INTERIM RESULTS OF THE 1ST HALF YEAR

	Performance of Group business sectors
	Analysis of the interim consolidated financial statements for first-half 2006
	Update on asbestos claims in the United States
	Strategy
	2006 outlook and targets

Overall, the Group's five business sectors saw a rise in like-for-like sales (constant Group structure and exchange rates) over first-half 2006 (see appendix 1). Most businesses reported a solid increase in sales volumes as well as a significant rise in sales prices, enabling them to pass on the higher costs of energy and certain raw materials at Group level. On a like-for-like basis, first-half sales climbed 6.3% (including a +3.0% price impact and a 3.3% volume effect). Business trends observed in the first quarter – which were boosted by a higher number of working days than first-quarter 2005 – sustained their momentum over the three months to June 30, 2006 (based on a constant number of working days). The Group's growth continued to be driven by businesses serving the construction markets (in particular the Construction Products and Building Distribution sectors), while businesses related to industrial markets held firm.
The Group's ongoing expansion in Asia and emerging countries continues to bolster performance, posting like-for-like growth of 10.9% in first-half 2006.

Building Distribution delivered a sharp 14.1% increase in underlying sales, fuelled by both the first-half contribution of acquisitions carried out in 2005 (particularly Optimera and Sanitas-Troësch) and by the strong 5.4% organic growth reported by the sector's main banners, namely in France and Scandinavia. The UK businesses posted moderate growth, while the German market showed the first signs of an upturn in the second quarter. The sector's operating margin continued on an upward trend, at 5.0% compared with 4.9% in the year-earlier period.

High-Performance Materials posted a 3.4% rise in like-for-like sales, reflecting strong sales volumes. Ceramics & Plastics and Abrasives delivered a further improvement in profitability, which climbed to 13.8% against 13.4% in the first six months of 2005. However, the Reinforcements division saw its operating margin narrow due to a further decrease in sales prices, as well as rising energy, raw materials and freight costs. Operating margin for the sector as a whole slipped to 10.8% versus 11.2% in first-half 2005.

Flat Glass sales advanced 4.2% like-for-like, on the back of robust growth in sales volumes, in particular on the construction markets. The hike in the cost of energy and certain raw materials dented profitability, however, and was not, on average, fully passed on to sales prices over first-half 2006. Sales prices rose mainly in the second quarter and the full benefits of this will therefore be felt in the second half of the year, which will also be boosted by a more favorable comparison basis.

Like-for-like sales for the Packaging sector edged up by 3.3%, thanks to sales price increases implemented in the past few months across both Europe and the US. This helped to partly counter the strong upward spiral observed since summer 2005 in the cost of energy and certain raw materials. The sector's operating margin, which improved on second-half 2005, nevertheless remains below first-half 2005 levels.

On the back of strong contributions from each of its businesses, the Construction Products (CP) sector posted the Group's highest organic growth at 11.5% (including a 5.7% price impact and a 5.8% volume effect). Both “interior building solutions” businesses (Gypsum and Insulation) turned in an excellent performance, registering organic growth above the sector average (at 13.7% and 12.2%, respectively), and marked price increases. The Building Materials division also raised its prices significantly, while the Pipe division continued to report vigorous export sales (up 17.0% like-for-like). Thanks to improved profitability across all of its businesses, the sector's operating margin leapt to 12.9% compared with 9.1% in first-half 2005 (or 10.6% pro forma including BPB over the six-month period to June 30, 2005).

The interim consolidated financial statements set out below were reviewed by the Board of Directors on July 27, 2006:

* including ancillary revenue of €134 million in first-half 2006 and €118 million in first-half 2005.
** including additional amortization of €9 million in first-half 2006 resulting from the allocation of BPB's acquisition cost to certain items of property, plant and equipment (gypsum quarries and industrial plants) and intangible assets such as patents.


Consolidated first-half sales jumped 21.8% on an actual structure basis and 19.7% at constant exchange rates*. Contributions from acquisitions, net of disposals, accounted for 12.9% of this increase. British Plaster Board (BPB), which has been consolidated within the Group's accounts since December 1, 2005, delivered sales of €1,964 million in the six months to June 30, 2006.
At constant Group structure and exchange rates*, Group sales advanced by €1,146 million, a rise of 6.3% including BPB organic growth (13.7%), and of 5.6% excluding BPB.

The breakdown of like-for-like sales by geographic area reveals robust business levels in France and other Western European countries, with the first signs of an upturn in Germany in the second quarter. Business in North America remained vigorous, with an advance in non-residential construction markets, although residential housing starts stalled as predicted. Emerging countries and Asia reported the Group's highest organic growth, at 10.9%.

By geographic area, France accounted for 29.1% of sales, with other Western European countries contributing 41.2%, North America 17.3%, and emerging countries and Asia/Pacific 12.4%.

* based on average exchange rates for first-half 2005

Operating income surged 32.3%, or 29.8% at constant exchange rates. The Group reported a significant rise in operating margin to 8.8% (11.1% excluding Building Distribution), compared with 8.1% (10.4% excluding Building Distribution) in the same year-ago period. This chiefly reflects the contribution from BPB, which posted first-half operating income of €334 million (including €20 million in synergies), representing 17.0% of sales.

All geographic areas reported improved profitability figures, with the exception of Asia and emerging countries, which were hit by an appreciation in certain currencies.

Business income soared 31.8%, fuelled mainly by an increase in operating income.

Non-operating expenses advanced to €157 million, compared with €108 million in the six months to June 30, 2005, due to additional restructuring measures designed to boost productivity and competitiveness of Group businesses. They also include a €50 million charge in respect of asbestos claims filed against CertainTeed (compared with €54 million in the year-earlier period).

Capital gains and losses and exceptional write-offs came in at €13 million, compared with €4 million in the year-earlier period. Capital gains on sales of assets during the first half of the year (€141 million including €139 million on the sale of Calmar) were almost fully offset by one-off asset impairment charges (€128 million).

Net financial income fell 40.6% to €(374) million versus €(266) million in first-half 2005, reflecting the increase in net debt due to the BPB acquisition. Excluding BPB-related acquisition financing costs, net financial income remained virtually unchanged.

Net income climbed 26.1% on first-half 2005, to €797 million. Based on the total number of shares outstanding at June 30, 2006 (350,655,561 following the issuance of 5,399,291 shares in connection with the Group Savings Plan), earnings per share surged 24.0% to €2.27, compared with €1.83 at June 30, 2005 (based on 345,255,470 shares). Based on the number of shares excluding treasury stock (343,262,396 shares at June 30, 2006 compared with 340,058,134 shares at June 30, 2005), earnings per share amounts to €2.32, an increase of 24.7% on June 30, 2005 (€1.86).

Excluding profit/(loss) on sales of non-current assets, net income leapt 26.6% to €813 million, versus €642 million in the year-earlier period. Based on the total number of shares outstanding at June 30, 2006 (350,655,561 shares), earnings per share excluding profit/(loss) on sales of non-current assets jumped 24.7% to €2.32, compared with €1.86 at end-June 2005. Based on the number of shares excluding treasury stock (343,262,396 shares at June 30, 2006 compared with 340,058,134 shares at June 30, 2005), earnings per share comes in at EUR 2.37, reflecting an increase of 25.4% on June 30, 2005 (EUR 1.89).

Cash flow from operations was 21.3% higher than the year-earlier period, at €1,643 million. Excluding the impact of capital gains tax, cash flow from operations advanced 22.9% to €1,672 million, versus €1,360 million for the six months to June 30, 2005.

Capital expenditure rose 35.6% to €811 million, compared with €598 million in first-half 2005. This increase reflects primarily the integration of BPB, whose higher year-on-year capital expenditure accounted for 10.5% of sales. The Group's capital expenditure programs in emerging countries and Asia also remain vigorous, accounting for 29.7% of the Group's capital expenditure in first-half 2006.

Investments in securities totaled €346 million, including €306 million relating to the Building Distribution business.

After adjusting for the dividend payout, and before the proceeds from the sale of Calmar (paid in July for an amount of €560 million), net debt totaled €13,738 million at June 30, 2006, an increase of 6.9% on December 31, 2005 (€12,850 million). Net debt represents 106.6% of consolidated shareholders' equity, compared with 104.4% at December 31, 2005.