. STRONG OPERATING PERFORMANCE:
- Sales up 1.1% on a comparable basis
- Operating income advances 0.2% on a comparable basis
- Operating margin holds firm at 8.5%
- Strong free cash flow, at EUR 1,257 million (excluding taxes on capital gains).
. NET INCOME (excluding capital gains) remains stable at EUR 1,051 million.
. NET DEBT FALLS 10% to EUR 7 billion.
. DIVIDEND RECOMMENDED FOR APPROVAL BY THE AGM: euro 1.13 per share, up 0.4%
At its meeting of Thursday, March 20, 2003, the Board of Directors of Saint-Gobain reviewed the Group’s consolidated financial statements for 2002.
Note: 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 engineering markets.
This transfer does not affect overall consolidated Group income as presented below, but it does impact sales and operating income data by division presented in the Appendix.
The Group’s key consolidated data, which confirm the estimates published at the end of January, are as follows:
|
2001
in EUR millions |
2002
in EUR millions |
% change |
| Net sales |
30,390 |
30,274 |
-0.4% |
| Operating income |
2,681 |
2,582 |
-3.7% |
| Dividend income |
32 |
22 |
-31.3% |
| Interest and other financial charges, net |
(603) |
(504) |
-16.4% |
| Non-operating costs |
(122) |
(252*) |
+ 106.6% |
| Income before profit on sales of non-current assets and taxes |
1,988 |
1,848 |
-7.0% |
| Profit on sales of non-current assets, net |
84 |
3 |
-96.4% |
| Provision for income tax |
(721) |
(612) |
-15.1% |
| Amortization of goodwill |
(184) |
(169) |
-8.2% |
| Share in net results of equity investees |
7 |
4 |
-42.9% |
| Net income before minority interests |
1,174 |
1,074 |
-8.5% |
| Minority interests |
(40) |
(34) |
-15% |
| Net income |
1,134 |
1,040* |
-8.3% |
| Earnings per share (in EUR) |
3.33(1) |
3.05 |
-8.4% |
| Net income excluding capital gains |
1,057 |
1,051* |
-0.6% |
| Earnings per share excluding capital gains (in EUR) |
3.10(1) |
3.08 |
-0.6% |
| Cash flow from operations |
2,733 |
2,673* |
-2.2% |
| Cash flow excluding capital gains |
2,765 |
2,688* |
-2.8% |
| Capital expenditure |
1,430 |
1,431 |
0.1% |
| Investments in securities |
848 |
789 |
-7.0% |
| Net debt |
7,792 |
7,012 |
-10% |
| * |
of which charge for CertainTeed asbestos-related litigation: EUR 100 million, before tax. |
| (1) |
EPS for 2001 has been restated to take into account the four-for-one stock split carried out on June 27, 2002. |
Saint-Gobain’s 2002 performance, achieved against the backdrop of a challenging economic environment, testifies to the Group’s resilience and its swift reaction to changing business conditions.
The Glass Sector posted the strongest like-for-like growth within the Group in 2002, driven by high sales volumes across the board. Profitability eased back slightly however, due to a contraction in sales prices in the Flat Glass and Insulation/Reinforcements divisions which could not be offset by the significant increase in earnings for Containers.
Business and earnings in the High-Performance Materials Sector - which slowed considerably during the first half - continued to contract in the second half of the year, albeit less significantly. Markets linked to industrial investment remain severely depressed both in Europe and the United States and the electronics market has not yet shown any tangible signs of recovery.
The Housing Products Sector continued down the same growth track as in the first half, slightly outstripping average growth for the Group as a whole and boosting profitability. The Building Materials division reaped the benefits of the buoyant construction market in the United States. The Building Materials Distribution division continued to expand, fuelled by organic growth and bolt-on acquisitions, and continued to leverage synergies. Operating margin for the division surged to 4.9%, from 4.5% in 2001 (pro forma, including full-year contributions from pipe distribution operations). Full-year Pipe division sales slipped slightly however, but the division reported a strong recovery in the fourth quarter, led by the first deliveries under the Abu Dhabi contract.
Asbestos claims in the United States: The number of new claims filed against CertainTeed in 2002 was slightly higher than in 2001 (67,000 compared with 60,000). This increase was due to an exceptional surge in the number of claims filed in Mississippi at the end of the year following the introduction of a new law more favorable to defendants as from January 1, 2003.
44,000 claims were settled during the year, leaving approximately 107,000 outstanding claims at December 31, 2002.
At December 31, 2002 the Group’s total cover for asbestos-related claims against CertainTeed amounted to EUR 426 million (USD 447 million), comprised of insurance policies and provisions, including the EUR 100 million charge booked in 2002. This cover represents approximately 4 to 5 years of indemnity payments at the current rate.
In 2003, several factors may have a positive impact on the number of new claims filed, particularly newly introduced or expected amendments to legislation in certain states.
Analysis of the Group’s 2002 key consolidated data:
Group sales dipped 0.4% in 2002. Based on a comparable Group structure, sales contracted 1.8% in euros and increased 1.1% in local currencies. This rise was mainly attributable to higher sales prices in most of the Group’s divisions (up 1.1% overall). Sales volumes, which declined slightly over the first nine months of the year, were unchanged for the year as a whole, after a recovery in the fourth quarter.
France accounted for 30% of total sales, with other European countries contributing 41.5%, North America 21.5% and other countries 7.0%.
Operating income contracted 3.7%, but rose 0.2% on a comparable structure and exchange rate basis. Operating margin was 8.5% compared with 8.8% in 2001. The change was wholly due to a sharp decrease in profitability for the High-Performance Materials Sector. The modest drop in margins for the Flat Glass and Insulation/Reinforcements divisions was more than offset by growth reported by most of the other Group divisions.
Profitability increased in North America, Brazil, the United Kingdom and Spain, but lost ground in other European countries.
Net interest and other financial charges fell 16.4%, mainly thanks to a reduction in both net debt and interest rates, combined with the impact of a weaker US dollar against the euro during the second half of the year. Interest expense was covered 5.1 times by operating income for the year ended December 31, 2002, compared with 4.4 times for the prior year.
Non-operating costs stood at EUR 252 million in 2002, compared with EUR 122 million in 2001. This increase was primarily due to a EUR 100 million charge recorded for CertainTeed asbestos-related litigation in the United States and, to a lesser extent, to an increase in reorganization costs for the High-Performance Materials Sector.
Profit on sales of non-current assets amounted to EUR 3 million. Capital gains made on the disposal of certain non-strategic Group assets were almost totally offset by capital losses and asset write-downs.
Goodwill amortization dropped 8.2%, as the Group wrote off in full certain cases of badwill.
Minority interests fell 15%, reflecting the purchase of minority interests in Saint-Gobain Cristaleria and several Brazilian subsidiaries in 2001 and in Lapeyre in 2002.
Net income contracted 8.3% in 2002 to EUR 1,040 million. Based on the 341,010,680 shares outstanding at December 31, 2002, earnings per share (EPS) amounted to EUR 3.05, an 8.4% contraction from EUR 3.33 in 2001. In line with the commitments made by the Group, new shares issued in the course of the year (in particular those issued under the Group Savings Plan) were offset at the end of the year by the cancellation of an equivalent number of shares. Total capital stock at December 31, 2002 was therefore practically unchanged in relation to December 31, 2001 (341,034,512 shares adjusted for impact of the June 27, 2002 stock split).
Excluding profit on sales of non-current assets, net income came to EUR 1,051 million, only 0.6% lower than the EUR 1,057 million recorded in 2001. Based on the 341,010,680 shares outstanding at December 31, 2002, earnings per share excluding capital gains dipped 0.6% to EUR 3.08 compared with the 2001 figure of EUR 3.10.
Excluding both capital gains and the asbestos-related charge, net income would be up 5.7%.
Cash flow from operations inched back to EUR 2,673 million, after the EUR 100 million Certain Teed asbestos-related litigation charge (before tax) in the United States, down 2.2% against the previous year. Excluding the EUR 15 million in tax on profit on sales of non-current assets, cash flow from operations contracted by 2.8% to EUR 2,688 million, compared with EUR 2,765 million in 2001.
Capital expenditure on plant and equipment came to EUR 1,431 million, on a par with the 2001 figure of EUR 1,430 million, and represented 4.7% of sales, as in 2001.
Free cash flow (cash flow minus capital expenditure on plant and equipment) totaled EUR 1,242 million compared with EUR 1,303 million a year earlier. Excluding the EUR 15 million in tax on profit on sales of non-current assets, free cash flow stood at EUR 1,257 million, 5.8% lower than the 2001 figure of EUR 1,335 million.
Investments in securities totaled EUR 789 million, including EUR 350 million for the purchase of minority interests in Lapeyre and EUR 159 million for share buybacks.
Net debt (excluding financial instruments) stood at EUR 7 billion at December 31, 2002, down 10% on the prior-year figure.
Annual General Meeting
The Board of Directors also reviewed the accounts of Compagnie de Saint-Gobain, the parent company. Net income amounted to EUR 596 million for the year ended December 31, 2002, against EUR 1,093 million for 2001.
At the General Meeting of the Company's shareholders, called for June 5, 2003, the Board will recommend the distribution of EUR 380 million (which accounts for 36.2% of net income excluding capital gains), against EUR 378 million last year. The dividend per share would therefore amount to EUR 1.13, an increase of 0.4% over last year. To this would be added a tax credit of EUR 0.565, giving a total of EUR 1.695 per share. Based on today’s closing share price, this dividend represents a gross yield of 6.7%. The dividend will be paid entirely in cash as from June 23, 2003.
In addition, the Board of Directors will recommend that the General Meeting confirm the November 21, 2002 appointment as director of Sehoon Lee, Co-Chairman of the South Korean companies Hankuk Glass Industries and Hankuk Sekurit. The General Meeting will also be asked to re-elect as director Gérard Mestrallet, Chairman and Chief Executive Officer of Suez, and to elect as director Paul Kerhuel, Chairman of the Saint-Gobain employee-shareholders Association, to replace Jean-Maurice Malot, and Denis Ranque, Chairman and Chief Executive Officer of Thales, to replace Mr Bernard Esambert, whose term expires at the meeting and is not seeking re-election.
Outlook: the current geopolitical events give rise to significant uncertainty as regards global economic trends. During the two first months of the year, Group sales have been in line with the target of moderate growth for the full year, despite increased exchange-rate fluctuation.
Next results announcements:
- First quarter 2003 sales: Thursday, April 24, 2003, after the close of the Paris Stock Exchange;
- Final results for the first half of 2003: Thursday July 24, 2003, after the close of the Paris Stock Exchange;
March 20, 2003.
Appendix:
Results by Business Sector, Division and Geographic Area
(in millions of euros)
| I. SALES |
2001 |
2002 |
change on an actual structure basis |
change on a comparable structure basis in euros |
change on a comparable structure and currency basis |
| 1°)By sector and division: |
| Glass (1) |
11,813 |
11,818 |
+0.0% |
-0.8% |
+2.8% |
| Flat Glass |
4,478 |
4,423 |
-1.2% |
-1.3% |
+2.3% |
| Insulation and Reinforcements |
3,274 |
3,329 |
+1.7% |
-0.8% |
+1.6% |
| Containers |
4,070 |
4,076 |
+0.1% |
+0.0% |
+4.3% |
| High-Performance Materials (1) |
4,018 |
3,637 |
-9.5% |
-9.3% |
-4.8% |
| Ceramics and Plastics & Abrasives |
4,018 |
3,637 |
-9.5% |
-9.3% |
-4.8% |
| Housing Products (1) |
14,824 |
15,102 |
+1.9% |
-0.5% |
+1.3% |
| Building Materials |
3,184 |
3,074 |
-3.5% |
-3.5% |
+1.9% |
| Building Materials Distribution proforma - (a) |
10,521 |
10,953 |
+4.1% |
+0.8% |
+1.5% |
| Building Materials Distribution proforma - (b) |
10,061 |
10,533 |
+4.7% |
+1.7% |
+2.4% |
| Pipe proforma-(a) |
1,397 |
1,344 |
-3.8% |
-3.8% |
-2.2% |
| Pipe proforma-(b) |
1,782 |
1,710 |
-4.0% |
-4.0% |
-3.9% |
| Internal sales |
-265 |
-283 |
|
|
|
| 2°)By geographical area: |
| France |
9,095 |
9,439 |
+3.8% |
+2.0% |
+2.0% |
| Other European Countries |
12,944 |
13,068 |
+1.0% |
-1.3% |
-1.2% |
| North America |
7,180 |
6,785 |
-5.5% |
-4.6% |
+0.7% |
| Rest of the world |
2,293 |
2,195 |
-4.3% |
-7.0% |
+15.2% |
| Internal sales |
-1,122 |
-1,213 |
|
|
|
| GROUP TOTAL |
30,390 |
30,274 |
-0.4% |
-1.8% |
+1.1% |
(1) including inter-division eliminations
(a) 2001 proforma including the Pipe Distribution activity in the Building Materials Distribution Division
(b) 2002 proforma including the Pipe Distribution Activity in the Pipe Division
| II. OPERATING INCOME |
2001 |
2002 |
change |
| 1°)By sector and division: |
| Glass |
1,357 |
1,325 |
-2.4% |
| Flat Glass |
551 |
495 |
-10.2% |
| Insulation and Reinforcements |
402 |
351 |
-12.7% |
| Containers |
404 |
479 |
+18.6% |
| High-Performance Materials |
392 |
244 |
-37.8% |
| Ceramics and Plastics & Abrasives |
392 |
244 |
-37.8% |
| Housing Products |
915 |
1,004 |
+9.7% |
| Building Materials |
294 |
335 |
+13.9% |
| Building Materials Distribution proforma - (a) |
475 |
534 |
+12.4% |
| Building Materials Distribution proforma - (b) |
490 |
539 |
+10.0% |
| Pipe proforma-(a) |
146 |
135 |
-7.5% |
| Pipe proforma-(b) |
131 |
130 |
-0.8% |
| 2°)By geographical area: |
| France |
870 |
841 |
-3.3% |
| Other European Countries |
979 |
923 |
-5.7% |
| North America |
580 |
586 |
+1.0% |
| Rest of the world |
252 |
232 |
-7.9% |
| GROUP TOTAL |
2,681 |
2,582 |
-3.7% |
(a) 2001 proforma including the Pipe Distribution activity in the Building Materials Distribution Division
(b) 2002 proforma including the Pipe Distribution Activity in the Pipe Division
| III. CASH FLOW |
2001 |
2002 |
change |
| 1°)By sector and division: |
| Glass |
1,560 |
1,614 |
+3.5% |
| Flat Glass |
613 |
622 |
+1.5% |
| Insulation and Reinforcements |
448 |
436 |
-2.7% |
| Containers |
499 |
556 |
+11.4% |
| High-Performance Materials |
330 |
246 |
-25.5% |
| Ceramics and Plastics & Abrasives |
330 |
246 |
-25.5% |
| Housing Products |
768 |
814 |
+6.0% |
| Building Materials |
297 |
247* |
-16.8% |
| Building Materials Distribution proforma - (a) |
321 |
414 |
+29.0% |
| Building Materials Distribution proforma - (b) |
339 |
420 |
+23.9% |
| Pipe proforma-(a) |
150 |
153 |
+2.0% |
| Pipe proforma-(b) |
132 |
147 |
+11.4% |
| 2°)By geographical area: |
| France |
797 |
794 |
-0.4% |
| Other European Countries |
1,024 |
1,050 |
+2.5% |
| North America |
593 |
513 |
-13.5% |
| Rest of the world |
319 |
316 |
-0.9% |
| GROUP TOTAL |
2,733 |
2,673 |
-2.2% |
(a) 2001 proforma including the Pipe Distribution activity in the Building Materials Distribution Division
(b) 2002 proforma including the Pipe Distribution Activity in the Pipe Division
* after the CertainTeed asbestos-related charge of EUR 100 m before tax
| IV. CAPITAL EXPENDITURE ON PLANT AND EQUIPMENT |
2001 |
2002 |
change |
| 1°)By sector and division: |
| Glass |
827 |
869 |
+5.1% |
| Flat Glass |
361 |
377 |
+4.4% |
| Insulation and Reinforcements |
229 |
198 |
-13.5% |
| Containers |
237 |
294 |
+24.1% |
| High-Performance Materials |
173 |
160 |
-7.5% |
| Ceramics and Plastics & Abrasives |
173 |
160 |
-7.5% |
| Housing Products |
429 |
401 |
-6.5% |
| Building Materials |
134 |
135 |
+0.7% |
| Building Materials Distribution proforma - (a) |
252 |
227 |
-9.9% |
| Building Materials Distribution proforma - (b) |
247 |
224 |
-9.3% |
| Pipe proforma-(a) |
43 |
39 |
-9.3% |
| Pipe proforma-(b) |
48 |
42 |
-12.5% |
| 2°)By geographical area: |
| France |
368 |
309 |
-16.0% |
| Other European Countries |
534 |
575 |
+7.7% |
| North America |
316 |
316 |
+0.0% |
| Rest of the world |
212 |
231 |
+9.0% |
| GROUP TOTAL |
1,430 |
1,431 |
+0.1% |
(a) 2001 proforma including the Pipe Distribution activity in the Building Materials Distribution Division
(b) 2002 proforma including the Pipe Distribution Activity in the Pipe Division |
