TIDMCOD
RNS Number : 7883G
Compagnie de Saint-Gobain
25 July 2019
PRESS RELEASE
Paris, July 25, 2019
First-half 2019 results: solid performance
Organic sales growth at 3.5%
Operating income(1) up 8.3%
Recurring earnings per share up 17.6%
-- Organic growth at 3.5%, with prices up 2.3% in a less
inflationary environment and volumes up 1.2% despite a negative
calendar impact
-- Operating income at EUR1,638 million, up 8.2% as reported and
up 8.3% like-for-like. Gain of 30 basis points in the operating
margin(2) to 7.6%
-- Recurring net income up 16.7%
-- Swift deployment of the "Transform & Grow" program: (1)
strong momentum in portfolio optimization, with divestments already
completed or signed representing over EUR2.8 billion in sales and
(2) the cost savings target for 2019 raised from over EUR50 million
to more than EUR80 million
-- Objectives for full-year 2019 confirmed
(EURm) H1 2018 H1 2019 Change Change
Restated(3) like-for-like
Sales 20,787 21,677 4.3% 3.5%
Operating income 1,514 1,638 8.2% 8.3%
EBITDA(4) 2,230 2,417 8.4%
Recurring net income(5) 809 944 16.7%
Free cash flow(6) 492 690 40.2%
1. Like-for-like.
2. Operating margin = Operating income divided by sales.
3. Figures for the first half of 2018 have been restated for
IFRS 16 with retroactive effect from January 1, 2018 (see the press
release dated
July 1, 2019).
4. EBITDA = operating income, plus operating depreciation and
amortization, less non-operating costs excluding Sika.
5. Recurring net income: net attributable income excluding
capital gains and losses on disposals, asset write-downs, material
non-recurring provisions and Sika income.
6. Free cash flow = EBITDA less depreciation of right-of-use
assets, plus net financial expense excluding Sika, plus income tax,
less investments in property, plant and equipment and intangible
assets excluding additional capacity investments, plus changes in
working capital requirement.
Pierre-André de Chalendar, Chairman and Chief Executive Officer
of Saint-Gobain, commented:
"The Group's first-half results progressed significantly, driven
by continued upbeat trends on our main markets, a positive
price-cost spread, and excellent advances in our transformation
plan, which is delivering expected results faster than initially
planned. The acceleration of our portfolio rotation program
announced a year ago continues apace and we will exceed EUR3.0
billion in sales divested by the end of 2019. The Group is
confirming its objectives for full-year 2019 and for the second
half, in a less supportive market overall, expects a like-for-like
increase in operating income versus second-half 2018."
Benoit Bazin, Chief Operating Officer of Saint-Gobain,
commented:
"Thanks to our new organization, in place since January 1, the
commitment of our teams on the ground is reaping rewards. Our
portfolio optimization program and measures to unlock EUR250
million in additional cost savings are being put into place with
agility and determination, as illustrated by the accelerated
timetable, with the cost savings target for 2019 raised from over
EUR50 million to more than EUR80 million. Going forward, we are
very confident in the capacity of "Transform & Grow" to give
new impetus to our growth and profitability."
Operating performance
First-half consolidated sales were EUR21,677 million, a
year-on-year increase of 4.3% on a reported basis and of 3.5%
like-for-like. Organic growth was driven both by prices (up 2.3%)
in a slightly less inflationary environment, and by volumes (up
1.2%). The growth in our main markets was mitigated by a negative
1% calendar effect in the second quarter against a high prior-year
comparison basis.
The Group structure impact added a slight 0.2% to overall
growth, with acquisitions more than compensating for divestments in
the first half given their respective transaction dates: in
particular the Pipe business in Xuzhou, China, the silicon carbide
business, glazing installation operations in the UK and glass
processing in Sweden and Norway. Acquisitions reflect the
consolidation of companies in new niche technologies and services
(Kaimann in technical insulation), in Asia and emerging countries
(Join Leader in adhesives) and to consolidate our strong positions
(Hunter Douglas in specialty ceilings).
Sales growth also benefited from a 0.6% positive currency
impact, mainly due to the appreciation of the US dollar against the
euro, despite the depreciation of the Brazilian real, Nordic krona
and other Asian and emerging country currencies.
The Group's operating income rose by 8.3% like-for-like. Its
operating margin moved up 30 basis points to 7.6%.
Acceleration in the Group's transformation continues apace:
- Divestments completed or signed to date represent sales of
over EUR2.8 billion, already close to the target of more than
EUR3.0 billion by the end of 2019. The full-year operating margin
impact stands at more than 40 basis points, already reaching the
target of the "Transform & Grow" program of a gain of 40 basis
points in the operating margin.
- The program to unlock EUR250 million in additional cost
savings by 2021 thanks to the new organization is producing results
faster than initially expected, with an accelerated timetable now
envisaged: over EUR80 million in cost savings for 2019 (versus an
initial target of over EUR50 million), of which EUR35 million in
first-half 2019, and overall savings of EUR150 million in 2020
(versus EUR120 million initially).
Segment performance (like-for-like sales)
High Performance Solutions (HPS) sales rose 1.0% like-for-like,
driven by the good progression in prices. Volumes were down
slightly, affected by the sharp contraction in the automotive
market since the summer of 2018 and by the decline in Ceramics
against a high first-half 2018 comparison basis. The operating
margin came in at 13.0% versus 14.4% in first-half 2018, which was
marked by a still upbeat automotive market and a strong level of
activity in Ceramics. The margin is significantly up on the
second-half 2018 figure of 12.4%.
- Mobility sales were stable in a difficult automotive market
environment. The differentiating strategy focused on high
value-added products continues to pay off. Despite the ongoing
contraction in Europe and China, business was up in the Americas,
led particularly by gains in market share. Our activities in the
aerospace market advanced significantly.
- Activities serving Industry reported satisfactory sales
overall, held back by a high first-half 2018 comparison basis for
Ceramics.
- Activities serving the Construction industry progressed
sharply on both the Americas and European markets, buoyed by gains
in market share, upbeat trends in external thermal insulation
solutions (ETICS) and recent acquisitions.
- Life Sciences continued to enjoy a strong growth dynamic in
the pharmaceutical and medical sector for single-use
components.
Northern Europe maintained the good momentum of 2018, advancing
3.6% despite a more negative calendar effect than for the Group as
a whole and a high comparison basis in second-quarter 2018 which
was marked by a sales catch-up after harsh weather conditions at
the start of that year. Distribution reported a good first-half and
Industry was up, particularly in Gypsum and Insulation.
Sales in Nordic countries were bullish at the start of the year
in all major businesses and countries, particularly for
Distribution, benefiting from its exposure to the renovation market
which remained upbeat. The UK deteriorated amid an uncertain
economic environment, with a decline in the second quarter,
particularly pronounced in Distribution. Sales in Germany
progressed. Eastern Europe continued to advance in all of its main
countries, also benefiting from a weak comparison basis in the
first-half 2018 period, which had seen the repair of two floats in
Poland and Romania.
The operating margin for the region rose sharply to 6.0% from
5.2% in the same prior-year period, fueled by a good start to the
year in terms of volumes, a positive raw material and energy
price-cost spread and a good industrial performance.
Southern Europe - Middle East & Africa was up 4.3%, an
improvement on the trends observed for full-year 2018. Growth was
powered by Distribution; industrial businesses progressed,
particularly Insulation, Gypsum and Mortars. Pipe reported a slight
increase in sales and continued its successful efforts to improve
competitiveness.
France reported a very good first half, buoyed by a construction
market where renovation remained supportive and by a weak
first-half 2018 comparison basis. By business, Distribution enjoyed
strong momentum and gains in market share, along with Insulation
which delivered double-digit growth on the back of strong demand
for energy-efficiency renovation. Among other countries in the
region, Spain posted robust growth, while Benelux and Italy
recorded slower advances. The Middle East and Africa were down over
the first half, especially in Turkey which is experiencing an
extremely tough environment.
The operating margin for the region increased significantly, up
to 5.0% from 4.4% in first-half 2018, lifted by a sharp improvement
in France.
The Americas reported 2.6% organic growth.
North America continued to benefit from a satisfactory price
effect amid continued inflation in certain raw material costs, at
the expense of volumes against a high second-quarter 2018
comparison basis. Exterior Products stabilized despite a
significant price effect. The pricing environment was favorable in
Insulation but more challenging in Gypsum; volumes remained
hesitant overall. Latin America enjoyed continued growth momentum,
particularly in Building Glass and Mortars; in a slightly more
uncertain macroeconomic environment, Brazil posted vigorous growth,
outperforming market trends in the period thanks to sales team
synergies linked to the new organization.
The operating margin for the region came in at 9.0% compared to
9.1% in first-half 2018.
Asia-Pacific delivered 6.0% organic growth, spurred by continued
strong momentum in Gypsum and Mortars in particular.
India was boosted by additional sales following the start-up of
its fifth float line, and Gypsum delivered further double-digit
growth. Elsewhere in Asia, China had a good first half, with the
start-up of a new plaster plant and bullish growth in Mortars.
South-East Asia faced a fiercely competitive environment which put
pressure on sales prices.
The operating margin for the region was up to 9.5% from 9.3% in
first-half 2018.
Analysis of the consolidated financial statements for first-half
2019
The unaudited interim consolidated financial statements for
first-half 2019 were subject to a limited review by the statutory
auditors and were approved and adopted by the Board of Directors on
July 25, 2019. Figures for first-half 2018 have been restated for
IFRS 16 with retroactive effect from January 1, 2018 (see the press
release dated July 1, 2019).
H1 2018 H1 2019 % H1 2018
Restated change Published
EURm (A) (B) (B)/(A)
-------- --------
Sales and ancillary revenue 20,787 21,677 4.3% 20,787
Operating income 1,514 1,638 8.2% 1,469
Operating depreciation and amortization 949 947 -0.2% 601
Non-operating costs (excl. Sika) (233) (168) n.s. (234)
EBITDA 2,230 2,417 8.4% 1,836
Sika non-operating costs 180 180
Capital gains and losses on disposals,
asset write-downs, corporate acquisition
fees and earn-out payments (295) (217) n.s. (296)
Business income 1,166 1,253 7.5% 1,119
Net financial income (expense) 354 (250) n.s. 392
Sika dividends 0 28 n.s. 0
Income tax (266) (318) 19.5% (265)
Share in net income (loss) of associates 0 1 n.s. 0
Net income before minority interests 1,254 714 -43.1% 1,246
Minority interests 27 25 -7.4% 27
Net attributable income 1,227 689 -43.8% 1,219
Earnings per share(2) (in EUR) 2.24 1.27 -43.3% 2.23
Recurring net income(1) 809 944 16.7% 802
Recurring(1) earnings per share(2)
(in EUR) 1.48 1.74 17.6% 1.47
Cash flow from operations(3) 1,766 1,895 7.3% 1,410
Cash flow from operations (excluding
capital gains tax)(4) 1,754 1,883 7.4% 1,398
EBITDA 2,230 2,417 8.4% 1,836
Depreciation of right-of-use assets 357 340 -4.8% 0
Net financial expense (excluding
Sika) (247) (250) n.s. (247)
Income tax (266) (318) 19.5% (265)
Investments in property, plant
and equipment 561 610 8.7% 561
o/w additional capacity investments 211 220 4.3% 257
Investments in intangible assets 76 72 -5.3% 76
Change in working capital requirement(5) (442) (357) -19.2% (442)
Free cash flow(6) 492 690 40.2% 502
Free cash flow conversion(7) 26.3% 33.2% n.s. 27.3%
Lease investments 430 353 -17.9% 0
Investments in securities(8) 1,289 158 n.s. 1,289
Consolidated net debt 12,380 12,617 1.9% 9,294
---------- -------- --------
1. Recurring net income: net attributable income excluding
capital gains and losses on disposals, asset write-downs, material
non-recurring provisions and Sika income.
2. Calculated based on the number of shares outstanding at June
30 (543,444,874 shares in 2019, versus 546,918,263 shares in
2018).
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 on disposals, asset
write-downs and material non-recurring provisions.
5. Change in working capital requirement: over a 12-month period
(cf. appendix 4 at the bottom of consolidated cash flow
statement).
6. Free cash flow = EBITDA less depreciation of right-of-use
assets, plus net financial expense excluding Sika, plus income tax,
less investments in property, plant and equipment and intangible
assets excluding additional capacity investments, plus changes in
working capital requirement.
7. Free cash flow conversion = free cash flow divided by EBITDA
less depreciation of right-of-use assets.
8. Investments in securities: EUR158 million in first-half 2019,
of which EUR145 million of consolidated entities.
Consolidated sales advanced 3.5%, led by both prices (up 2.3%)
and by volumes (up 1.2%). On a reported basis, sales were 4.3%
higher, with a positive 0.6% currency impact resulting mainly from
the appreciation of the US dollar against the euro despite the
depreciation of the Brazilian real, Nordic krona and other emerging
country currencies. The Group structure impact was a positive 0.2%,
with acquisitions more than compensating for divestments.
Acquisitions reflect the consolidation of companies in new niche
technologies and services, in Asia and emerging countries and to
consolidate our strong positions.
Consolidated operating income was up 8.2% on a reported basis
and 8.3% like-for-like. The Group's operating margin moved up 30
basis points to 7.6%. EBITDA rose 8.4% to EUR2,417 million, while
the EBITDA margin climbed to 11.2% of sales versus 10.7% of sales
in first-half 2018.
Non-operating costs totaled EUR168 million compared to EUR53
million in first-half 2018 which included a gain of EUR180 million
on the Sika transaction (non-operating costs of EUR233 million
excluding this one-off gain). Non-operating costs in first-half
2019 therefore improved sharply on a normalized basis, despite
factoring in EUR51 million of restructuring costs associated with
the execution of the "Transform & Grow" program. The EUR45
million accrual to the provision for asbestos-related litigation
involving CertainTeed in the US remained unchanged compared to the
last few half-year periods.
The net balance of capital gains and losses on disposals, asset
write-downs and corporate acquisition fees represented an expense
of EUR217 million compared to an expense of EUR295 million in
first-half 2018. In the first six months of 2019, this item mainly
includes write-downs of businesses held for sale. Business income
was up 7.5% to EUR1,253 million.
Net financial expense excluding Sika remained virtually stable
at EUR250 million (EUR247 million in first-half 2018). Dividends
received from Sika totaled EUR28 million in the period; the
comparative period in 2018 had benefited from a EUR601 million gain
relating to the Sika transaction.
The income tax rate on recurring net income remained stable at
25%. Income tax totaled EUR318 million (EUR266 million in
first-half 2018).
Recurring net income (excluding capital gains and losses, asset
write-downs, material non-recurring provisions and Sika income)
rose 16.7% to EUR944 million.
Net attributable income fell 43.8% to EUR689 million owing to
the gain relating to the Sika transaction in first-half 2018
(EUR781 million).
Cash flow from operations increased 7.3% to EUR1,895 million
(EUR1,766 million in first-half 2018); before the tax impact of
capital gains and losses on disposals, asset write-downs and
material non-recurring provisions, cash flow from operations was
7.4% higher at EUR1,883 million (EUR1,754 million in first-half
2018).
Free cash flow jumped 40.2% to EUR690 million (3.2% of sales
versus 2.4% of sales in first-half 2018), buoyed by improved cash
generation and a lower increase in working capital requirement over
a 12-month period.
Investments in property, plant and equipment and intangible
assets totaled EUR682 million (including EUR220 million in
additional capacity investments for organic growth) and remained
stable as a percentage of sales, at 3.1%.
Investments in securities totaled EUR158 million (EUR1,289
million in first-half 2018 which included Sika for EUR933 million)
and were made to develop innovative niches (American Seal) and the
Group's presence in emerging countries (plasterboard in Mexico).
Net debt edged up to EUR12.6 billion at end-June 2019 from EUR12.4
billion as restated at end-June 2018, with acquisitions over the
past 12 months representing EUR568 million and divestments EUR311
million. Net debt represents 68% of consolidated equity compared to
65% as restated at end-June 2018. The net debt to EBITDA ratio over
the last 12-month rolling period stands at 2.6 at end-June 2019
compared to 2.7 as restated at end-June 2018.
Update on asbestos claims in the US
Some 1,300 new claims were filed against CertainTeed in
first-half 2019, stable compared to the first six months of
2018.
At the same time, around 1,200 claims were settled (versus 1,500
claims in first-half 2018), bringing the total number of
outstanding claims to around 32,700 at June 30, 2019, close to the
32,600 outstanding claims at December 31, 2018.
A total of USD 69 million in indemnity payments were made in the
US in the 12 months to June 30, 2019, compared to USD 67 million in
the 12 months to December 31, 2018.
Strategic priorities and outlook for 2019
The Group continued to implement its strategic priorities in
first-half 2019:
- EUR155 million in cost savings (excluding "Transform &
Grow") versus first-half 2018;
- 10 acquisitions for EUR145 million, representing EUR108
million in sales and EUR19 million in EBITDA on a full-year
basis;
- Divestments completed or signed to date for over EUR2.8
billion in sales: in the first half of 2019, disposal of silicon
carbide and glass processing businesses in Sweden and Norway, and
signing of agreements to sell Distribution in Germany, Optimera
Denmark and DMTP in France. In 2018, disposal of Pipe at Xuzhou,
China, the EPS insulating foam business in Germany and glazing
installation operations in the UK;
- Strategic review of the business portfolio in progress in the
context of the new organization, which will lead to an additional
dynamic of divestments and acquisitions;
- 6.5 million shares bought back for EUR212 million,
contributing to a reduction in the number of shares outstanding to
543.4 million at June 30, 2019 (546.9 million at June 30,
2018).
The Group confirms its outlook for 2019 as a whole:
- High Performance Solutions: industrial markets should remain
satisfactory, particularly in the US, despite the contraction in
the automotive market in Europe and China;
- Northern Europe: should progress despite a tougher environment
in the UK;
- Southern Europe - Middle East & Africa: overall growth
expected for the region, with for the second half a lower
contribution from new construction and a solid renovation market,
in particular in France;
- Americas: stabilization in North America and a more uncertain
environment in Latin America;
- Asia-Pacific: further growth.
The Group's action priorities as defined in February remain:
- its focus on sales prices;
- its cost savings program with the aim of unlocking additional
savings of around EUR300 million (calculated on the 2018 cost
base), in addition to more than EUR80 million in 2019 as part of
the "Transform & Grow" program;
- its property, plant and equipment and intangible assets
investments program close to the 2018 level, with a focus on growth
capex outside Western Europe and also on productivity and continued
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 its objectives for full-year 2019 and for
the second half expects a like-for-like increase in operating
income compared to second-half 2018.
Financial calendar
- An information meeting for analysts and investors will be held
at 8:30am (GMT+1) on July 26, 2019 and will be broadcast live
on:
www.saint-gobain.com/
- Sales for the first nine months of 2019: October 24, 2019,
after close of trading on the Paris Bourse.
Analyst/Investor relations Press relations
+33 1 47 62 30
+33 1 47 62 44 10
29 +33 1 47 62 51
Vivien Dardel +33 1 47 62 35 Laurence Pernot 37
Floriana Michalowska 98 +33 1 47 62 Patricia Marie +33 1 47 62 43
Christelle Gannage 30 93 Susanne Trabitzsch 25
------------------------ ------------------ -------------------------------------------- -----------------
Indicators of organic growth and like-for-like changes in
sales/operating income reflect the Group's underlying performance
excluding the impact of:
-- changes in Group structure, by calculating indicators for the
year under review based on the scope of consolidation of the
previous year (Group structure impact);
-- changes in foreign exchange rates, by calculating the
indicators for the year under review and those for the previous
year based on identical foreign exchange rates for the previous
year (currency impact);
-- changes in applicable accounting policies.
All indicators contained in this press release (not defined in
the footnote) are explained in the notes to the financial
statements in the interim financial report, available by clicking
here:
https://www.saint-gobain.com/fr/finance/information-reglementee/rapport-financier-semestriel
The glossary below shows the notes of the interim financial
report in which you can find an explanation of each indicator.
Glossary:
Cash flow from operations Note 4
Net debt Note 9
EBITDA Note 4
Non-operating costs Note 4
Operating income Note 4
Net financial income (expense) Note 9
Recurring net income Note 4
Business income Note 4
Working capital requirement Note 4
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 further information, please visit www.saint-gobain.com.
Click on, or paste the following link into your web browser, to
view the associated PDF document.
http://www.rns-pdf.londonstockexchange.com/rns/7883G_1-2019-7-25.pdf
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR VELFLKDFEBBK
(END) Dow Jones Newswires
July 26, 2019 02:00 ET (06:00 GMT)
Compagnie De Saint-gobain (LSE:COD)
Historical Stock Chart
From Jun 2024 to Jul 2024
Compagnie De Saint-gobain (LSE:COD)
Historical Stock Chart
From Jul 2023 to Jul 2024
