ESTIMATED 2005 RESULTS: ANOTHER YEAR OF GROWTH

	Update on the consolidation of British Plaster Board (BPB)
	Performances of Group Sectors (excluding BPB)
	Analysis of the 2005 estimated consolidated financial statements
	Update on asbestos claims in the United States
	2006 outlook and targets

BPB’s accounts are reflected in Saint-Gobain Group’s consolidated data for 2005 as from December 1, the date at which they were fully consolidated within the Construction Products (CP) Sector. The public tender offer followed by a squeeze-out procedure launched on December 7 resulted in the delisting of BPB shares with effect from January 9, 2006 and the acquisition by Saint-Gobain of all of BPB’s capital on January 19, 2006.

In accordance with IFRS, and in particular IFRS 3 on Business Combinations, BPB’s consolidated financial data was restated when consolidated into the Saint-Gobain Group’s accounts (see appendixes 2 and 3):

Some restructuring costs intended to generate operating synergies as from 2006 were also recorded in December 2005. These costs mainly relate to the closure of the BPB head office (EUR 23 million in restructuring costs and a provision for unavoidable future rent payments due) and the termination of an IT project at BPB (resulting in an asset write-down of EUR 13 million).

Overall, after adjusting for finance costs of EUR 18 million, in particular costs recorded in the books of BPB and those relating to its acquisition by Saint-Gobain, and after taxes, the contribution of BPB to Saint-Gobain’s net income was a negative EUR 54 million for 2005.

As these restated BPB figures are clearly not representative of the Company’s overall performance, which is on track to meet its published operating forecasts, and to ensure Saint-Gobain comparability with 2004 data, the following comments on Saint-Gobain Group’s 2005 estimated results are primarily based on its performance excluding BPB.

Excluding BPB, consolidated sales for the Saint-Gobain Group are estimated at EUR 34,873 million for 2005, representing an increase of 8.4%, or 7.4% at constant exchange rates*. The contribution of the Group’s acquisitions (excluding BPB) to the growth figure, net of disposals, amounted to EUR 1,502 million, accounting for a rise of 4.7% in net sales. On a like-for-like basis (constant structure and exchange rates), the Group’s consolidated sales advanced 2.7% in 2005.

Excluding BPB, Saint-Gobain Group consolidated net income is estimated at EUR 1,318 million, up 6.4% on the year-earlier figure. Excluding profit (loss) on sales of non-current assets, net income is expected to come in at EUR 1,328 million, up 3.0% on 2004. This earnings growth is primarily fueled by a 4.6% increase in operating income (3.3% at constant exchange rates*) and an 8.0% rise in business income, but is hit by a higher year-on-year tax rate.

This performance bears testimony to the Group’s resilience and the dynamics of its business model. The merits of the business model were again evident in 2005, with strong growth reported in the Construction Products and Building Distribution Sectors in particular, and ongoing expansion into emerging markets.

* based on average 2004 exchange rates

•  Performances of Group Sectors (excluding BPB):

Overall, all of the Group’s sectors reported like-for-like sales growth in 2005 (see appendix 1). As in the first half, the Group’s growth over the year was mainly driven by businesses relating to the residential construction market. The Insulation Division, in particular, turned in the Group’s highest organic growth figures, at 7.1%.

Based on the estimates presented at the Board of Directors’ meeting of January 26, 2006, unaudited key consolidated data for 2005 are set out below. The final version of the 2005 consolidated financial statements will be approved by the Board of Directors at their meeting of March 23, 2006.

* including ancillary revenue of EUR 250 million in 2005, up from EUR 190 million in 2004.

To enhance comparability with 2004 data, the following comments mainly relate to the Group’s 2005 consolidated data excluding the impact of BPB.

Group sales climbed 8.4% on an actual structure basis, and 3.6% like-for-like. At constant exchange rates**, consolidated sales rose by 7.4% on an actual structure basis and 2.7% like-for-like. Sales prices edged up by 1.9% on average, while volumes were up by 0.8%.

** based on average 2004 exchange rates.

The breakdown of like-for-like sales by geographic area reveals continuing robust business levels in France and the United States, which posted increases of 4.7% and 4.0% respectively. Business held firm in other western European countries, with the fall-off in sales in Germany and the UK offset by strong performances elsewhere, particularly in Spain, Portugal and Scandinavia. Delivering vigorous sales growth of 6.8%, emerging countries and Asia made a healthy contribution to the Group’s growth momentum.

By geographic area, France accounted for 31.1% of total sales, with other western European countries contributing 40.6%, North America 16.2%, and emerging countries and Asia-Pacific 12.1%.

Operating income is up by 4.6%, or by 3.3% at constant exchange rates**. Operating margin stands at 8.2% compared with 8.5% in 2004 and, in accordance with IFRS, includes costs relating to stock option programs and the Group Savings Scheme, which amounted to EUR 41 million, compared with EUR 32 million in 2004. This dip in profit margin reflects the increased relative weight of Building Distribution within the Group, although it should be noted that the operating margin reported by this sector once again increased, to 5.7% of sales in 2005, up from 5.6% in 2004. Another contributing factor was the impact of energy and transport costs, as well as the rise in certain start-up costs related to the Group’s accelerated growth in emerging countries.

Business income advanced by 8.0%, mainly on the back of the rise in operating income and profit on the sale of non-current assets, coupled with a fall in non-operating costs over 2005, to EUR 252 million from EUR 271 million in the year-earlier period. These costs include an amount of EUR 100 million set aside to the provision for asbestos claims against CertainTeed in the US, compared with EUR 108 million in 2004.

Net financial income fell 2.8% to EUR (550) million compared with EUR (535) million in 2004, due to higher finance costs stemming from the increase in financial investments.

Income taxes climbed 17.1% to EUR 721 million, compared with EUR 616 million a year earlier, chiefly due to year-on-year adjustments under the consolidated tax system.

Minority interests experienced a slight dip, to EUR 30 million as against EUR 36 million in 2004.

Consolidated net income is estimated at EUR 1,318 million, up 6.4% on the year-earlier figure. Based on the 345,256,270 shares outstanding at December 31, 2005, earnings per share totaled EUR 3.82, which represents a rise of 5.2% on 2004 (EUR 3.63 for 340,988,000 shares). Based on the number of shares excluding treasury stock outstanding at December 31, 2005 (336,873,109 shares compared with 335,127,590 shares at December 31, 2004), earnings per share amounts to EUR 3.91, reflecting a rise of 5.7% on 2004 (EUR 3.70).

Excluding profit (loss) on sales of non-current assets, consolidated net income comes in at an estimated EUR 1,328 million, up 3.0% on the 2004 figure. Based on the 345,256,270 shares outstanding at December 31, 2005, earnings per share excluding profit (loss) on sales of non-current assets amounted to EUR 3.85, compared with EUR 3.78 in 2004 (based on 340,988,000 shares), which represents an increase of 1.9%. Based on the number of shares excluding treasury stock outstanding at December 31, 2005 (336,873,109 shares compared with 335,127,590 shares at December 31, 2004), earnings per share excluding profit (loss) on sales of non-current assets amounts to EUR 3.94, reflecting a rise of 2.3% on 2004 (EUR 3.85).

Cash flow from operations came in at EUR 2,767 million, an increase of 4.9% on the prior-year figure. Excluding the impact of capital gains tax, cash flow from operations climbed by 5.0% in relation to 2004, coming in at EUR 2,767 million, compared with EUR 2,635 million a year earlier.

** based on average 2004 exchange rates

Capital expenditure rose 10.7% to EUR 1,705 million, from EUR 1,540 million in 2004, and represented 4.9% of sales, compared to 4.8% a year earlier. This rise was mainly fueled by the ramp-up of the capital expenditure program in emerging countries, particularly Asia.

Investments in securities totaled EUR 1,208 million, including EUR 1,062 million relating to acquisitions (value of shares acquired) – primarily concerning the Building Distribution business (EUR 628 million) – and EUR 146 million relating to share buyback programs.

Net debt came in at EUR 6.6 billion at end-2005, slightly up on the figure reported at December 31, 2004 (EUR 6.2 billion). Net debt represents 52% of consolidated shareholders’ equity.

•  UPDATE ON ASBESTOS CLAIMS IN THE UNITED STATES

Some 17,000 new claims were filed against CertainTeed during the year 2005 (against 18,000 in 2004). Some 6,000 of these new claims could be considered to be mass claims not supported by any medical proof (3,000 in Kentucky in first-half 2005; 3,000 in Texas over the second half).  Excluding these mass claims, around 4,000 new claims were filed in second-half 2005, compared with 7,000 in the first six months of the year. The rate at which claims are filed seems to have stabilized at about the 4,000 per quarter level.

Over the full year, approximately 20,000 claims were resolved (13,000 in the first half and 7,000 in the second half) and 3,000 claims were transferred to an inactive docket.  Therefore, the number of outstanding claims at December 31, 2005 continued on a downward trend, standing at around 100,000, compared with 106,000 at December 31, 2004.

Over the last 12 months, the average cost of claims settled fell to approximately US$ 2,800 per claim (against US$ 2,900 per claim in 2004), due to a slightly more favorable claims mix than in the prior period. 

Based on all these trends, an additional accrual of €100 million (compared to €108 million in 2004) was recorded in 2005, increasing the total coverage for CertainTeed‘s asbestos-related claims to approximately US$ 422 million at December 31, 2005.

On the legislative front, the US Senate Judiciary Committee approved the FAIR Act (the asbestos trust fund bill) by a bipartisan vote on May 26, 2005.  The bill is expected to be debated by the full Senate as from February 2006.

•  2006 OUTLOOK AND TARGETS

Against a backdrop of moderate economic growth, and in light of the consolidation of BPB as from December 1, 2005, the Group’s target for 2006 is to achieve:

- between 23% and 25% growth in operating income at constant exchange rates (average rates for 2005).

- between 18% and 20% growth in net income excluding profit (loss) on sales of non-current assets

These targets do not take into account any major change in the scope of consolidation that may occur in 2006.

- continuing strong levels of free cash flow.

Saint-Gobain has initiated a series of actions concerning the divestiture program it announced at the end of 2005, and has launched a strategic reflection process regarding Calmar. The findings of this process should be known during the first half of 2006. Other divestitures are also being considered.

Forthcoming results announcements:

- Final results for 2005: March 23, 2006, after close of trading on the Paris bourse.

- Sales for the first quarter of 2006: April 27, 2006, after close of trading on the Paris bourse.