m.      n.m.          1
    Group Total              1,183     1,275    +7.8%     6.2%      6.4%      1,330     -147

    By geographic area:
    France                     209       136   -34.9%     3.8%      2.6%        247      -38
    Other Western
    European countries         382       460   +20.4%     4.7%      5.4%        442      -60
    North America              253       259    +2.4%    10.9%      9.5%        298      -45
    Emerging countries
    and Asia                   339       420   +23.9%     8.8%     10.0%        343       -4
    Group Total              1,183     1,275    +7.8%     6.2%      6.4%      1,330     -147

                              H1              Change on    H1        H1
                             2014       H1    an actual   2014      2015
                           Restated    2015   structure (in % of  (in % of
                          (in EUR m)(in EUR m)  basis    sales)    sales)       H1 2014
    III. BUSINESS INCOME
                                                                           Published  Impact

    By sector and division:
    Innovative Materials       359       463   +29.0%     8.0%      9.4%        359
    Flat Glass                 131       181   +38.2%     5.5%      6.9%        131
    High-Performance
    Materials                  228       282   +23.7%    10.9%     12.3%        228
    Construction Products      323       475   +47.1%     5.7%      7.8%        323
    Interior Solutions         235       258    +9.8%     8.0%      8.1%        235
    Exterior Solutions          88       217  +146.6%     3.2%      7.4%         88
    Building Distribution      105       196   +86.7%     1.1%      2.1%        105
    Packaging (Verallia)         0         0                                    515     -515
    Misc. (a)                  333       -54     n.m.     n.m.      n.m.        -42      375
    Group Total              1,120     1,080    -3.6%     5.9%      5.4%      1,260     -140

    By geographic area:
    France                     661       107   -83.8%    11.9%      2.0%        696      -35
    Other Western
    European countries         182       393  +115.9%     2.2%      4.6%        240      -58
    North America (a)           66       200  +203.0%     2.8%      7.3%        110      -44
    Emerging countries
    and Asia                   211       380   +80.1%     5.5%      9.0%        214       -3
    Group Total              1,120     1,080    -3.6%     5.9%      5.4%      1,260     -140
    (a) after asbestos-related charge (before tax) of EUR45m in H1 2014 and EUR45m in
        H1 2015

                              H1              Change on    H1        H1
                             2014       H1    an actual   2014      2015
                           Restated    2015   structure (in % of  (in % of
                          (in EUR m)(in EUR m)  basis    sales)    sales)        H1 2014
    IV. CASH FLOW
                                                                            Published  Impact

    By sector and division:
    Innovative Materials       344       465   +35.2%     7.7%      9.4%        344
    Flat Glass                 105       221  +110.5%     4.4%      8.4%        105
    High-Performance
    Materials                  239       244    +2.1%    11.4%     10.6%        239
    Construction Products      369       415   +12.5%     6.5%      6.8%        369
    Building Distribution      199       188    -5.5%     2.1%      2.0%        199
    Packaging (Verallia)         0         0                                    123     -123
    Misc. (a)                  133       127     n.m.     n.m.      n.m.        163      -30
    Group Total              1,045     1,195   +14.4%     5.5%      6.0%      1,198     -153

    By geographic area:
    France                      99        90    -9.1%     1.8%      1.7%        134      -35
    Other Western
    European countries         359       470   +30.9%     4.4%      5.5%        439      -80
    North America (a)          209       200    -4.3%     9.0%      7.3%        236      -27
    Emerging countries
    and Asia                   378       435   +15.1%     9.8%     10.3%        389      -11
    Group Total              1,045     1,195   +14.4%     5.5%      6.0%      1,198     -153
    (a) after asbestos-related charge (after tax) of EUR27m in H1 2014 and EUR27m in H1 2015

                                H1             Change on    H1        H1
                                2014       H1   an actual   2014      2015
                              Restated    2015  structure (in % of  (in % of
                             (in EUR m)(in EUR m) basis    sales)    sales)        H1 2014
    V. CAPITAL EXPENDITURE
                                                                            Published  Impact

    By sector and division:
     Innovative Materials       129       165   +27.9%     2.9%      3.4%        129
       Flat Glass                  75        91   +21.3%     3.1%      3.5%         75
    High-Performance
        Materials                   54        74   +37.0%     2.6%      3.2%         54
       Construction Products      150       183   +22.0%     2.7%      3.0%        150
       Interior Solutions          79       110   +39.2%     2.7%      3.4%         79
       Exterior Solutions          71        73    +2.8%     2.6%      2.5%         71
       Building Distribution       76        82    +7.9%     0.8%      0.9%         76
       Packaging (Verallia)         0         0                                     86      -86
       Misc.                        8        27     n.m.     n.m.      n.m.          8
       Group Total                363       457   +25.9%     1.9%      2.3%        449      -86

    By geographic area:
       France                      72        69    -4.2%     1.3%      1.3%         80       -8
    Other Western
         European countries          95       107   +12.6%     1.2%      1.2%        139      -44
      North America               63       119   +88.9%     2.7%      4.3%         83      -20
    Emerging countries
         and Asia                   133       162   +21.8%     3.5%      3.8%        147      -14
      Group Total                363       457   +25.9%     1.9%      2.3%        449      -86

                              H1               Change on    H1        H1
                              2014       H1     an actual   2014      2015
                            Restated    2015    structure (in % of  (in % of
      VI. EBITDA           (in EUR m) (in EUR m)  basis    sales)    sales)        H1 2014

                                                                           Published  Impact

    By sector and division:
       Innovative Materials       626       731   +16.8%     14.0%     14.9%       626
       Flat Glass                 274       347   +26.6%     11.4%     13.2%       274
    High-Performance
        Materials                  352       384    +9.1%     16.8%     16.7%       352
       Construction Products      732       765    +4.5%     13.0%     12.6%       732
       Interior Solutions         403       448   +11.2%     13.6%     14.0%       403
       Exterior Solutions         329       317    -3.6%     12.1%     10.9%       329
      Building Distribution      394       374    -5.1%      4.2%      4.0%       394
      Packaging (Verallia)         0         0                                    230     -230
       Misc.                       15        16     n.m.      n.m.      n.m.        15
      Group Total              1,767     1,886    +6.7%      9.3%      9.5%     1,997     -230

    By geographic area:
       France                     360       287   -20.3%      6.5%      5.4%       419      -59
    Other Western
         European countries         570       650   +14.0%      6.9%      7.6%       674     -104
     North America              327       349    +6.7%     14.1%     12.7%       372      -45
    Emerging countries
         and Asia                   510       600   +17.6%     13.2%     14.2%       532      -22
      Group Total              1,767     1,886    +6.7%      9.3%      9.5%      1,997    -230

    Appendix 2: Sales by business sector and geographic area - Second Quarter
    Q2 2014: restated accounts including IFRS 5 impact

                                                                 Change on a
                                                                 comparable
                                         Change on  Change on a  structure
                     Q2 2014             an actual  comparable      and
                      Restated   Q2 2015   structure   structure   currency
                    (in EUR m) (in EUR m)   basis       basis       basis    Q2 2014
    SALES
                                                                            Published  Impact

    By sector
      and division:
    Innovative
       Materials [1]     2,309     2,537       +9.9%       +9.8%       +3.0%     2,309
      Flat Glass        1,239     1,348       +8.8%       +9.3%       +5.5%     1,239
    High-Performance
       Materials         1,073     1,193      +11.2%      +10.3%       +0.3%     1,073
    Construction
       Products [1]      2,886     3,246      +12.5%      +12.2%       +4.6%     2,886
    Interior
        Solutions         1,502     1,656      +10.3%       +9.7%       +3.4%     1,502
    Exterior
       Solutions         1,401     1,606      +14.6%      +14.7%       +5.7%     1,401
    Building
       Distribution      4,926     5,023       +2.0%       +2.2%       +0.1%     4,926
    Packaging
      (Verallia)            0         0                                           678     -678
    Internal sales
        and misc.          -227      -255        n.m.        n.m.        n.m.      -227
       Group Total       9,894    10,551       +6.6%       +6.9%       +2.1%    10,572     -678
    [1] including
      intra-sector eliminations

    By geographic area:
       France            2,863     2,743       -4.2%       -3.3%       -3.3%     3,076     -213
    Other Western
    European
         countries         4,340     4,584       +5.6%       +5.6%       +2.4%     4,685     -345
      North America     1,168     1,493      +27.8%      +29.2%       +4.9%     1,205      -37
    Emerging countries
       and Asia          2,026     2,215       +9.3%       +8.7%       +5.8%     2,119      -93
      Internal sales     -503      -484        n.m.        n.m.        n.m.      -513       10
      Group Total       9,894    10,551       +6.6%       +6.9%       +2.1%    10,572     -678

    Appendix 3: Consolidated balance sheet

                                                                                    Dec 31,
    (in EUR million)                                                June 30, 2015     2014

                                Assets
    Goodwill                                                               10,897   10,462
    Other intangible assets                                                 3,229    3,085
    Property, plant and equipment                                          11,776   12,657
    Investments in associates                                                 374      386
    Deferred tax assets                                                     1,325    1,348
    Other non-current assets                                                  699      646

    Non-current assets                                                     28,300   28,584

    Inventories                                                             6,157    6,292
    Trade accounts receivable                                               5,990    4,923
    Current tax receivable                                                    128      156
    Other accounts receivable                                               1,658    1,356
    Cash and cash equivalents                                               4,249    3,493
    Assets of discontinued operations                                       2,253        0

    Current assets                                                         20,435   16,220

    Total assets                                                           48,735   44,804

                 Liabilities and Shareholders' equity
    Capital stock                                                           2,294    2,248
    Additional paid-in capital and legal reserve                            6,785    6,437
    Retained earnings and net income for the year                          10,412   10,411
    Cumulative translation adjustments                                      (173)    (953)
    Fair value reserves                                                       318     (63)
    Treasury stock                                                          (174)     (67)

    Shareholders' equity                                                   19,462   18,013

    Minority interests                                                        406      405

    Total equity                                                           19,868   18,418

    Long-term debt                                                          8,495    8,713
    Provisions for pensions and other employee benefits                     3,426    3,785
    Deferred tax liabilities                                                  802      634
    Provisions for other liabilities and charges                            1,290    1,225

    Non-current liabilities                                                14,013   14,357

    Current portion of long-term debt                                       2,096    1,389
    Current portion of provisions for other liabilities and charges           423      409
    Trade accounts payable                                                  5,854    6,062
    Current tax liabilities                                                   104       97
    Other accounts payable                                                  3,770    3,460
    Short-term debt and bank overdrafts                                     1,653      612
    Liabilities of discontinued operations                                    954        0

    Current liabilities                                                    14,854   12,029

    Total equity and liabilities                                           48,735   44,804

    Appendix 4: Consolidated cash flow statement
    2014 restated accounts including IFRS 5 impact

                                                               H1 2014     H1      H1 2014
     (in EUR million)                                          Restated   2015    Published

    Net income of continuing operations
    attributable to equity holders of the parent                   604     493         671

     Minority interests in net income                                21      23          22
     Share in net income of associates, net of dividends received   (10)    (12)        (11)
    Depreciation, amortization and impairment of assets          1,036     633       1,119
      Gains and losses on disposals of assets                       (402)     10        (399)
    Unrealized gains and losses arising from
    changes in fair value and share-based payments                 (17)     21         (17)
     Changes in inventories                                        (463)   (250)       (475)
    Changes in trade accounts receivable and payable,
    and other accounts receivable and payable                   (1,097) (1,128)     (1,199)
     Changes in tax receivable and payable                           17      24          34
    Changes in deferred taxes and provisions
    for other liabilities and charges                           (1,141)     43      (1,129)
    Net cash from operating activities
    of continuing operations                                    (1,452)   (143)
    Net cash from operating activities
    of discontinued operations                                      68      61

     Net cash from operating activities                          (1,384)    (82)     (1,384)

    Purchases of property, plant and equipment
    [ H1-2014: (363), H1-2015: (457) ] and intangible assets      (412)   (511)       (499)
    Acquisitions of property, plant
    and equipment in finance leases                                 (5)     (8)         (5)
    Increase (decrease) in amounts
    due to suppliers of fixed assets                              (100)   (135)       (140)
    Acquisitions of shares in consolidated companies
    [ H1-2014: (29), H1-2015:(85)], net of debt acquired           (89)    (86)        (89)

     Acquisitions of other investments                              (19)     (7)        (19)
     Increase in investment-related liabilities                       1       4           1
     Decrease in investment-related liabilities                      (1)    (14)         (1)
                                      Investments                  (625)   (757)       (752)
    Disposals of property, plant and equipment
    and intangible assets                                           35      73          35
    Disposals of shares in consolidated companies,
    net of net debt divested                                       866       7         999
    Disposals of other investments and other divestments             0       0           0
                                      Divestments                   901      80       1,034
     Increase in loans and deposits                                (55)    (84)        (57)
     Decrease in loans and deposits                                  32      33          34
    Net cash from (used in) investment and divestment
    activities of continuing operations                            253   (728)
    Net cash from (used in) investment and divestment
    activities of discontined operations                             6   (107)

     Net cash used in investment and divestment activities          259   (835)         259

     Issues of capital stock                                        408     394         408
    Minority interests' share in capital
    increases of subsidiaries                                        8      12           8
    Increase (decrease) in investment-related liabilities
    (put on minority interests)                                      0       0           0
     Disposals of minority interests without loss of control          0       0           0
     (Increase) decrease in treasury stock                            0   (104)           0
     Dividends paid                                                (685)   (695)       (685)
     Increase (decrease) in dividends payable                       441     455         441
    Dividends paid to minority shareholders
    of consolidated subsidiaries                                   (34)    (34)        (35)
    Net cash from (used in) financing activities
    of continuing operations                                       138      28
    Net cash from (used in) financing activities
    of discontinued operations                                      (1)     (1)

     Net Cash from (used in) financing activities                   137      27         137

     Increase (decrease) in net debt                               (988)   (890)       (988)

     Net effect of exchange rate changes on net debt                (12)    (13)         (5)
     Net effect from changes in fair value on net debt              (13)     33         (13)
    Net effect of exchange rate changes on
    net debt of discontinued operations                              7      (3)
    Transfer of net debt in assets and
    liabilities of discontinued operations                           0      99


      Net debt at beginning of period                             (7,513) (7,221)     (7,513)

      Net debt at end of period                                   (8,519) (7,995)     (8,519)

    Appendix 5: Results of Packaging Sector (Verallia)

                                                                                     Change
                                                                                      on a
                                                                                   comparable
                                                       Change on an   Change on a  structure
                                    H1            H1        actual      comparable     and
                                   2014          2015      structure     structure   currency
                               (in EUR m)    (in EUR m)     basis         basis      basis
    I. SALES

     Packaging (Verallia)         1,500         1,194        -20.4%         +0.7%      +2.1%
        including VNA              314             0
     Total                        1,500         1,194        -20.4%         +0.7%      +2.1%

                                                        Change on an       H1          H1
                                    H1            H1        actual         2014        2015
                                   2014          2015      structure     (in % of    (in % of
                                (in EUR m)    (in EUR m)     basis        sales)      sales)
    II. OPERATING INCOME *

      Packaging (Verallia)           147           116        -21.1%         9.8%        9.7%
         including VNA               45             0
     Total                          147           116        -21.1%         9.8%        9.7%

                                                         Change on an       H1          H1
                                    H1            H1         actual         2014        2015
                                   2014          2015      structure     (in % of    (in % of
                               (in EUR m)    (in EUR m)     basis        sales)      sales)
    III. BUSINESS INCOME *

     Packaging (Verallia)           140           112        -20.0%         9.3%        9.4%
         including VNA               43             0
      Total                          140           112        -20.0%         9.3%        9.4%

                                                        Change on an       H1          H1
                                   H1            H1        actual         2014        2015
                                 2014          2015      structure     (in % of    (in % of
                               (in EUR m)    (in EUR m)     basis        sales)      sales)
    IV. CASH FLOW

    Packaging (Verallia)           153           140         -8.5%         10.2%      11.7%
         including VNA               27             0
     Total                          153           140         -8.5%         10.2%      11.7%

                                                        Change on an       H1          H1
                                   H1            H1        actual         2014        2015
                                  2014          2015      structure     (in % of    (in % of
                               (in EUR m)    (in EUR m)     basis        sales)      sales)

    V. CAPITAL EXPENDITURE

     Packaging (Verallia)            86            67        -22.1%         5.7%        5.6%
         including VNA               19             0
      Total                           86            67        -22.1%         5.7%        5.6%

                                                        Change on an       H1          H1
                                  H1            H1        actual         2014        2015
                                 2014          2015      structure     (in % of    (in % of
     VI. EBITDA                (in EUR m)    (in EUR m)     basis        sales)      sales)

     Packaging (Verallia)           230           200        -13.0%         15.3%      16.8%
         including VNA               45             0
     Total                          230           200        -13.0%         15.3%      16.8%

    * After stop of depreciation of EUR18m in H1 2014 and before stop of depreciation of
    EUR14m in H1 2015

    Appendix 6: Debt at June 30, 2015

    Amounts in EURbn                            Comments

    Amount and structure of net debt    EURbn

                                                At end of June 2015, 74% of gross debt
                                                was at fixed interest rates and the
    Gross debt                           12.2   average cost of gross debt was 3.7%
    Cash & cash equivalents               4.2
    Net debt                              8.0

    Breakdown of gross debt              12.2

    Bond debt and perpetual notes         9.5
    September 2015                        1.0
    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

    Other long-term debt                  0.7  (including EUR 0.4bn long-term
                                               securitization)

    Short-term debt                       2.0  (excluding bonds)
    Commercial paper (< 3 months)         0.9  Maximum amount of bond issue: EUR3bn
    Securitization                        0.3  (EUR 0.2bn equivalent in USD + EUR 0.1bn)
                                               Annual rollover; several hundreds of
    Local debt and accrued interest       0.8  different sources of financing

    Credit lines, cash & cash equivalents 8.2

    Cash and cash equivalents             4.2
    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 2019                        None
    Syndicated line: EUR1.5bn         December 2018                        None

 




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SOURCE Saint-Gobain