RNS Number:9569N
Compagnie de Saint-Gobain
24 July 2003
press release
* FIRST-HALF 2003 RESULTS
* GROUP RESULTS SEVERELY IMPACTED BY UNFAVORABLE EXCHANGE RATES
- Sales: EUR 14,650 million, down 4.6% including a 7.7-point negative
currency effect
- Operating income: EUR 1,187 million, down 8.1% including a
9.1-point negative currency effect
- Net income: EUR 470 million, down 5.6%
- Net income before profits and losses on sales of non-current
assets: EUR 471 million, down 8.5%
* MODERATE GROWTH IN SALES AND OPERATING INCOME, ON A "LIKE-FOR-LIKE"
BASIS
- Sales up 2.0%
- Operating income up 0.6%
* 2003 TARGET: MODEST INCREASE IN OPERATING INCOME ON A CONSTANT RATE
BASIS
* Net income
Saint-Gobain Group consolidated net income for the first half of 2003 amounted
to EUR 470 million, a decrease of 5.6% on the same period of 2002. Net income
before profits and losses on sales of non-current assets came to EUR 471
million, down 8.5% on the year-earlier period. The decline was attributable to
unfavorable exchange rates (US Dollar: -19%; Brazilian Real: -39%;, British
Pound: -9%) which significantly impacted the Group's main income statement
captions. At constant exchange rates*, net income was on a par with first-half
2002.
* conversion based on average exchange rates for first-half 2002
* Performance of Group sectors and divisions: moderate like-for-like
growth in sales (2.0%) and operating income (0.6%)
Like-for-like consolidated sales - based on a comparable Group structure and at
constant exchange rates - rose 2.0% compared with first-half 2002. Changes in
exchange rates negatively impacted all Group divisions (see appendix 1).
However, all three sectors reported increased like-for-like sales, spurred
mainly by higher sales prices.
The Glass Sector achieved moderate organic growth, with like-for-like sales up
1.6%. However, operating margin dipped slightly, to 10.2% from 10.6%. This was
due to lower margins in the Containers division, caused by soaring energy costs
in the United States, as well as in the Insulation and Reinforcements divisions
as a result of renewed pricing pressure. The Flat Glass division, for its part,
turned in the best operating income performance within the Group on a
like-for-like basis. These good results were primarily attributable to strong
sales in emerging markets as well as in the European automobile market,
offsetting the ongoing erosion of demand from the European construction
industry.
The High Performance Materials Sector posted a solid improvement in operating
margin, to 9% from 7.2%, on the back of a modest 1.1% increase in like-for-like
sales. This was achieved primarily thanks to the cost-cutting measures
implemented in 2001 and 2002. Sales growth was held back by the persistently
depressed conditions in manufacturing industry on both sides of the Atlantic,
which have prevented any real recovery in corporate capital spending.
The Housing Products Sector was the star performer in terms of organic growth.
The 2.7% rise in like-for-like sales was attributable to the 12.9% surge in Pipe
sales, spurred by major distant export contracts. However, the sector's
operating margin dipped slightly, to 6.0% from 6.7%, due to sharply higher raw
materials costs for the Building Materials division in the United States. The
Building Materials Distribution division continued to gain ground in its main
markets, through a combination of organic and external growth, and also posted a
further improvement in profitability despite the persistently dismal conditions
in Germany.
* * *
* Detailed review of interim results:
Key figures from the interim consolidated financial statements reviewed by the
Board of Directors on July 24, 2003 are as follows:
H1 2002 H1 2003 Change
EURm EURm %
(1) (2) (2)/(1)
Net sales 15,350 14,650 -4.6%
Operating income 1,292 1,1,87 -8.1%
Dividend income 17 4 -76.5%
Interest and other financial charges, net (274) (242) -11.7%
Non-operating costs (99) (124) +25.3%
Income before profit on sales of non-current assets and taxes 936 825 -11.9%
Profit (loss) on sales of non-current assets, net (24) 2 n.m.
Provisions for income tax (321) (271) -15.6%
Amortization of goodwill (78) (74) -5.1%
Share in net results of equity investees 1 2 +100%
Net income before minority interests 514 484 -5.8%
Minority interests (16) (14) -12.5%
Net income 498 470 -5.6%
Earnings per share (in EUR) 1.44 1.38 -4.2%
Net income excluding profits and losses on sales of non-current 515 471 -8.5%
assets
Earnings per share excluding profits and losses on sales of
non-current assets (in EUR) 1.49 1.38 -7.4%
Cash flow from operations 1,357 1,243 -8.4%
Cash flow excluding capital gains tax 1,350 1,247 -7.6%
Capital expenditure 575 501 -12.9%
Investments in securities 480 251 -47.7%
Net indebtedness 8,009 7,099 -11.4%
Consolidated sales contracted by 4.6% or 5.9% based on a comparable structure.
The decline was entirely attributable to unfavourable exchange rates - mainly
the sharp weakening of the US dollar, sterling and the Brazilian real against
the euro - which had a 7.7% negative impact on sales for the period. Excluding
the currency effect, sales climbed 3.4% (2.0% based on a comparable structure).
Volumes expanded by 0.8% while average sales prices rose by a further 1.2%.
The breakdown by geographic area is as follows: France 32.9%, other European
countries 41.3%, North America 19.0% and rest of the world 6.8%.
Operating income declined by 8.1%. However, excluding the currency effect,
operating income rose 1.0% (0.6% based on a comparable structure). Operating
margin eased back to 8.1% of sales, from 8.4% in first-half 2002. The decline
stemmed from lower margins in the Insulation and Reinforcements Division, and
also in the Building Materials Division due to soaring raw materials prices in
the United States.
Profitability improved in France and emerging markets, but retreated in the
other countries of Europe and in North America.
Dividend income from non-consolidated companies fell to EUR 4 million from EUR
17 million in first-half 2002, reflecting the absence of a 2002 dividend on
Vivendi Universal shares.
Interest and other financial charges, net amounted to EUR 242 million versus EUR
274 million in first-half 2002. The 11.7% improvement was attributable to a
reduction in Group indebtedness and the favourable impact of converting interest
on dollar-denominated debt into euros.
Non-operating costs for the period amounted to EUR 124 million, equivalent to
half of total non-operating costs for 2002. The figures for first-half 2003 and
first-half 2002 both include a EUR 50 million charge for the cost of asbestos
claims filed against CertainTeed.
Net profit on sales of non-current assets amounted to EUR 2 million. Profits on
asset sales were almost entirely offset by permanent write-downs of assets.
Amortization of goodwill stood at EUR 74 million versus EUR 78 million in
first-half 2002.
Minority interests dipped to EUR 14 million from EUR 16 million in first-half
2002, due to the unfavourable currency effect on minority interests in the
Brazilian subsidiaries.
Net income came in at EUR 470 million, down 5.6% on first-half 2002. Based on
the 341,010,680 shares outstanding at June 30, 2003, earnings per share stood at
EUR 1.38 versus EUR 1.44 for first-half 2002. Net income at constant exchange
rates was virtually on a par with that for the year-earlier period.
Excluding profits and losses on sales of non-current assets, net income amounted
to EUR 471 million versus EUR 515 million in first-half 2002, a decline of 8.5%.
Earnings per share before profits and losses on sales of n on-current assets
stood at EUR 1.38, compared with EUR 1.49 for the year-earlier period, based on
the 341,010,680 shares outstanding at June 30, 2003. Net income before profits
and losses on sales of non-current assets and at constant exchange rates was
virtually unchanged compared with first-half 2002.
Cash flow from operations contracted by 8.4% to EUR 1,243 million. Excluding
taxation of profits on sales of non-current assets (EUR 4 million), cash flow
from operations was EUR 1,247 million, versus EUR 1,350 million in first-half
2002, a decrease of 7.6%. Excluding the currency effect, cash flow from
operations was stable compared with the year-earlier period.
Capital expenditure amounted to EUR 501 million compared with EUR 575 million in
first-half 2002, representing 3.4% of sales versus 3.7%.
Investments in securities totalled EUR 251 million, including EUR 159 million
for acquisitions of local Building Materials distributors.
Net indebtedness (excluding financial instruments) came to EUR 7.1 billion at
June 30, 2003, after payment of the 2002 dividend. This was significantly below
the year-earlier figure of EUR 8.0 billion. The gearing ratio - based on
consolidated shareholders' equity plus non-voting participating securities - was
61% compared with 67% at June 30, 2002.
* * *
Asbestos claims in the United States: During the first half of 2003, around
48,000 new asbestos claims were filed against CertainTeed, including 28,000 in
the state of Mississippi. As announced at the beginning of the year, there was
an exceptional surge in asbestos claims filed in Mississippi at the end of 2002
due to the adoption of a new law, applicable from January 1, 2003, which makes
this state a less friendly venue for these claims. Most of the claims recorded
in Mississippi in the first half of 2003 were filed before the new law came into
effect on January 1 but were not disclosed to the company until after that date.
The flow of claims in Mississippi declined significantly in June, indicating
that the surge is probably over.
Some 20,000 claims were filed during the period in other states, compared with
21,400 in the second half of 2002. Apart from the temporary rise in claims in
Mississippi, average monthly new claims in the first half of 2003 were on a par
with the second half of 2002, at less than 4,000.
During first-half 2003, 25,000 claims were settled versus 24,000 in second-half
2002, and 7,000 claims were placed on the inactive docket. At June 30, 2003,
some 123,000 claims were in progress.
The average cost of claims settled in first-half 2003 was USD 2,100, unchanged
since September 2002.
In the coming months, the number of new claims recorded in Mississippi is
expected to remain very low. However, there may be a rush to the courthouse in
Texas, as the state legislature is seriously considering a new legislation
making the state a less friendly venue.
The proposal to set up a federal Asbestos Trust Fund contained in a Bill
introduced by Senator Hatch might pave the way for all current and future
claims to be dealt with at national level.
* * *
Outlook and targets: In light of the sharp rise in the euro against most other
currencies observed since the beginning of the year, operating income and net
income for the full year will be down on 2002. At constant exchange rates (i.e.
based on average 2002 exchange rates), the Group is aiming for a modest increase
in operating income.
July 24, 2003
Next results announcement:
- sales for the first nine months of 2003: October 28, 2003 after market closure
Investor Relations Department
Florence TRIOU-TEIXEIRA Tel. : +33 1 47 62 45 19 - mailto : florence.triou@saint-gobain.com
Alexandre ETUY Tel. : +33 1 47 62 37 15 - mailto : alexandre.etuy@saint-gobain.com
Fax : +33 1 47 62 50 62
Appendix 1
Result by Business Sector, Division and Geographic
Area
(in EUR millions)
H1 H1 change on change on a change on
2002 2003 an actual comparable a comparable
I. SALES structure structure structure and
basis basis currency basis
by sector and division:
Glass (1) 6 018 5 642 -6,2% -7,0% +1,6%
Flat Glass 2 244 2 159 -3,8% -4,3% +3,2%
Insulation and Reinforcements 1 678 1 534 -8,6% -10,4% -1,9%
Containers 2 101 1 955 -6,9% -6,9% +2,7%
High-Performance Materials (1) 1 913 1 640 -14,3% -12,6% +1,1%
Ceramics & Plastics and Abrasives 1 913 1 640 -14,3% -12,6% +1,1%
Housing Products (1) 7 565 7 515 -0,7% -3,2% +2,7%
Building Materials 1 644 1 436 -12,7% -13,0% +1,0%
Building Materials Distribution 5 371 5 477 +2,0% -1,4% +2,0%
Pipe 690 750 +8,7% +8,1% +12,9%
internal sales -146 147 n.s.
Group 15 350 14 650 -4,6% -5,9% +2,0%
by geographic area:
France 4 793 5 022 +4,8% +2,2% +2,2%
Other European Countries 6 420 6 321 -1,5% -3,2% -0,1%
North America 3 614 2 894 -19,9% -18,4% +0,2%
Rest of the world 1 127 1 031 -8,5% -12,1% +23,2%
internal sales -604 -618 n.s.
Group 15 350 14 650 -4,6% -5,9% +2,0%
(1) including inter-division
eliminations
H1 H1 change on
II. OPERATING INCOME 2002 2003 an actual
structure
basis
by sector and division:
Glass 641 574 -10,5%
Flat Glass 227 227 +0,0%
Insulation and Reinforcements 176 134 -23,9%
Containers 238 213 -10,5%
High-Performance Materials 137 147 +7,3%
Ceramics & Plastics and Abrasives 137 147 +7,3%
Housing Products 511 453 -11,4%
Building Materials 199 125 -37,2%
Building Materials Distribution 244 250 +2,5%
Pipe 68 78 +14,7%
misc. 3 13 n.s.
Group 1 292 1 187 -8,1%
by geographic area:
France 445 470 +5,6%
Other European Countries 417 384 -7,9%
North America 328 223 -32,0%
Rest of the world 102 110 +7,8%
Group 1 292 1 187 -8,1%
H1 H1 change on
III. CASH FLOW 2002 2003 an actual
structure
basis
by sector and division:
Glass 770 696 -9,6%
Flat Glass 292 266 -8,9%
Insulation and Reinforcements 205 179 -12,7%
Containers 273 251 -8,1%
High-Performance Materials 131 153 +16,8%
Ceramics & Plastics and Abrasives 131 153 +16,8%
Housing Products 387 336 -13,2%
Building Materials 149** 90 -39,6%
Building Materials Distribution 166 172 +3,6%
Pipe 72 74 +2,8%
Misc. 69 58** -15,9%
Group 1 357 1 243 -8,4%
by geographic area:
France 445 487 +9,4%
Other European Countries 472 416 -11,9%
North America 295** 212** -28,1%
Rest of the world 145 128 -11,7%
Group 1 357 1 243 -8,4%
** after asbestos-related litigation charge of EUR 34 m
after taxes
IV. CAPITAL EXPENDITURE H1 H1 change on
ON PLANT AND EQUIPMENT 2002 2003 an actual
structure
basis
by sector and division:
Glass 345 286 -17,1%
Flat Glass 158 102 -35,4%
Insulation and Reinforcements 78 86 +10,3%
Containers 109 98 -10,1%
High-Performance Materials 58 42 -27,6%
Ceramics & Plastics and Abrasives 58 42 -27,6%
Housing Products 171 172 +0,6%
Building Materials 52 57 +9,6%
Building Materials Distribution 105 95 -9,5%
Pipe 14 20 +42,9%
misc. 1 1 +0,0%
Group 575 501 -12,9%
by geographic area:
France 104 126 +21,2%
Other European Countries 242 214 -11,6%
North America 114 87 -23,7%
Rest of the world 115 74 -35,7%
Group 575 501 -12,9%
Appendix 2: CONSOLIDATED BALANCE SHEET
In EUR millions
ASSETS June 30, 2003 Dec. 31, 2002
Goodwill 5 205 5 521
Other intangible assets, net 1 863 1 914
7 068 7 435
Property, plant and equipment 21 806 22 069
Less: depreciation (12 864) (12 687)
8 942 9 382
Investments in equity investees 104 114
Investments, at cost 139 144
Non-current marketable securities 147 175
Other non-current assets 1 514 1 590
1 904 2 023
Non-current assets 17 914 18 840
Inventories 4 873 4 664
Trade accounts receivable 4 986 4 264
Other receivables 1 236 1 010
Short-term loans 140 162
Marketable securities 760 469
Cash and cash equivalents 955 739
Current assets 12 950 11 308
Total assets 30 864 30 148
LIABILITIES AND SHAREHOLDERS' EQUITY
Capital stock 1 364 1 364
(at 06/30/2003 and 12/31/2002, composed of 341 010 680 shares with a par value of EUR 4)
Additional paid-in capital and legal reserve 2 264 2 264
Retained earnings and net income for the period 9 295 9 204
Translation adjustments (1 808) (1 438)
Treasury stock (87) (79)
Shareholders' equity 11 028 11 315
Minority interests 216 227
Net equity of consolidated entities 11 244 11 542
Non-voting participating securities 391 391
Pensions and other post-retirement benefits 2 290 2 353
Deferred tax liability 554 696
Other liabilities 1 059 1 084
Long-term debt 6 759 6 238
Shareholders' equity and non-current liabilities 22 297 22 304
Trade accounts payable 3 740 3 352
Other payables 2 632 2 348
Current portion of long-term debt 651 487
Short-term debt and bank overdrafts 1 544 1 657
Current liabilities 8 567 7 844
Total liabilities and shareholders' equity 30 864 30 148
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR ILFLTDDISFIV