 |
|
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
(2) |
CHANGE %
(2)/(1) |
| Net sales |
15,286 |
15,35 |
+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 non-current 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 |
1,39 |
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-on-year 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 _EUR 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.
APPENDIX
Results by business sector, division and geographic area.
| I.SALES |
H1 2001 |
H1 2002 |
Change on an actual structure |
Change on an comparable structure |
Change on a comparable structure and currency basis |
| 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
|
| II. OPERATING INCOME |
H1 2001 |
H1 2002 est. |
Change |
| 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
| III. CASH FLOW |
H1 2001 |
H1 2002 est. |
Change |
| 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% |
2001 pro forma, i.e. including cash flow from Pipe distribution operations within Building Materials Distribution
| IV. CAPITAL EXPENDITURE ON PLANT & EQUIPMENT |
H1 2001 |
H1 2002 est. |
Change |
| 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
| Pro forma results for the Building Materials Distribution and Pipe divisions |
|
|
H1 2001 |
H1 2002 |
FULL YEAR 2001 |
| Sales |
| Building Materials Distribution prior to transfer |
4,915 |
5,180 |
10,060 |
| Building Materials Distribution |
5,142 |
5,370 |
10,520 |
| Pipe prior to transfer |
916 |
852 |
1,782 |
| Pipe |
729 |
690 |
1,397 |
| Operating income |
| Building Materials Distribution prior to transfer |
220 |
249 |
490 |
| Building Materials Distribution |
213 |
244 |
475 |
| Pipe prior to transfer |
79 |
63 |
131 |
| Pipe |
87 |
68 |
146 |
| Operating margin |
| Building Materials Distribution prior to transfer |
4,5% |
4,8% |
4,9% |
| Building Materials Distribution |
4,1% |
4,5% |
4,5% |
| Pipe prior to transfer |
8,6% |
7,3% |
7,4% |
| Pipe |
11,9% |
9,9% |
10,5% |
| Cash flow |
| Building Materials Distribution prior to transfer |
146 |
172 |
339 |
| Building Materials Distribution |
134 |
166 |
321 |
| Pipe prior to transfer |
72 |
66 |
132 |
| Pipe |
84 |
72 |
150 |
| Capital expenditure |
| Building Materials Distribution prior to transfer |
118 |
104 |
247 |
| Building Materials Distribution |
115 |
105 |
252 |
| Pipe prior to transfer |
16 |
15 |
48 |
| Pipe |
13 |
14 |
43 |
|
