RNS Number:1510Z
Compagnie de Saint-Gobain
25 July 2002
ESTIMATED RESULTS FOR FIRST-HALF 2002:
. SLIGHT DIP IN RESULTS IN THE FIRST HALF
- Sales up 0.4% (down 0.3% on a like-for-like basis)
- Operating income down 6.1% (down 5.6% on a like-for-like basis)
- Net income excluding capital gains down 8.0%, to EUR 515 million
. OBJECTIVE FOR FULL YEAR 2002: STABILITY IN NET
INCOME EXCLUDING CAPITAL GAINS
Excluding sales of non-current assets, net income of the Saint-Gobain Group for
the first half of 2002 is estimated at EUR 515 million, down 8.0% compared with
the same period of 2001.
Consolidated net income is estimated at EUR 498 million, down 24.9% from first-
half 2001, in which net income had been boosted by large-scale proceeds from the
disposal of BNP Paribas shares.
Within the Housing Products Sector, the Pipe Division's distribution operations
have been transferred, as from January 1, 2002, to the Building Materials
Distribution Division, in order to set up a European organization for sales of
materials in civil engineering markets.
This transfer does not affect overall Group income as presented below, but it
does impact sales and operating income data by division presented in the
Appendix.
The estimated interim consolidated financial statements were reviewed by the
Board of Directors at its meeting of July 25, 2002. Key figures for the period
are as follows:
In EUR millions H1 2001 H1 2002 Change
%
(2) (2)(1)
Net sales 15,286 15,350 +0.4%
Operating income 1,376 1,292 -6.1%
Dividend income 22 17 -22.7%
Interest and other financial charges, net (311) (274) -11.9%
Non-operating costs (43) (99) N.M.
Income before profit on sales of noncurrent
assets and taxes 1,044 936 -10.3%
Profit on sales of non-current assets, net 134 (24) N.M.
Provisions for income tax (407) (321) -21.1%
Amortization of goodwill (93) (78) -16.1%
Share in net results of equity investees 9 1 -88.9%
Net income before minority interests 687 514 -25.2%
Minority interests (24) (16) -33.3%
Net income 663 498 -24.9%
Earnings per share (in EUR) 1.92* 1.44 -25.0%*
Net income excluding capital gains 560 515 -8.0%
Earnings per share excluding capital gains (in EUR) 1.63* 1.49 -8.6%*
Cash flow from operations 1,390 1,357 -2.4%
Cash flow excluding capital gains tax 1,437 1,351 -6.0%
Capital expenditure 557 571 +2.5%
Investments in securities 537 484 -9.9%
Net indebtedness 8,376 8,006 -4.4%
* Earnings per share for first-half 2001 have been restated to take into account
the four-for-one stock split carried out on June 27, 2002
The Glass Sector recorded mixed results. In Containers demand was sustained in
both the United States and Europe, and results improved markedly. The other
divisions were hurt by price erosion, particularly Flat Glass in Europe, for
which first-half 2001 was, however, a high comparison basis. The Insulation and
Reinforcements division enjoyed a strong rebound in volumes of reinforcement
fiber sales, albeit tempered by sales prices that have declined from their high
level of 2001.
The High-Performance Materials Sector recorded a substantial contraction in
relation to first-half 2001, in terms of both sales and profitability.
Manufacturing activity remained depressed in the U.S. and even more so in
Europe. In both regions, capital spending is picking up only at a very slow
pace. The Ceramics and Plastics division continues to suffer from the recession
in the electronics market. However, these businesses seem to have bottomed out
at the end of the first quarter.
The Housing Products Sector achieved the best performance in the Group in the
first half. The Building Materials Division was buoyed by a vigorous
construction market in the U.S. and experienced strong growth in its results.
Building Materials Distribution continued to develop and improve its
profitability even though conditions in Germany remained unfavorable. Only the
Pipe division recorded slightly lower results year-on-year.
* * *
Group sales were up 0.4%. Based on a comparable Group structure, sales declined
slightly, by 1.0% in euros and 0.3% in local currencies. This stability was
mainly attributable to higher sales prices in all Group Divisions, as volumes
decreased: the drop in Europe was not fully offset by expansion in North America
and in emerging countries.
Sales in France accounted for 30.0% of the total, with other European countries
contributing 40.2%, North America 22.7% and other countries 7.1%.
Operating income declined by 6.1%, and 5.6% on a like-for-like basis. Operating
margin was 8.4%, compared to 9.0% in first-half 2001. The change was mainly due
to the sharp year-onyear contraction of margins in the High-Performance
Materials Sector, and to a lesser degree in Flat Glass and Reinforcements, which
had achieved record levels in first-half 2001. All other divisions increased
their operating margins.
Profitability rose in the United States and United Kingdom thanks to the
positive impact of restructuring, but decreased in other European countries.
Net interest and other financial charges fell 11.9% to EUR 274 million, against
EUR 311 million for the year-earlier period, thanks in particular to lower
interest expense on borrowings as a result of falling interest rates.
Non-operating costs increased by EUR 56 million, to EUR 99 million, up from EUR
43 million in first-half 2001. This increase is mainly due to restructuring
costs in High-Performance Materials, on the one hand, and to the recording for
first-half 2002 of a non-operating charge for claims related to past use of
asbestos by a U.S. subsidiary, on the other. Due to the recent development of a
new type of claims in the United States against a very large number of
industrial companies, including this Saint-Gobain subsidiary, the Saint-Gobain
Group has been caused to review its level of insurance cover and reserves for
asbestos-related contingencies. As a result of this review, the Group has
decided to record a non-operating charge of EUR 50 million for the first half of
2002, corresponding to half of the expected annual charge related to these U.S.
claims for the full year 2002.
Losses on sales of non-current assets, in an amount of EUR 24 million, were
mainly due to impairment of assets. This is to be compared to a profit of EUR
134 million in first-half 2001, thanks to the disposal of the Group's entire
stake in BNP Paribas.
Amortization of goodwill fell 16.1%, to EUR 78 million from EUR 93 million in
first-half 2001, as a result of write-offs of negative goodwill.
Minority interests declined to EuroEUR 16 million, against EUR 24 million in first-
half 2001. This sharp decrease was mainly due to the buyback of minority
interests in Saint-Gobain Cristaleria and Brazilian subsidiaries in 2001 and
Lapeyre in 2002.
Net income amounted to EUR 498 million, down 24.9% in relation to first-half
2001. Based on the number of shares outstanding at June 30, 2002 (345,851,068
shares, taking into account the 4,703,396 shares issued under the Group Savings
Plan), earnings per share came to EUR 1.44. In line with the commitments made by
the Group, the new shares issued in the course of the first half will be
neutralized in the second, by the cancellation of an equivalent number of
shares, to bring total capital stock very close to its level at December 31,
2001, i.e. 341,034,512, after the effect of the four-for-one stock split of June
27, 2002.
Excluding profit and losses on sales of non-current assets, net income came to
EUR 515 million, down 8.0% on the EUR 560 million recorded in first-half 2001.
Excluding the impact of the charge related to U.S. claims, the decrease would
have been 2.0%. Based on the total number of shares outstanding at June 30, 2002
(345,851,068), earnings per share excluding capital gains stood at EUR 1.49.
Cash flow from operations decreased by 2.4%, to EUR 1,357 million. Excluding the
tax impact of capital losses (amounting to EUR 6 million), cash flow from
operations was EUR 1,351, 6.0% lower than the EUR 1,437 million for first-half
2001.
Capital expenditure on plant and equipment totaled EUR 571 million (compared to
EUR 557 million for the same period last year), representing 3.7% of sales,
against 3.6% in first-half 2001.
Expenditure on securities amounted to EUR 484 million, including EUR 350 million
for the buyback of minority interests in Lapeyre.
Net debt at June 30, 2002 (excluding financial instruments) stood, after payment
of the dividend, at EUR 8.0 billion, significantly lower than the EUR 8.4
million (before payment of the dividend) at June 30, 2001, and up slightly in
relation to December 31, 2001. The gearing ratio was approximately 67% (based on
total capital stock plus non-voting participating securities).
* * *
Outlook: the accelerated downturn in financial markets over the past weeks has
produced uncertainty regarding trends in consumer confidence and spending. This
uncertainty brings about a need for prudence. Nevertheless, thanks to its strong
operating performance, in particular firm sales prices and the early deliveries
for the Abu Dhabi pipe contract, the Group should be able to achieve full-year
net income excluding capital gains on a par with 2001.
July 25, 2002
Investor Relations Department
Florence TRIOU-TEIXEIRA - mailto : florence.triou@saint-gobain.com
Claire MOSES tel.:+33 1 47 62 32 36 - mailto : claire.moses@saint-gobain.com
Fax : +33 1 47 62 50 62
Appendix
Results by Business Sector, Division and Geographic Area
(in EUR millions)
H1 H1 change on
change on a change on a
2001 2002 an actual
comparable comparable
est. structure
structure structure and
basis
basis currency basis
I. SALES
by sector and division:
Glass (1) 5,967 6,019 +0.9%
+0.0% +0.9%
Flat Glass 2,262 2,245 -0.8%
-1.6% -0.1%
Insulation and Reinforcements 1,652 1,678 +1.5%
+0.0% -0.1%
Containers 2,059 2,101 +2.1%
+1.7% +2.8%
High-Performance Materials (1) 2,129 1,913 -10.2%
-11.0% -10.1%
Ceramics & Plastics and Abrasives 2,129 1,913 -10.2%
-11.0% -10.1%
Housing Products (1) 7,310 7,565 +3.5%
+1.4% +1.8%
Building Materials 1,596 1,644 +3.0%
+3.3% +4.4%
Building Materials Distribution 4,914 5,370 +9.3%
+1.4% +1.5%
Building Materials Distribution pro forma (2) 5,142 5,370 +4.4%
+1.4% +1.5%
Pipe 916 690 -24.7%
-5.3% -4.5%
Pipe pro forma (2) 729 690 -5.3%
-5.3% -4.5%
internal sales -120 -147
Group 15,286 15,350 +0.4%
-1.0% -0.3%
by geographic area:
France 4,662 4,793 +2.8%
+1.1% +1.1%
Other European Countries 6,404 6,420 +0.3%
-2.5% -2.8%
North America 3,652 3,614 -1.0%
+0.4% +0.4%
Rest of the world 1,159 1,127 -2.8%
-4.2% +6.5%
internal sales -591 -604
Group 15,286 15,350 +0.4%
-1.0% -0.3%
(1) including inter-division eliminations
(2) 2001 pro forma, i.e. including sales from Pipe distribution operations
within Building Materials Distribution
H1 H1
II. OPERATING INCOME 2001 2002 change
est.
by sector and division:
Glass 684 641 -6.3%
Flat Glass 274 227 -17.2%
Insulation and Reinforcements 208 176 -15.4%
Containers 202 238 +17.8%
High-Performance Materials 253 137 -45.8%
Ceramics & Plastics and Abrasives 253 137 -45.8%
Housing Products 430 510 +18.6%
Building Materials 131 198 +51.1%
Building Materials Distribution 220 244 +10.9%
Building Materials Distribution pro forma (1) 213 244 +14.6%
Pipe 79 68 -13.9%
Pipe pro forma (1) 86 68 -20.9%
misc. 9 4
Group 1,376 1,292 -6.1%
by geographic area:
France 479 445 -7.1%
Other European Countries 470 417 -11.3%
North America 297 328 +10.4%
Rest of the world 130 102 -21.5%
Group 1,376 1,292 -6.1%
(1) 2001 pro forma, i.e. including operating income from Pipe distribution
operations within Building Materials Distribution
H1 H1
III. CASH FLOW 2001 2002 change
est.
by sector and division:
Glass 800 770 -3.8%
Flat Glass 313 292 -6.7%
Insulation and Reinforcements 232 205 -11.6%
Containers 255 273 +7.1%
High-Performance Materials 210 131 -37.6%
Ceramics & Plastics and Abrasives 210 131 -37.6%
Housing Products 347 387 +11.5%
Building Materials 129 149 +15.5%
Building Materials Distribution 146 166 +13.7%
Building Materials Distribution pro forma (1) 134 166 +23.9%
Pipe 72 72 +0.0%
Pipe pro forma (1) 84 72 -14.3%
misc. 33 69 +109.1%
Group 1,390 1,357 -2.4%
by geographic area:
France 429 445 +3.7%
Other European Countries 495 472 -4.6%
North America 297 295 -0.7%
Rest of the world 169 145 -14.2%
Group 1,390 1,357 -2.4%
(1) 2001 pro forma, i.e. including cash flow from Pipe distribution operations
within Building Materials Distribution
IV. CAPITAL EXPENDITURE H1 H1
ON PLANT AND EQUIPMENT 2001 2002 change
est.
by sector and division:
Glass 296 342 +15.5%
Flat Glass 117 158 +35.0%
Insulation and Reinforcements 94 79 -16.0%
Containers 85 105 +23.5%
High-Performance Materials 75 57 -24.0%
Ceramics & Plastics and Abrasives 75 57 -24.0%
Housing Products 186 171 -8.1%
Building Materials 55 52 -5.5%
Building Materials Distribution 115 105 -8.7%
Building Materials Distribution pro forma (1) 118 105 -11.0%
Pipe 16 14 -12.5%
Pipe pro forma (1) 13 14 +7.7%
misc. 0 1
Group 557 571 +2.5%
by geographic area:
France 138 104 -24.6%
Other European Countries 191 238 +24.6%
North America 141 114 -19.1%
Rest of the world 87 115 +32.2%
Group 557 571 +2.5%
(1) 2001 pro forma, i.e. including the capex of Pipe distribution operations
within Building Materials Distribution
This information is provided by RNS
The company news service from the London Stock Exchange
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