TIDMCOD
RNS Number : 3531M
Compagnie de Saint-Gobain
27 July 2017
PRESS RELEASE
Paris, July 27, 2017
First-half 2017 results
Significant progress in results across the board
-- Organic growth at 3.5% with volumes up 1.7% despite a
negative impact of around EUR220 million (1.1%) resulting from the
June 27, 2017 cyber-attack, fully in line with our July 13, 2017
announcement
-- Prices up 1.8%, offsetting the rise in raw material and energy costs at Group level
-- Reported sales up 4.4%, aided by a positive 0.8% Group
structure impact and a positive 0.1% currency effect
-- Operating income up 7.1% on a reported basis and 6.6%
like-for-like, despite the negative impact of the cyber-attack,
estimated at EUR65 million, or 4.4% of first-half operating
income
-- Recurring net income up 20.4% and free cash flow up 19.4%
-- 18 acquisitions in first-half 2017 in line with investor day objectives
-- Objectives for full-year 2017 confirmed
(EURm) H1 2016 H1 2017 Change Change
like-for-like
Sales 19,549 20,409 +4.4% +3.5%
EBITDA 1,957 2,071 +5.8%
Operating income 1,368 1,465 +7.1% +6.6%
Recurring net income(1) 624 751 +20.4%
Free cash flow(2) 823 983 +19.4%
Pierre-André de Chalendar, Chairman and Chief Executive Officer
of Saint-Gobain, commented:
"The first half of 2017 confirmed the encouraging trends seen in
2016, particularly in France. Excluding the one-off impact of the
cyber-attack, the Group grew at its fastest rate since the first
half of 2011 translating into double-digit growth in operating
income. The focus on sales prices paid off, allowing us to offset
the rise in raw material and energy costs at Group level. Overall,
the results were in line with our expectations, and we can
therefore confirm with confidence our 2017 objectives."
1. Recurring net income excluding capital gains and losses on
disposals, asset write-downs and material non-recurring
provisions.
2. Free cash flow excluding the tax impact of gains and losses
on disposals, asset write-downs and material non-recurring
provisions, and less capital expenditure.
3.
Operating performance
First-half reported sales increased 4.4% year-on-year to
EUR20,409 million, including a positive 0.1% currency impact
resulting mainly from the depreciation of the euro against the
Brazilian real and US dollar, offset by the fall in pound sterling.
The positive 0.8% Group structure impact essentially reflects the
consolidation of acquisitions made in Asia and emerging countries
(Emix, Solcrom, Tumelero), in new niche technologies and services
(H-Old, Isonat, France Pare-Brise), and to further strengthen our
positions in Building Distribution (particularly in Nordic
countries).
On a like-for-like basis, sales increased 3.5%, driven both by
prices (up 1.8%), which continued to rise in a more inflationary
cost environment, and by volumes (up 1.7%). Volumes increased
across all Business Sectors and regions, with a slightly negative
calendar impact over the first half (around +3% in Q1 and around
-3.5% in Q2).
The Group's operating income climbed 7.1% on a reported basis
and 6.6% like-for-like, while its operating margin(1) widened to
7.2% versus 7.0% in first-half 2016.
On June 27, 2017, Saint-Gobain experienced an important
cyber-attack, which led to information system downtime and supply
chain disruptions. IT systems were quickly restored and all of our
operations had returned to normal by July 10. All efforts were made
to ensure the continuity of our business and in particular to keep
any impact on our customers to a minimum. The cyber-attack is not
expected to have any impact on commercial relations going
forward.
The cyber-attack is estimated to have had a negative impact of
EUR220 million on first-half sales and of EUR65 million on
first-half operating income. Over the full year, the negative
impact is estimated at less than EUR250 million on sales and EUR80
million on operating income, with July including additional losses
in some businesses in the first few days of the month, a claw-back
of June sales, and costs associated with re-starting operations.
Overall, just over half the impact of the cyber-attack concerned
Building Distribution, while the rest concerned the Group's
industrial businesses, particularly Construction Products. From a
geographical perspective, Western European countries were the
hardest hit, especially Nordic countries, Germany and France.
Performance of Group Business Sectors
Innovative Materials sales increased 4.1% like-for-like, driven
by Flat Glass. There was another significant improvement in the
Business Sector's operating margin, up to 12.3% from 11.2% in
first-half 2016.
-- Upbeat trends continued in Flat Glass, which reported 5.6%
organic growth over the first half. The automotive business enjoyed
further good momentum led by Asia and emerging countries; sales in
Europe remained healthy. Construction markets benefited from an
upturn in volumes in Western Europe and an increase in float
prices; Asia and emerging countries posted further growth despite
Brazil remaining down. Organic growth combined with optimized
operating leverage and a positive price-cost spread for raw
materials and energy, drove a further rally in the operating
margin, up to 9.9% from 8.8% in first-half 2016.
-- High-Performance Materials (HPM) sales rose 2.5% on a
like-for-like basis over the first half, spurred by volumes amid a
measured rise in raw material and energy costs. All HPM businesses
advanced in the first half, with a strong second quarter for
Ceramics in particular. The operating margin benefited from
operating leverage on volumes, moving up to 15.0% from 14.0% in
first-half 2016.
1. Operating margin = Operating income expressed as a percentage of sales.
Construction Products (CP) sales were up 3.7% like-for-like over
the first half. The operating margin for the Business Sector was
9.3% compared to 9.4% in the same period of 2016, affected by the
cyber-attack and by a timelag between pricing and cost
increases.
-- Interior Solutions reported 4.1% organic growth in the first
half, with an increase in volumes and prices amid strong inflation
in raw material and energy costs. Trading in Western Europe and in
Asia and emerging countries improved in terms of both volumes and
prices, with prices continuing to rise during the second quarter.
North America also advanced, with a slight acceleration in prices
since the first quarter. The operating margin slipped to 9.9%
versus 10.2% in first-half 2016, reflecting the impact of the
cyber-attack and the rise in raw material and energy costs.
-- Exterior Solutions like-for-like sales climbed 3.4% in the
first half. Exterior Products saw an increase in both volumes and
prices over the period, with a more difficult second quarter as
expected due to the combined impact of significant stockpiling by
distributors in North America early in the year and a tough
comparison basis against last year (favorable weather conditions in
the US). Prices increased in the Pipe business against a backdrop
of rising raw material costs, but volumes continued to suffer from
the lack of major export contracts. Mortars reported good organic
growth overall, led by Asia and emerging countries in particular
despite persistently tough conditions in Brazil. Overall, the
operating margin came in at 8.4%, up from 8.3% in first-half 2016
despite the impact of the cyber-attack.
Building Distribution like-for-like sales rose 3.2%. Trading in
France continued to recover, spurred by brisk momentum in
new-builds and with positive pricing. Nordic countries were
particularly hard hit by the cyber-attack, although Norway and
Sweden still delivered good gains. Germany, which was also hard
hit, contracted slightly, while France was affected albeit to a
lesser extent. The UK continued to enjoy a steady pace of growth,
driven by prices. Spain and the Netherlands posted further strong
growth, while a tough macroeconomic environment continued to affect
Brazil. The operating margin was 2.7%, compared to 2.8% in
first-half 2016, squeezed by supply chain disruptions resulting
from the cyber-attack.
Analysis by region
The Group reported organic growth and a slight improvement in
margins in all of its regions over the first half, with the
calendar impact slightly negative during the period (around +3% in
Q1 and
around -3.5% in Q2).
-- France confirmed its improvement in the first half, with
organic growth at 2.2% buoyed by good momentum in the new-build
market. Renovation showed the first signs of improvement at the end
of the first half. The decline in Pipe continued to weigh on
performance in the absence of major export contracts. The operating
margin stood at 2.5% versus 2.4% in first-half 2016.
-- Other Western European countries reported further organic
growth, at 2.7% for the first half. Good market conditions
continued to benefit Nordic countries as well as the UK despite a
lack of visibility. Germany was down slightly. The region's
operating margin stood at 6.0% versus 5.9% in first-half 2016.
-- North America posted 2.5% like-for-like growth in the first
half, driven by construction. Industry made small gains overall,
despite contrasting trends between end-markets. The operating
margin was up slightly, at 11.8% versus 11.6% in the same period in
2016.
-- Asia and emerging countries delivered further good organic
growth, at 6.7% for the first half, led by all regions despite the
ongoing slowdown in Brazil. Asia advanced, with strong trading in
China and India. Eastern Europe continued on an uptrend, driven by
Poland and the Czech Republic. The region continued to produce a
good operating margin, at 10.7% of sales compared to 10.6% of sales
in first-half 2016.
Analysis of the consolidated financial statements for first-half
2017
The unaudited interim consolidated financial statements for
first-half 2017 were subject to a limited review by the statutory
auditors and were approved and adopted by the Board of Directors on
July 27, 2017.
H1 H1 %
2016 2017 change
EURm (A) (B) (B)/(A)
------- ------- --------
Sales and ancillary revenue 19,549 20,409 4.4%
Operating income 1,368 1,465 7.1%
Operating depreciation and
amortization 589 606 2.9%
EBITDA (operating income +
operating depr./amort.) 1,957 2,071 5.8%
Non-operating costs (180) (166) -7.8%
Capital gains and losses on
disposals, asset write-downs,
corporate acquisition fees
and earn-out payments (32) 7 -121.9%
Business income 1,156 1,306 13.0%
Net financial expense (287) (231) -19.5%
Income tax (261) (297) 13.8%
Share in net income (loss)
of associates 2 (1) n.s.
Net income before minority
interests 610 777 27.4%
Minority interests 14 23 64.3%
Net attributable income 596 754 26.5%
Earnings per share(2) (in
EUR) 1.08 1.36 25.9%
Recurring net income(1) 624 751 20.4%
Recurring(1) earnings per
share(2) (in EUR) 1.13 1.35 19.5%
Cash flow from operations(3) 1,260 1,407 11.7%
Cash flow from operations
(excluding capital gains tax)(4) 1,251 1,410 12.7%
Capital expenditure(5) 428 427 -0.2%
Free cash flow(6) 823 983 19.4%
Investments in securities 68 136 100.0%
Net debt 6,624 6,816 2.9%
1. Recurring net income: net attributable income excluding
capital gains and losses on disposals, asset write-downs and
material non-recurring provisions.
2. Calculated based on the number of shares outstanding at June
30 (554,424,460 shares in 2017, versus 552,574,120 shares in
2016).
3. Cash flow from operations = operating cash flow excluding material non-recurring provisions.
4. Cash flow from operations excluding capital gains tax = (3)
less the tax impact of capital gains and losses, asset write-downs
and material non-recurring provisions.
5. Capital expenditure: investments in property, plant and equipment.
6. Free cash flow = (4) less capital expenditure.
Consolidated sales advanced 3.5% like-for-like, led both by
prices (up 1.8%) in a more inflationary cost environment, and by
volumes (up 1.7%). On a reported basis, sales were up 4.4%, with a
positive 0.1% currency impact resulting mainly from the
depreciation of the euro against the Brazilian real and US dollar,
offset by the fall in pound sterling. The positive 0.8% Group
structure impact essentially reflects the consolidation of
acquisitions made in Asia and emerging countries (Emix, Solcrom,
Tumelero), in new niche technologies and services (H-Old, Isonat,
France Pare-Brise), and to further strengthen our positions in
Building Distribution (particularly in Nordic countries).
Operating income increased 7.1% based on reported figures and
6.6% like-for-like. The operating margin widened to 7.2% of sales
from 7.0% of sales in first-half 2016.
EBITDA (operating income plus operating depreciation and
amortization) climbed 5.8% to EUR2,071 million, while the EBITDA
margin moved up to 10.1% of sales from 10.0% of sales in the same
period in 2016.
Non-operating costs totaled EUR166 million, with a fall in
restructuring costs compared to first-half 2016. The EUR45 million
accrual to the provision for asbestos-related litigation involving
CertainTeed in the US remained 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 represented income of
EUR7 million versus an expense of EUR32 million in first-half 2016.
Business income therefore rose 13.0% to EUR1,306 million.
Net financial expense improved significantly, down 19.5% to
EUR231 million from EUR287 million in first-half 2016, mainly
reflecting the decrease in the cost of gross debt, which stood at
2.7% at end-June 2017 versus 3.9% at June 30, 2016.
The income tax rate on recurring net income was 27% compared to
30% in the prior-year period, due in particular to a continued
favorable geographical mix effect.
Income tax totaled EUR297 million (EUR261 million in first-half
2016).
Recurring net income (excluding capital gains and losses on
disposals, asset write-downs and material non-recurring provisions)
jumped 20.4% to EUR751 million.
Net attributable income surged 26.5% to EUR754 million.
Capital expenditure was stable at EUR427 million, representing
2.1% of sales compared to 2.2% of sales in first-half 2016.
Cash flow from operations was up 11.7% to EUR1,407 million;
before the tax impact of capital gains and losses on disposals,
asset write-downs and material non-recurring provisions, cash flow
from operations advanced 12.7% to EUR1,410 million, and free cash
flow increased 19.4% to EUR983 million (4.8% of sales versus 4.2%
of sales in first-half 2016).
The difference between EBITDA and capital expenditure improved,
up 7.5% to EUR1,644 million (EUR1,529 million in first-half 2016),
representing 8.1% of sales (7.8% in first-half 2016).
Operating working capital requirements (operating WCR) settled
at EUR4,333 million (EUR4,244 million at June 30, 2016), stable at
39 days of sales.
Investments in securities doubled, at EUR136 million (EUR68
million in first-half 2016) and correspond to targeted acquisitions
made to develop innovative niches and consolidate strong positions.
They include Biolink in Germany (Innovative Materials), SimTek
Fence in the US (Construction Products) and Tumelero in Brazil
(Building Distribution).
Net debt was up slightly at EUR6.8 billion from EUR6.6 billion
at June 30, 2017, with EUR174 million in share buybacks over the
period. Net debt represents 36% of consolidated equity, stable
versus end-June 2016. The net debt to EBITDA ratio over the last
12-month rolling period was also stable at 1.7 at June 30,
2017.
Update on asbestos claims in the US
Some 1,600 claims were filed against CertainTeed in first-half
2017 (versus 1,700 in first-half 2016).
At the same time, around 2,300 claims were settled (versus 2,100
claims in first-half 2016), bringing the total number of
outstanding claims to around 34,400 at June 30, 2017, a decrease of
700 compared to end-2016 (35,100).
A total of USD 71 million in indemnity payments were made in the
12 months to June 30, 2017, compared to USD 97 million in the 12
months to December 31, 2016, when payments for settlements dating
from prior years pending documentation had adversely affected the
beginning of the year.
Strategic priorities and 2017 outlook
The Group continued to pursue its strategic priorities during
the first half, in line with its strategy confirmed at the investor
day on May 17, 2017:
- EUR170 million in additional cost savings versus first-half
2016;
- 18 acquisitions in the first half and 6 being finalized in
July, including Glava, Kirson and TekBond;
- buyback of 3.5 million shares, in line with the Group's
long-term objectives.
After a first half in line with expectations, the economic
environment should remain supportive for the Group in the second
half of 2017:
- gradual improvement of construction markets in France;
- continued upbeat trends in other Western European countries,
despite less visibility in the UK;
- positive market conditions in North American construction;
- further good organic growth in Asia and emerging countries,
despite ongoing difficulties in Brazil.
The Group maintains its action priorities for the year as a
whole:
- its focus on sales prices amid a stronger uptick in
inflation;
- its cost savings program, generating additional savings of
more than EUR270 million on the 2016 cost base;
- its capital expenditure program (around EUR1,600 million in
2017), with a focus on growth capex outside Western Europe and also
on productivity and digital transformation;
- its commitment to invest in R&D to support its
differentiated, high value-added strategy;
- its focus on high levels of free cash flow generation.
Saint-Gobain confirms with confidence its 2017 objective of a
like-for-like increase in operating income.
http://www.rns-pdf.londonstockexchange.com/rns/3531M_-2017-7-27.pdf
Financial calendar
- An information meeting will be held at 8:30am (GMT+1) on July
28, 2017 and will be broadcast live on www.saint-gobain.com
- Sales for the first nine months of 2017: October 26, 2017,
after close of trading on the Paris Bourse.
Analyst/Investor relations Press relations
-------------------------------------- ------------------------------------------------------------
+33 1 47
62 44 29
+33 1 47
Vivien Dardel 62 30 93
Florent Nouveau +33 1 47 +33 1 47 62
Floriana Michalowska 62 35 98 Susanne Trabitzsch 43 25
------------------------ ------------ -------------------------------------------- --------------
All indicators contained in this press release (not defined in
the footnotes) are explained in the notes to the financial
statements in the interim financial report, available by clicking
here:
https://www.saint-gobain.com/en/finance/regulated-information/half-yearly-financial-report
The glossary below shows the note of the interim financial
statements in which you can find an explanation of each
indicator.
Glossary:
Cash flow from operations Note 3
Net debt Note 7
EBITDA Note 3
Non-operating costs Note 3
Operating income Note 3
Net financial expense Note 7
Recurring net income Note 3
Business income Note 3
Important disclaimer - forward-looking statements:
This press release contains forward-looking statements with
respect to Saint-Gobain's financial condition, results, business,
strategy, plans and outlook. Forward-looking statements are
generally identified by the use of the words "expect",
"anticipate", "believe", "intend", "estimate", "plan" and similar
expressions. Although Saint-Gobain believes that the expectations
reflected in such forward-looking statements are based on
reasonable assumptions as at the time of publishing this document,
investors are cautioned that these statements are not guarantees of
its future performance. Actual results may differ materially from
the forward-looking statements as a result of a number of known and
unknown risks, uncertainties and other factors, many of which are
difficult to predict and are generally beyond the control of
Saint-Gobain, including but not limited to the risks described in
Saint-Gobain's registration document available on its website
(www.saint-gobain.com). Accordingly, readers of this document are
cautioned against relying on these forward-looking statements.
These forward-looking statements are made as of the date of this
document. Saint-Gobain disclaims any intention or obligation to
complete, update or revise these forward-looking statements,
whether as a result of new information, future events or
otherwise.
This press release does not constitute any offer to purchase or
exchange, nor any solicitation of an offer to sell or exchange
securities of Saint-Gobain.
For any further information, please visit
www.saint-gobain.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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