TIDMCOD
RNS Number : 6771U
Compagnie de Saint-Gobain
30 July 2020
PRESS RELEASE
Paris, July 30, 2020 , 6:15pm
First-half 2020 results
In the context of the coronavirus:
- Return to sales and operating income growth in June after a
12.3% decline in sales over the first half(1)
- Sharp 143% rise in free cash flow(2) to EUR1,678 million
-- Sales down 12.3% like-for-like in first-half 2020, including
a 19.2% decrease in the second quarter owing to the coronavirus
pandemic, with very different situations from one country and
market to the next
-- Operating income of EUR827 million, down 49.2% like-for-like,
leading to a decline in the operating margin(3) from 7.6% to
4.7%
-- EBITDA down 32.4% to EUR1,635 million
-- Clear-cut action on costs with savings of EUR395 million in first-half 2020:
(1) EUR160 million to mitigate the impact of the health crisis
during the lockdown period, thanks to the temporary reduction in
discretionary spending and partial employment measures, which will
not recur beyond the first half;
(2) EUR80 million in net recurring savings under the <<
Transform & Grow >> program, for which we will meet our
net savings target of EUR250 million at the end of 2020, a year
earlier than planned;
(3) EUR155 million at end-June relating to the continuation of
the operational excellence program, which aims to offset various
inflation impacts
-- Launch of additional adaptation measures to lower the
break-even point of businesses for which the recovery is delayed or
uncertain, representing savings of EUR50 million in second-half
2020 and EUR200 million on a full-year basis by 2021
-- Steep 143% rise in free cash flow to EUR1,678 million; conversion ratio(4) up sharply at 129%
-- Sharp decrease in net debt, to EUR9.8 billion from EUR12.8 billion at end-June 2019
-- The Group will reach its medium-term target of a reduction in
the number of its shares outstanding to 530 million at end-2020
(EURm) H1 2019 H1 2020 Change Change
like-for-like
Sales 21,677 17,764 -18.1% -12.3%
EBITDA(5) 2,417 1,635 -32.4%
Operating income 1,638 827 -49.5% -49.2%
Recurring net income(6) 944 272 -71.2%
Free cash flow 690 1,678 143.2%
1. Like-for-like.
2. Free cash flow = EBITDA less depreciation of right-of-use
assets, plus net financial expense excluding Sika dividends, plus
income tax, less investments in property, plant and equipment and
intangible assets excluding additional capacity investments, plus
change in working capital requirement on a rolling 12-month
basis.
3. Operating margin = Operating income divided by sales.
4. Free cash flow conversion = Free cash flow divided by EBITDA
less depreciation of right-of-use assets.
5. EBITDA = Operating income, plus operating depreciation and
amortization, less non-operating costs.
6. Recurring net income = Net attributable income excluding
capital gains and losses on disposals, asset write-downs, and
material non-recurring provisions.
Pierre-André de Chalendar, Chairman and Chief Executive Officer
of Saint-Gobain, commented:
"In the unprecedented context of the coronavirus pandemic,
Saint-Gobain set itself four priorities: protecting the health and
safety of all, strengthening its liquidity and balance sheet,
adapting costs and preparing for the recovery. Our efforts to
preserve cash allowed us to achieve a high level of free cash flow
generation in the first half.
In a macroeconomic and health environment which remains affected
by uncertainties, our earnings growth in June and outlook for the
third quarter suggest that our operating income for second-half
2020 will improve significantly on first-half 2020. Saint-Gobain's
medium and long-term outlook remains robust thanks to its
successful strategic and organizational choices. Saint-Gobain's
comprehensive portfolio of innovative energy-efficiency solutions,
as well as its extensive exposure to the renovation market, ideally
position the Group to benefit from national and European stimulus
plans supporting the energy transition."
Benoit Bazin, Chief Operating Officer of Saint-Gobain,
commented:
"Our new organization has proved extremely effective during this
crisis, supported by excellent international coordination and the
agility of our country and market CEOs, who quickly took the best
local decisions for their customers and teams. By rapidly cutting
costs, we achieved savings of EUR395 million in the first half,
with in particular an acceleration of our "Transform & Grow"
program, which generated EUR80 million of net savings in the first
half of 2020 and for which we expect to meet our initial EUR250
million target by the end of 2020, a year earlier than planned. We
have also already launched the additional necessary adaptation
measures to lower the break-even point wherever the recovery is
delayed or more uncertain with resulting cost savings of EUR200
million on a full-year basis in 2021, of which EUR50 million in
second-half 2020. Lastly, our portfolio optimization strategy to
enhance our growth and profitability profile will be gradually
resumed according to market conditions. We firmly believe that the
Group will emerge stronger from this crisis and we would like to
thank the unwavering commitment of all of our teams."
Operating performance
First-half consolidated sales were EUR17,764 million, down 18.1%
on a reported basis and down 12.3% like-for-like compared to
first-half 2019. After a good start to the year in the European
Regions and in the Americas, the effects of the coronavirus spread
beyond Asia-Pacific to the rest of the world as from March. Trading
for the Group hit a low in April, when it stood at 60% of 2019
levels, and then rallied with a sharp rebound in June, which was up
3.7% like-for-like, also benefitting from two additional working
days.
Volumes contracted by 12.7% in the first half and by 19.4% in
the second quarter (no calendar effect), but rebounded 3.3% in
June. Prices held up well, increasing 0.4% over the first half in a
slightly deflationary environment, resulting in a positive
price-cost spread.
Changes in Group structure had a negative 4.5% impact on sales,
resulting from disposals carried out as part of "Transform &
Grow" in 2019, with negative structure impacts of 11.4% in Northern
Europe (Distribution in Germany and Optimera in Denmark), 3.1% in
Southern Europe - Middle East & Africa (in France with DMTP and
K par K in Distribution and with the expanded polystyrene business;
in the Netherlands with Glassolutions) and 9.0% in Asia-Pacific
(Hankuk Glass Industries in South Korea). The structure impact also
reflects acquisitions carried out to consolidate our strong
positions (Continental Building Products in North America as from
February), develop new niche technologies and services (HTMS), and
expand in emerging countries (gypsum and mortars in Latin America).
In light of the hyperinflationary environment in Argentina, this
country which represents less than 1% of the Group's consolidated
sales, is excluded from the like-for-like analysis.
The currency effect reduced sales by 1.3% and chiefly reflects
the depreciation of Nordic krona, the Brazilian real and other
emerging country currencies .
The Group's operating income was down 49.2% like-for-like. Its
operating margin narrowed, from 7.6% to 4.7%, due to the downturn
in volumes in the second quarter - usually a strong contributor to
first-half earnings - owing to pandemic-related disruptions.
Overall, cost actions resulted in savings of EUR395 million in the
first half:
(1) EUR160 million to mitigate the impact of the health crisis
during the lockdown period, thanks to the temporary reduction in
discretionary spending and partial employment measures, which will
not recur beyond the first half;
(2) EUR80 million in net recurring savings under the <<
Transform & Grow >> program, for which we will meet our
net savings target of EUR250 million at the end of 2020, a year
earlier than planned;
(3) EUR155 million at end-June relating to the continuation of
the operational excellence program, which aims to offset wage
inflation and other fixed costs.
Segment performance (like-for-like sales)
High Performance Solutions (HPS): gradual recovery in June
HPS sales fell by 18.0%, and by 27.0% in the second quarter,
affected by sometimes full-scale shutdowns lasting several weeks in
certain industries (especially automotive) in most regions. In
June, the steady rally in all industrial markets limited the fall
to 8.2%. In this context, the operating margin came out at 7.4%
versus 13.0% in first-half 2019, hit by lower second-quarter
volumes in most markets and particularly automotive. However, this
was partially offset by swift reductions in costs.
- Mobility sales were hit particularly hard by shutdowns of
automotive manufacturing plants across the globe as from March. In
the second quarter, Mobility sales were down by almost 45%
worldwide, particularly in Europe; only China saw an improvement.
In June, sales gradually improved, up to around 85% of prior-year
levels. Mobility continued to outperform the automotive market in
all regions in the first half of the year, thanks mainly to its
increasing exposure to high value-added products and electric
vehicles.
- Activities serving Industry were also affected in the second
quarter by the wider slowdown in industrial markets in all regions.
In June, trading recovered, up to around 90% of prior-year
levels.
- Activities serving the Construction Industry held up well in
the first half, reporting only a slight decrease in sales, buoyed
by gains in market share in the second quarter as well as upbeat
trends in external thermal insulation solutions (ETICS).
- Life Sciences continued to enjoy a strong growth dynamic in
the pharmaceutical and medical sector, benefiting from its recent
capacity investments. The business is also engaged in the fight
against the coronavirus, prioritizing components for critical
medical devices (silicone membranes, flexible tubes, filters,
connectors and fixings) used in respirators, ventilators and
infusion pumps in particular.
Northern Europe: clear improvement in June; first-half margin
growth excluding the UK
Sales declined 8.2%, including 15.6% in the second quarter after
a good start to the year in January and February. Sales rose 4.9%
in June.
Nordic countries reported good growth over the first half,
particularly in Distribution which continued to increase its market
share thanks to past investments in digital and logistics. Sales
were also up in the second quarter, with robust growth in June
supported by a dynamic renovation market. Germany and Eastern
Europe proved resilient over the first half, reporting a moderate
fall in sales, despite a greater volume and price impact in the
second quarter in the manufacturing base serving Mobility markets.
In contrast, UK sales contracted sharply, down by nearly half in
the second quarter: all operations were at a virtual standstill
throughout April, before slowly restarting in May and picking up
somewhat in June.
The Region delivered an impressive operating margin, reporting
slight growth excluding the UK. The UK impact alone reduced the
margin for the Region as a whole to 4.2% versus 6.0% in first-half
2019, despite a positive raw material and energy price-cost spread
in the Region.
Southern Europe - Middle East & Africa: significant upturn in June, especially in France
Like-for-like sales in Southern Europe - Middle East &
Africa improved month-by-month over the second quarter, with June
up 7% year-on-year. Overall, sales fell 22.7% for the quarter, with
a sharp contraction in the manufacturing base serving Mobility
markets due to reduced plant utilization. Sales were down 16.0%
over the first half, thanks to a very strong start to the year
before the coronavirus hit.
The Region's momentum was driven by France, which rallied
sharply towards the end of the period: after coming to a total
standstill for several days at the end of March, trading improved
at 50% of prior-year levels in mid-April, more than 80% in May, and
virtually back to normal levels in June at a comparable number of
working days. Distribution benefited from past investments in
digital and from upbeat momentum in the renovation market; energy
efficiency solutions also returned to growth. Spain, Italy, the
Middle East and Africa also saw a significant improvement in June,
after being hit harder than average for the Region early in the
second quarter by lockdown measures. Only in the Netherlands did
trading over the first half remain relatively unaffected by the
coronavirus.
The operating margin for the Region came out at 1.7% versus 5.0%
in first-half 2019, hit by weak volumes in most countries in the
Region for several weeks in the second quarter - usually a strong
contributor to earnings - and despite a positive raw material and
energy price-cost spread.
Americas: return to growth in June; first-half margin growth in
North America
Sales in the Americas were down 6.5%, including 11.9% in the
second quarter after a good start to the year in January and
February. The Region rose 6.7% in June, up in both North and South
America.
North America saw a moderate decline in the first half, chiefly
affected by volumes and by lockdown measures in certain States in
April which limited trading. The US and Canada posted robust growth
in June, despite a still uncertain health situation, driven by
exterior solutions and gypsum which delivered double-digit volume
growth. Thanks to the successful integration of Continental
Building Products, the gypsum business benefited from a volume
upturn in June and regained the good momentum observed at the start
of the year.
In Latin America, after a good start to the year in January and
February, construction markets were severely disrupted in March and
April by the quarantine measures introduced in many countries and
in Brazilian states, which generally prevented the construction
industry from operating. After bottoming out at 40% of 2019 levels
in mid-April, trading rebounded sharply, up to 80% of prior-year
levels in May and delivering year-on-year growth in June. Over the
first half as a whole, Brazil continued to benefit from its
channel-driven sales synergies, enabling it to outpace market
growth, particularly gypsum which reported a double-digit
advance.
The operating margin for the Region came out at 7.1% in
first-half 2020 versus 9.0% in first-half 2019, reflecting the
downturn in trading in Latin America. North America reported an
increase in its operating margin, lifted by extensive productivity
efforts, a positive raw material and energy price-cost spread and
the seamless integration of Continental Building Products.
Asia-Pacific: growth in China in the second quarter; sharp rise
in the first-half margin excluding India
Asia-Pacific sales fell by 17.5% in first-half 2020, and by
21.9% in the second quarter due to lockdown measures in South-East
Asia and India. June improved, recording a fall of 7.8%, with
double-digit growth in China, a stabilizing situation in South-East
Asia and a lower decline in India.
As the first country to have been affected by the coronavirus,
the Group's activities in China hit a low point in February, before
regaining their full production capacity in early March, thanks to
which they were able to support the progressive improvement in
demand. Sales showed dynamic growth in the second quarter, led by
double-digit growth in gypsum on the back of the new plaster plant
opened in 2019 which is now operating at full capacity. India
delivered double-digit growth in January and February buoyed by
productivity solutions (plaster and mortars), but came to a
standstill at the end of March with the introduction of strict
lockdown measures. These were gradually lifted during May and June
although severe disruptions are ongoing. In June, trading was at
around 70% of 2019 levels, with clear week-on-week improvements and
significant market share gains despite health conditions remaining
difficult. Other Asian countries saw varying degrees of disruption
in the first half: these were very limited in Japan, but more
pronounced in Thailand, while Vietnam reported growth which
significantly outperformed the market, illustrating the success of
its local strategy in the context of "Transform & Grow".
The operating margin for the Region came out at 7.0% versus 9.5%
in first-half 2019, affected by the sharp downturn in India in the
second quarter of 2020, despite the strong rise elsewhere.
Measures put in place to address the coronavirus pandemic
Since the start of the pandemic, Saint-Gobain has taken all
necessary steps in real time to limit its impacts. The Group's new
organization by country and by market, put in place within the
scope of "Transform & Grow", has given it the agility and
flexibility it needs to take decisions quickly at the local level.
The Group's priorities have been to:
Ensure employee health and safety:
Since the outbreak of the health crisis in China, the Group has
done its utmost to protect the health of its employees and other
stakeholders by putting in place strict hygiene measures adapted to
its different businesses, encouraging working from home and
cooperating with the authorities in each country.
Strengthen our liquidity and balance sheet:
The Group has a very solid financial position in terms of cash
and financing. At June 30, 2020, the Group's cash and cash
equivalents represented EUR7.1 billion, following the repayment of
EUR1 billion on the syndicated credit facility drawn in March and
of EUR1.5 billion in bonds in the first half of the year. The Group
reinforced its financing sources during first-half 2020:
- A EUR1.5 billion bond issued March 26, consisting of EUR750
million with a 3-year maturity and a 1.75% coupon and EUR750
million with a 7.5-year maturity and a 2.375% coupon;
- A syndicated credit line totaling EUR2.5 billion which was
arranged in March and reduced to EUR1.0 billion at end-June 2020,
in addition to the confirmed and undrawn back-up credit lines of
EUR4.0 billion;
- Access to the new commercial paper Pandemic Emergency Purchase
Program (PEPP) launched by the European Central Bank on March 18,
2020;
- Reduction in capital expenditure, down 34.5% in first-half
2020 to EUR447 million; targeted reduction for the full year of
over EUR500 million compared to 2019;
- Sharp EUR1.2 billion decrease in working capital requirement
over 12 months thanks to strict monitoring of inventories and daily
tracking of customer payments;
- Disposal of Sika shares for EUR2.4 billion at end-May,
generating a net cash gain of EUR1.5 billion.
Reduce costs to preserve cash:
- Swiftly adapting production to local demand on a site-by-site
basis;
- Cost actions resulted in total savings of EUR395 million in
the first half:
(1) EUR160 million to mitigate the impact of the health crisis
during the lockdown period, thanks to the temporary reduction in
discretionary spending and partial employment measures, which will
not recur beyond the first half;
(2) EUR80 million in net recurring savings under the <<
Transform & Grow >> program, for which we will meet our
net savings target of EUR250 million at the end of 2020, a year
earlier than planned;
(3) EUR155 million at end-June relating to the continuation of
the operational excellence program, which aims to offset wage
inflation and other fixed costs.
- Maintaining strict pricing discipline, generating a positive
price-cost spread of EUR 50 million in first-half 2020.
In the context of the pandemic, the countries and markets where
the recovery is delayed or is more uncertain have ramped up
adaptation measures, including capacity adjustments, especially
in:
- The UK, with restructurings and closures of Distribution
outlets;
- In the manufacturing base serving Mobility markets in Europe
and in certain activities serving industrial markets.
These measures will generate additional full-year savings of
EUR200 million by 2021, of which EUR50 million as from second-half
2020 .
(1) Calculated as the cash difference between proceeds collected
from the disposals (May 2020 and May 2018), dividends received
(EUR61 million) and the amount paid to acquire the shares in May
2018.
Analysis of the consolidated financial statements for first-half
2020
The unaudited interim consolidated financial statements for
first-half 2020 were subject to a limited review by the statutory
auditors and adopted by the Board of Directors on July 30,
2020.
H1 2019 H1 2020 %
change
EURm (A) (B) (B)/(A)
-------- --------
Sales and ancillary revenue 21,677 17,764 -18.1%
Operating income 1,638 827 -49.5%
Operating depreciation and amortization 947 950 0.3%
Non-operating costs -168 -142 -15.5%
EBITDA 2,417 1,635 -32.4%
Capital gains and losses on disposals,
asset write-downs and impact of changes
in Group structure -217 -734 n.s.
Business income (loss) 1,253 -49 -103.9%
Net financial expense -250 -234 -6.4%
Sika dividends 28 34 21.4%
Income tax -318 -183 -42.5%
Share in net income (loss) of associates 1 -1 n.s.
Net income (loss) before minority interests 714 -433 -160.6%
Minority interests 25 1 -96.0%
Net attributable income (loss) 689 -434 -163.0%
Earnings (loss) per share (2) (in EUR) 1.27 -0.81 -163.8%
Recurring net income (1) 944 272 -71.2%
Recurring earnings per share(2) (in EUR) 1.74 0.51 -70.7%
EBITDA 2,417 1,635 -32.4%
Depreciation of right-of-use assets -340 -336 -1.2%
Net financial expense -250 -234 -6.4%
Income tax -318 -183 -42.5%
Capital expenditure -682 -447 -34.5%
o/w additional capacity investments 220 155 -29.5%
Change in working capital requirement
(3) -357 1,088 -404.8%
Free cash flow 690 1,678 143.2%
Free cash flow conversion 33.2% 129.2%
Lease investments 353 409 15.9%
Investments in securities 158 1,256 n.s.
Divestments 227 2,434 n.s.
Consolidated net debt 12,799 9,841 -23.1%
1. Recurring net income = Net attributable income (loss)
excluding capital gains and losses on disposals, asset write-downs
and material non-recurring provisions.
2. Calculated based on the weighted average number of shares
outstanding at June 30 (538,242,661 shares in 2020, versus
542,350,708 shares in 2019).
3. Change in working capital requirement: over a 12-month period
(see Appendix 4, bottom of "consolidated cash flow statement").
4. Free cash flow = EBITDA less depreciation of right-of-use
assets, plus net financial expense excluding Sika dividends, plus
income tax, less capital expenditure excluding additional capacity
investments, plus change in working capital requirement over a
12-month period.
5. Free cash flow conversion = Free cash flow divided by EBITDA
less depreciation of right-of-use assets.
6. Investments in securities: EUR1,256 million in 2020, mainly Continental Building Products.
7. 2019 consolidated net debt restated for the IFRIC's November 2019 decision.
Consolidated sales were down 12.3% like-for-like, with volumes
contracting 12.7% while prices held firm, up 0.4%. On a reported
basis, sales fell 18.1%, including a negative 1.3% currency effect
and a negative 4.5% Group structure impact resulting from
divestments carried out within the scope of "Transform & Grow"
in 2019 and various acquisitions, including Continental Building
Products in February 2020.
Consolidated operating income fell 49.5% as reported and 49.2%
like-for-like, leading to a decline in the operating margin from
7.6% to 4.7%. EBITDA fell 32.4% to EUR1,635 million, while the
EBITDA margin fell to 9.2% from 11.2% in first-half 2019.
Non-operating costs fell to EUR142 million versus EUR168 million
in first-half 2019, mainly due to the discontinuation of the EUR45
million accrual to the provision for asbestos-related litigation
involving CertainTeed in the US. The first-half 2020 amount
includes around EUR30 million in restructuring costs associated
with the "Transform & Grow" program and EUR40 million in
restructuring costs related to additional cost savings measures put
in place to address the coronavirus crisis.
The net balance of capital gains and losses on disposals, asset
write-downs and the impact of changes in Group structure
represented an expense of EUR734 million compared to an expense of
EUR217 million in first-half 2019. In the first six months of 2020,
this item consists mainly of a EUR581 million write-down of
intangible assets in the UK Distribution business, which is
operating in a downbeat environment. The Group has launched a new
large-scale cost reduction program which includes shutting down its
least profitable outlets. The sale of the Group's 10.75% stake in
Sika for EUR2.4 billion led to a net cash gain of EUR1.5 billion,
with no resulting disposal gain recognized in the income statement
owing to the accounting method adopted (IFRS 9 option to recognize
changes in fair value in equity). Following a gain of EUR781
million recognized in the income statement for first-half 2018, the
additional gain gradually recognized directly in equity represents
around EUR640 million.
The Group recorded a business loss of EUR49 million.
Net financial expense excluding Sika dividends was down
slightly, at EUR234 million versus EUR250 million in first-half
2019. Dividends received from Sika totaled EUR34 million.
The income tax rate on recurring net income was 45%, which is
not comparable to the income tax rate of 25% recorded in first-half
2019 due to certain exceptional items such as the liability method
in the UK, withholding taxes, and losses recorded in certain
countries which did not give rise to tax credits. Income tax
totaled EUR183 million (EUR318 million in first-half 2019).
Recurring net income (excluding capital gains and losses on
disposals, asset write-downs and material non-recurring provisions)
was EUR272 million compared to EUR944 million in first-half
2019.
The net attributable loss was EUR434 million.
Investments in property, plant and equipment and intangible
assets (capital expenditure) declined by 34.5% to EUR447 million,
representing 2.5% of sales compared to 3.1% in first-half 2019.
Three-quarters of the decrease is attributable to optimized
maintenance capital expenditure. Most planned growth capital
expenditure has been maintained and represents EUR155 million,
mainly in the Construction Industry, façade and productivity
solutions in emerging countries (Mexico, India and China), and Life
Sciences.
Free cash flow jumped 143% to EUR1,678 million, representing
three times the percentage of sales in first-half 2019 (9.4% versus
3.2%), with a sharp improvement in the free cash flow conversion
ratio at 129% (versus 33% in first-half 2019), thanks mainly to a
significant decrease in working capital requirement and capital
expenditure. Operating working capital requirement came in at 32
days' sales at June 30, 2020, compared to 41 days at end-June
2019.
Investments in securities totaled EUR1,256 million (EUR158
million in first-half 2019) and chiefly included the Continental
Building Products acquisition. In the first six months of 2020,
Continental Building Products generated USD 240 million in sales
and USD 50 million in EBITDA, representing an EBITDA margin of
20.8% despite the impact of the coronavirus. Over 2020 as a whole,
EBITDA is expected to exceed USD 110 million (compared to USD 125
million in 2019), buoyed by the ramp-up in synergies that should
represent over USD 15 million (of which USD 3 million in first-half
2020). Expectations for value creation in year three are
confirmed.
Divestments totaled EUR2,434 million (EUR227 million in
first-half 2019), and mainly consist of the sale of Sika
shares.
Net debt fell sharply to EUR9.8 billion at June 30, 2020
compared to EUR12.8 billion at end-June 2019 (as restated further
to the IFRIC's November 2019 decision requiring the revision of the
terms adopted for certain leases), thanks chiefly to proceeds from
divestments net of acquisitions amounting to around EUR1.5 billion,
along with the reduction in working capital requirement and capital
expenditure. Excluding IFRS 16, net debt fell to EUR6.7 billion at
June 30, 2020 from EUR9.8 billion at end-June 2019. Net debt
represents 54% of consolidated equity compared to 69% as restated
at June 30, 2019. The net debt to EBITDA ratio on a rolling
12-month basis was 2.4 (2.0 excluding IFRS 16) compared to 2.6 (2.4
excluding IFRS 16) at June 30, 2019.
2020 outlook
In second-half 2020, despite uncertainties as to the impact of
the crisis caused by the coronavirus pandemic and the different
patterns of recovery in each country, Saint-Gobain should benefit
in the third quarter from a significant improvement in its markets
that began at the end of the second quarter. While most industrial
markets - especially automotive - should remain down on 2019,
construction markets which represent about 85% of the Group's sales
are expected to see supportive trends, especially renovation in
Europe, which accounts for around half of the Group's sales and is
a market on which the Group is strategically very well
positioned.
Priorities:
1) Ensure the health and safety of all in a health environment
which remains uncertain .
2) Continue to implement adaptation measures and generate robust
free cash flow ,
driven by:
- constant focus on the price-cost spread ;
- cost reduction thanks to additional post-coronavirus measures,
which should generate EUR200 million in full-year savings by 2021,
including EUR50 million in second-half 2020;
- the success of the cost savings program as part of "Transform
& Grow", generating EUR130 million in additional cost savings
in 2020 (of which EUR50 million in the second half), after EUR120
million in 2019, enabling the Group to meet its EUR250 million
target a year earlier than planned;
- a decrease in capital expenditure of more than EUR500 million
in 2020 versus 2019 after an investment peak and thanks to
continued optimization of maintenance capital expenditure in the
context of the pandemic;
- ongoing efforts to optimize working capital requirement;
- continuation of the operational excellence program aimed at
offsetting wage inflation and other fixed costs: around EUR300
million in additional cost savings in 2020 (of which EUR155 million
in the first half) calculated on the 2019 cost base; continued
discipline on cost structure.
3) Maintain a strong balance sheet and reach at end-2020 the
medium-term objective of a reduction in the number of its shares
outstanding to 530 million , from 542 million at December 31,
2019.
4) Enhance in the Group's profitable growth profile, driven
by:
- the continuation of its portfolio optimization as part of
"Transform & Grow" (divestments and acquisitions), according to
market conditions;
- the strategy of differentiation and innovation with enhanced
data, digital and customer productivity, as well as new services to
adapt our solutions to the needs of the post-coronavirus world;
- the "green" recovery, central to Saint-Gobain's strategic
positioning on energy-efficient renovation markets thanks to its
comprehensive portfolio of innovative solutions to reduce the
energy consumption of buildings.
In a macroeconomic and health environment which remains affected
by uncertainties, our earnings growth in June and outlook for the
third quarter suggest that our operating income for second-half
2020 will improve significantly on first-half 2020.
Saint-Gobain's medium and long-term outlook are robust thanks to
its successful strategic and organizational choices. The strategy
of differentiation and innovation puts Saint-Gobain in the best
position to benefit from its profitable growth drivers:
sustainability and wellbeing, and enhanced customer performance and
productivity. The Group's extensive exposure to the renovation
market means it is ideally placed to benefit from national and
European stimulus plans focused on the energy transition.
Financial calendar
- An information meeting for analysts and investors will be held
at 8:30am (GMT+1) on July 31, 2020 and will be broadcast live
on:
www.saint-gobain.com/
- Sales for the first nine months of 2020: October 29, 2020,
after close of trading on the Paris Bourse.
Analyst/Investor relations Press relations
+33 1 88 54 +33 1 88 54 23
29 77 45
+33 1 88 54 +33 1 88 54
Vivien Dardel 19 09 Laurence Pernot 26 83
Floriana Michalowska +33 1 88 54 Patricia Marie +33 1 88 54 27
Christelle Gannage 15 49 Susanne Trabitzsch 96
----------------------- -------------- -------------------- ----------------
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 :
EBITDA Note 4
Net debt Note 9
Non-operating costs Note 4
Operating income Note 4
Net financial 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 Universal Registration Document available on its
website ( www.saint-gobain.com ) and the main risks and
uncertainties for the second-half 2020, presented within the
half-year 2020 financial report. 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 .
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 QBLFXBDLZBBX
(END) Dow Jones Newswires
July 30, 2020 12:59 ET (16:59 GMT)
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