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NET INCOME ESTIMATED AT 7.2 BILLION FRENCH FRANCS OR 1.1 BILLION EUROS (+27.8%) FOR THE YEAR 1998
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Consolidated net income for the Saint-Gobain Group is estimated at 7,190 million French Francs (1,096 million euros), up 27.8% on the previous fiscal year. It includes profits on disposals of cross shareholdings made during the year.
Excluding profits on disposals, consolidated net income is estimated at 5,170 million French Francs (788 million euros), an increase of 20.2% compared with 1997. Based on current estimates presented to the Board of Directors on January 28th, 1999, the key consolidated figures are as follows in millions of French Francs :
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1998 estimates
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1997
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F.Francs
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Euros
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F.Francs
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Euros |
| Sales |
116.954
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17.830
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107.078
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16.324
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| Operating income |
11.651
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1.776
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10.451
|
1.593 |
| Dividend income |
380 |
58 |
590 |
90 |
| Financial charges, net |
(1.976)
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(301)
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(1.887)
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(288)
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| Reorganisation and other costs |
(909)
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(139)
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(1.150)
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(175)
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| Income before tax and before results of sales of non-current assets |
9.147
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1.394
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8.004
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1.220
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| Results of sales of non-current assets |
2.576
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393
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2.014
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307
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| Income taxes |
(3.859)
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(588)
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(3.385)
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(516)
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| Amortization of goodwill |
(674)
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(103)
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(600)
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(91)
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| Group’s share in net results of associated companies |
563
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86
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332
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51
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| Net income before minority interests |
7.753
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1.182
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6.365
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970
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| Minority interests in consolidated companies |
(562)
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(86)
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(737)
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(112)
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| Net income |
7.190
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1.096
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5.628
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858
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| EPS (in FF, in E) |
79,63
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12,14
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63,08
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9,60
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| Net income excluding capital gains |
5.170
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788
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4.300
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656
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| Cash flow from operations |
12.386
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1.888
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11.100
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1.692
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| Capital expenditure on plant and equipment |
8.497
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1.295
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8.875
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1.353
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| Acquisition of investments |
13.600
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2.073
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7.175
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1.094
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| Net indebtedness |
25.589
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3.901
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17.501
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2.668
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These satisfactory performances of Saint-Gobain are the result of the strategy of development and profitability improvement followed by the Group in its three business sectors : Glass, High Performance Materials and Housing Products.
The Glass sector has a significant increase in its profitability due to sustained demand both in Europe and the United States and the impact of cost reduction programs.
The High Performance Materials sector maintains its 1997 results, the improved profitability of the Abrasives division compensating the decrease in the activities of the Ceramics division, particularly in the electrofused sector and products for the electronics industry.
The Housing Products sector has double digit growth both in sales and operating profit due to the Group’s attacking development policy in all its activities and the recovery of the building market.
The Group’s sales increase by 9.2% on a real structure basis. On a comparable structure basis, sales are up 3% in French Francs and 3.5% in local currencies. Sales in volumes increased significantly in 1998, both in the United States and Europe with the same trend as in the first half of 1998. As far as selling prices are concerned, there was a slight erosion during the second semester and they are on average for the full year slightly below those of 1997. Sales are split : France 37.7%, other European countries: 29.7%, America and Asia: 32.6%.
Operating income increases by 11.5% and accounts for 10% of sales, against 9.8% in 1997. Profitability increases in all major geographical areas especially in Europe thanks to good activity in most of the Group’s markets as well as productivity gains.
Income before tax and before results of sales of non-current assets is up 14.3% due to the improvement of operating income and the reduction of reorganisation costs (909 million French Francs against 1,150 in 1997 (139 million euros against 175 in 1997), despite the reduction in dividend income, which amounted to 380 million French Francs against 590 million French Francs in 1997 (58 million euros against 90 in 1997). Dividend income was indeed particularly high in 1997 because of the payment by Compagnie de Suez of an exceptional dividend of 253 million French Francs (38.6 million euros).
Financial charges amount to 1,976 million French Francs (301.2 million euros) and are stable compared to 1997.
Capital gains amount to 2,576 million French Francs (393 million euros).This is mainly due to the profits resulting from the disposals of 1,2 million shares of Vivendi and the remaining holdings in Suez-Lyonnaise des Eaux and AXA.
Net income amounts to 7,190 million French Francs (1,096 million euros) an increase of 27.8% compared to 1997. Earnings per share based on the total number of shares issued at December 31st, 1998 (90,295,788 shares), are 79.63 French Francs (12.14 euros), against 63.08 French Francs (9.06 euros) per share in 1997 (89,226,813 shares).
Excluding capital gains, net income amounts to 5,170 million French Francs (788 million euros) against 4,300 million French Francs (655 million euros) in 1997, an increase of 20.2%. Earnings per share, excluding capital gains, based on the total number of shares issued at December 31st, 1998 (90,295,788 shares), are 57.27 French Francs (8.73 euros), against 48.19 French Francs (7.35 euros) per share in 1997 (89,226,813 shares).
Cash flow amounts to 12,386 million French Francs (1,888 euros), an increase of 11.6%. It represents 10.6% of sales against 10.4% in 1997. Before the tax charge on profits on disposals which amounts to 542 million French Francs (82.6 million euros), cash flow amounts to 12,928 million French Francs (1,971 million euros).
Capital expenditure amounts to 8,497 million French Francs (1,295 million euros) against 8,875 million French Francs (1,353 million euros) in 1997 and represents 7.3% of sales against 8.3% in 1997.
Acquisition of investments amounts to 13.6 billion French Francs (2.1 billion euros), including 2.3 billion French Francs (351 million euros) for the acquisition of 2.3 million Saint-Gobain shares and 2.5 billion French Francs (381 million euros) for the acquisition of 17% of Poliet’s equity in July 1998.
Net indebtedness is 25.6 billion French Francs (3.9 billion euros) at December 31st, 1998, giving a gearing of 37.8%.
The review by geographical area (see appendix) shows on-going good performances in North and South America, as well as an improvement in Europe, except the United Kingdom. The monetary and financial crisis currently affecting Asian countries and Brazil did not have any significant effect on the 1998 results because of the characteristics of the Group in those countries.
Prospects : the Saint-Gobain Group forecasts for 1999, a strong increase in its EPS both before and after capital gains.
28/01/1999
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