Interim Results

Compagnie de Saint-Gobain 28 January 2005 January 27, 2005 press release ESTIMATED 2004 RESULTS: > STRONG GROWTH IN OPERATING PERFORMANCE: - Sales up 8.2% to EUR 32,025 million, - Operating income up 7.8% to EUR 2,632 million, up 10.3% at constant exchange rates*. On a like-for-like basis: - Sales up 4.6% - Operating income up 8.1% > NET INCOME EXCLUDING CAPITAL GAINS AND LOSSES UP BY 10.0%, to EUR 1,122 million > FURTHER DECREASE IN NET DEBT, to EUR 5.6 billion 2005 TARGETS: > To achieve 6% growth in operating income at constant exchange rates (average rates for 2004) and based on comparable accounting standards. > To maintain strong free cash flow levels. * based on average 2003 exchange rates Consolidated sales for the Saint-Gobain Group are estimated at EUR 32,025 million for 2004, representing an increase of 8.2% after a negative currency effect of 2.2%. The contribution of the Group's acquisitions to the growth figure, net of disposals, amounted to EUR 1,717 million during the year, accounting for a rise of 5.8% in net sales. On a like-for-like basis, the Group's consolidated sales grew by 4.6% in 2004. Saint-Gobain Group consolidated net income is estimated at EUR 1,083 million, up 4.2% on the year-earlier figure. Excluding capital gains and losses, net income is expected to come in at EUR 1,122 million, up 10.0% on 2003. This earnings growth was primarily fueled by an increase in operating income. This performance testifies to the Group's robustness and the dynamics of its business model, which became even more visible in 2004 as new businesses (Building Distribution and High-Performance Materials) developed and emerging markets picked up significantly in all sectors. Organization and presentation of financial statements In 2004, the Group modified its structure to bring it into line with its business model. As a result, the three existing business sectors (Glass, Housing Products and High-Performance Materials) have been reorganized into five new business sectors (two for new businesses, three for historic ones). The new structure stands as follows: New businesses: - Building Distribution sector - High-Performance Materials (HPM) sector, which includes Ceramics, Plastics and Abrasives, and now also Reinforcements Historic businesses: - Flat Glass sector - Packaging sector - Construction Products sector, which includes Building Materials, Insulation and Pipe Segment information (see appendix 1) and comments by business (see below) are now presented in accordance with this new structure, and the results of the Insulation and Reinforcements divisions are published separately (see appendices 2 and 3 for historic data). Performance of Group Sectors and Divisions: Overall, apart from the Pipe Division, all of the Group's divisions reported sales growth on a like-for-like basis in 2004. In line with the economic scenario anticipated at the beginning of the year and the trends observed in the first nine months, the new businesses (Building Distribution and High-Performance Materials), as well as emerging countries in general (sales up 13.6% and operating income up 28.4%), proved to be the Group's main growth and profitability drivers in 2004. New businesses: The Building Distribution sector achieved the largest contribution to consolidated sales growth and operating income, posting a 21% increase in sales and a 32% rise in operating income (respectively, 5% and 12% on a like-for-like basis). Thanks to further internal progress and the positive contribution from recent acquisitions (especially Dahl), the sector's operating margin improved significantly to 5.4% from 5.0% in 2003. High-Performance Materials (including Reinforcements) reported the Group's strongest like-for-like growth at 8.9%, as well as a significant increase in operating margin to 9.9% from 8.3% in 2003. These performances reflect a strong increase in overall sales volumes for the sector (up 11.0%), and were achieved despite a contraction in sales prices and the resulting fall in the profitability of the Reinforcements division. The recovery in the manufacturing industry and capital spending took hold throughout the year, particularly in the United States, and benefits from the cost reduction programs carried out in recent years continued to filter through. Historic businesses: The Flat Glass sector continued on a growth track, posting a 2.9% increase in like-for-like sales. However, margins were eroded due to downward pressure on sales prices in the European construction market. Further advances have been achieved in both the European automotive sector and in emerging countries. Towards the end of the year, price trends improved in the European construction market. The Packaging sector registered a slight rise in like-for-like sales - with price rises implemented throughout the division more than offsetting a dip in sales volumes in the European wine market. Despite the increase in energy costs, the operating margin edged up to 11.6%, compared with 11.4% in 2003. Organic growth posted by the Construction Products sector is consistent with the Group average, coming in at 4.3% on a like-for-like basis, despite the sharp drop in sales reported by the Pipe division (down 9.1% on a like-for-like basis) since the last deliveries under the Abu Dhabi contract at the end of the first quarter of 2004. Building Materials - which is smaller in size since the sale of Terreal and CertainTeed Ventilation in 2003 - and Insulation benefited from the buoyant residential construction market in the United States, both achieving very strong levels of organic growth of 9.6% and 8.1%, respectively, on a like-for-like basis. Meanwhile, operating income for the sector as a whole remained stable on a like-for-like basis, with higher raw materials costs negatively impacting the profitability of the Building Materials division (asphalt and resins) and, especially, the Pipe division (scrap metal, cast iron and coke). * * * • Analysis of the estimated 2004 consolidated financial statements: Based on the estimates presented at the Board of Directors' Meeting of January 27, 2005, unaudited key consolidated data for 2004 are set out in the table below. The final 2004 consolidated financial statements will be approved by the Board of Directors on March 24, 2005. 2003 2004 % Change (estimated) In EUR In EUR millions millions (1) (2) (2)/(1) Net sales 29,590 32,025 +8.2% Operating income 2,442 2,632 +7.8% Dividend income 12 3 -75.0% Interest and other financial charges, net (457) (441) -3.5% Non-operating costs (275) (280) +1.8% Income before profit on sales of non-current assets and taxes 1,722 1,914 +11.1% Profit (loss) on sales of non-current assets, net 86 (44) n.m. Provisions for income tax (595) (603) +1.3% Amortization of goodwill (154) (155) +0.6% Share in net results of equity investees 6 8 +33.3% Net income before minority interests 1,065 1,120 +5.2% Minority interests (26) (37) +42.3% Net income 1,039 1,083 +4.2% Earnings per share (in EUR) 2.99 3.18 +6.4% Earnings per share excluding treasury stock (in EUR) 3.09 3.23 +4.5% Net income excluding profit on sales of non-current assets 1,020 1,122 +10.0% Earnings per share excluding profit on sales of non-current 2.93 3.29 +12.3% assets (in EUR) Earnings per share excluding profit on sales of non-current 3.03 3.35 +10.6% assets and treasury stock (in EUR) Cash flow from operations 2,471 2,612 +5.7% Cash flow excluding capital gains tax 2,540 2,608 +2.7% Capital expenditure 1,351 1,537 +13.8% Investments in securities 789 899 +13.9% Net indebtedness 5,657 5,566 -1.6% Group sales are up by 8.2%. At constant exchange rates*, consolidated sales rose by 10.3% on an actual structure basis, and by 6.8% excluding Dahl. On a like-for-like basis, sales growth stands at 4.6%, with a 2.9% rise in sales volumes and a 1.7% rise in prices. The breakdown of like-for-like sales by geographic area reveals very robust business levels in France - despite the drop in sales of the Pipe division - and especially in the United States, which posted an increase of 10.1%. Growth in other western European countries - also affected by the decline in the Pipe division - showed little growth. Delivering like-for-like sales growth of 13.9%, emerging countries remain the Group's biggest growth driver. By geographic area, France accounted for 31.7% of total sales, with other western European contributing 40.8%, North America 17%, and emerging countries and Asia 10.5%. * based on average 2003 exchange rates Operating income is up by 7.8%. At constant exchange rates*, it rose 10.3% on an actual structure basis and 7.2% excluding Dahl, thus ahead of the 7% target. Like-for-like growth in operating income stands at 8.1%. Operating margin stood at 8.2% compared with 8.3% in 2003. This slight contraction is solely attributable to the increased relative weight of Building Distribution within the Group. This sector's operating margin rose significantly, to 5.4% of sales in 2004, up from 5.0% in 2003. Excluding Building Distribution, the Group's operating margin remained stable at 10.1%. Margins improved in all of the geographic areas where the Group operates except France, where the Pipe Division reported lower earnings as a result of significant increases in the cost of raw materials. The strongest growth in operating income (28.5%) was generated by the emerging countries, which also saw their operating margin rise from 10.5% to 11.8%. Net interest and other financial charges decreased 3.5% to EUR 441 million from EUR 457 million in 2003, primarily thanks to the favorable impact of converting interest on dollar-denominated debt into euros. Non-operating costs came in at EUR 280 million, up slightly in relation to 2003 (EUR 275 million). This figure includes a EUR 108 million charge for the cost of asbestos-related claims filed against CertainTeed, compared to EUR 100 million in 2003 (see below). The Group has registered a EUR 44 million loss on sales of non-current assets, due to write-downs and disposal losses, and despite the capital gain realized on the sale of the Group's remaining interest in Vivendi Universal. Goodwill amortization remained more or less stable at EUR 155 million. Minority interests rose by 42.3% due to the increase in the contribution from the Group's Brazilian subsidiaries. It climbed from EUR 26 million in 2003 to EUR 37 million in 2004. Consolidated net income is estimated at EUR 1,083 million, up 4.2% on the year-earlier figure. Based on the 340,988,000 shares outstanding at December 31, 2004, earnings per share totaled EUR 3.18, which represents a rise of 6.4% on 2003 (EUR 2.99 for 347,824,967 shares). Based on the number of shares excluding treasury stock outstanding at December 31, 2004 (335,127,590 shares compared with 336,185,581 shares at December 31, 2003), earnings per share amounts to EUR 3.23, which denotes an increase of 4.5% on 2003 (EUR 3.09). Excluding profit and loss on sales of non-current assets, consolidated net income is estimated at EUR 1,122 million, up 10.0% on the 2003 figure. Based on the 340,988,000 shares outstanding at December 31, 2004, earnings per share excluding profit on sales of non-current assets amounted to EUR 3.29, compared with EUR 2.93 in 2003 (based on 347,824,967 shares), which represents an increase of 12.3%. Based on the number of shares excluding treasury stock outstanding at December 31, 2004 (335,127,590 shares compared with 336,185,581 shares at December 31, 2003), earnings per share excluding profit on sales of non-current assets amounts to EUR 3.35, reflecting a rise of 10.6% on 2003 (EUR 3.03). Cash flow from operations came to EUR 2,612 million, an increase of 5.7% on the prior-year figure. Excluding the tax impact of capital gains and losses, cash flow from operations rose by 2.7% in relation to 2003, coming in at EUR 2,608 million, compared with EUR 2,540 million a year earlier. Capital expenditure rose 13.8% to EUR 1,537 million, from EUR 1,351 million in 2003, and represented 4.8% of sales, compared to 4.6% in 2003. This rise was mainly fueled by the ramp-up of the capital expenditure program in emerging countries, particularly Asia. * based on average 2003 exchange rates Investments in securities totaled EUR 899 million, including EUR 658 million relating to acquisitions (value of shares acquired) - primarily concerning Building Distribution (EUR 529 million) - and EUR 241 million relating to share buyback programs. Net indebtedness stood at EUR 5.6 billion at December 31, 2004, down slightly from EUR 5.7 billion one year earlier, despite the increase in the amount spent on acquisitions. The gearing ratio - based on consolidated shareholders' equity plus non-voting participating securities - stands at 46%. * * * Asbestos claims in the United States: During 2004, around 18,000 new asbestos claims were filed against CertainTeed, including 2,000 in the state of Mississippi, representing a decline of approximately 70% in relation to 2003 (62,000 including 29,000 in Mississippi). Approximately 4,000 new claims were filed in the fourth quarter of 2004, which is more or less on a par with the number of claims filed in each of the first three quarters of the year. The number of new claims seems to have stabilized at around 4,000 to 5,000 per quarter. Approximately 20,000 claims were resolved during the year, including 3,000 in the fourth quarter. At December 31, 2004, some 106,000 claims were outstanding, slightly down on the 108,000 claims in progress at December 31, 2003. The average cost of claims settled in 2004 was approximately USD 2,900 per claim, compared with USD 2,100 in 2003. This increase was due to the lower number of mass claims as a proportion of overall claims settled and claims currently in the process of being settled. Based on all these trends, an additional accrual of USD 134 million (EUR 108 million) was recorded in 2004, increasing the total coverage for CertainTeed's asbestos-related claims to USD 402 million for the period ended December 31, 2004. CertainTeed's risk concerning asbestos-related claims is now exclusively covered by way of provisions as insurance coverage was exhausted in 2004. Driven by the new Chairman of the US Senate Judiciary Committee, further active negotiations have taken place during the last few weeks concerning the proposed legislation to create a National Asbestos Trust Fund in the United States. A new bill is expected to be put before the Senate in February. * * * • 2005 Outlook and targets: 2004 confirmed the efficiency of the business model implemented by the Group, which is based on three strategic drivers: a strong increase in Building Materials Distribution, growth dynamics in High Performance Materials and development of all businesses in emerging countries. Based on the same dynamics, and in an environment of moderate economic growth, the Group's target for 2005 is to achieve 6% growth in operating income at constant exchange rates (average rates for 2004) and based on comparable accounting standards. The group also aims to maintain strong free cash flow levels. Forthcoming results announcements: - Final results for 2004: March 24, 2005, after close of trading on the Paris bourse. - Full results for 2004 under IFRS: March 29, 2005, after close of trading on the Paris bourse. - Information meeting on the transition to IFRS: at 8.30 a.m. on March 30, 2005, at the Group head office (Les Miroirs, 18, avenue d'Alsace, 92400 Courbevoie, France). - Sales for the first quarter of 2005 (under IFRS): April 26, 2005, after close of trading on the Paris bourse. Investor Relations Department Mme. Florence TRIOU-TEIXEIRA Tel. : +33 1 47 62 45 19 M. Alexandre ETUY Tel. : +33 1 47 62 37 15 Fax : +33 1 47 62 50 62 Appendix 1 Results by Business Sector, Division and Geographic Area (In millions of euros) Change on a Change on Change on comparable a I. SALES 2003 2004e an actual comparable structure and structure structure currency basis basis basis 1) By sector and division: Building Distribution (1) 11 305 13 679 +21,0% +5,3% +5,0% High-Performance Materials (1) 4 452 4 717 +6,0% +3,7% +8,9% Ceramics and Plastics & Abrasives 3 256 3 473 +6,7% +5,3% +10,8% Reinforcements 1 212 1 264 +4,3% -0,2% +4,0% Flat Glass (1) 4 298 4 394 +2,2% +1,4% +2,9% Packaging (1) 3 869 3 779 -2,3% -2,8% +0,8% Construction Products (1) 6 233 6 004 -3,7% +0,5% +4,3% Building Materials 2 824* 2 625 -7,0% +3,1% +9,6% Insulation 1 909 2 018 +5,7% +5,0% +8,1% Pipe 1 516 1 381 -8,9% -9,3% -9,1% Internal sales and misc. -567 -548 n.m. n.m. n.m. GROUP TOTAL 29 590 32 025 +8,2% +2,4% +4,6% 2) By geographic area: France 9 926 10 704 +7,8% +4,1% +4,1% Other western European countries 12 225 13 743 +12,4% +1,7% +1,2% North America 5 735 5 727 -0,1% +0,3% +10,1% Emerging countries and Asia 3 127 3 553 +13,6% +8,9% +13,9% Internal sales -1 423 -1 702 n.m. n.m. n.m. GROUP TOTAL 29 590 32 025 +8,2% +2,4% +4,6% (1) including inter-division eliminations * including companies sold in 2003: 304 million euros Change on II.OPERATING INCOME 2003 2004e an actual structure basis 1) By sector and division: Building Distribution 560 737 +31,6% High-Performance Materials 370 466 +25,9% Ceramics and Plastics & Abrasives 273 392 +43,6% Reinforcements 97 74 -23,7% Flat Glass 471 440 -6,6% Packaging 442 440 -0,5% Construction Products 584 507 -13,2% Building materials 265* 195 -26,4% Insulation 168 242 +44,0% Pipe 151 70 -53,6% Miscellaneous 15 42 +180,0% GROUP TOTAL 2 442 2 632 +7,8% 2) By geographical area: France 884 825 -6,7% Other western European countries 779 906 +16,3% North America 452 481 +6,4% Emerging countries and Asia 327 420 +28,4% GROUP TOTAL 2 442 2 632 +7,8% * including companies sold in 2003: 61 million euros Change on 2003 2004e an actual III. CASH FLOW structure basis 1) By sector and division: Building Distribution 398 515 +29,4% High-Performance Materials 435 490 +12,6% Ceramics and Plastics & Abrasives 291 356 +22,3% Reinforcements 144 134 -6,9% Flat Glass 548 508 -7,3% Packaging 504 490 -2,8% Construction Products 526 538 +2,3% Building Materials 172* 203 +18,0% Insulation 210 267 +27,1% Pipe 144 68 -52,8% Miscellaneous 60** 71** +18,3% GROUP TOTAL 2 471 2 612 +5,7% 2) By geographic area: France 832 827 -0,6% Other western European countries 800 878 +9,8% North America 450** 441** -2,0% Emerging countries and Asia 389 466 +19,8% GROUP TOTAL 2 471 2 612 +5,7% * including companies sold in 2003: 56 million euros ** after asbestos-related charge (net of tax) of €66m in 2003 and €72m in 2004. Change on an 2003 2004e actual IV. CAPITAL EXPENDITURE structure basis 1) By sector and division: Building Distribution 213 249 +16,9% High-Performance Materials 251 239 -4,8% Ceramics and Plastics & Abrasives 108 132 +22,2% Reinforcements 143 107 -25,2% Flat Glass 364 448 +23,1% Packaging 265 302 +14,0% Construction Products 257 294 +14,4% Building Materials 117* 102 -0,1% Insulation 90 145 +61,1% Pipe 50 47 -6,0% Miscellaneous 1 5 n.m. GROUP TOTAL 1 351 1 537 +13,8% 2) By geographic area: France 305 361 +18,4% Other western European countries 459 483 +5,2% North America 233 274 +17,6% Emerging countries and Asia 354 419 +18,4% GROUP TOTAL 1 351 1 537 +13,8% * including companies sold in 2003:14 million euros Appendix 2: 2004 quarterly sales and half-yearly results for the Insulation and Reinforcements Divisions (in millions of euros) I. SALES Change on Change on a Change on a Q1 2004 2003 2004e an actual comparable comparable structure structure structure and basis basis currency basis Insulation 462 473 +2,4% +1,7% +6,7% Reinforcements 315 301 -4,4% -6,1% +0,7% Change on Change on a Change on a H1 2004 2003 2004e an actual comparable comparable structure structure structure and basis basis currency basis Insulation 908 958 +5,5% +4,7% +8,2% Reinforcements 630 641 +1,7% -0,9% +3,9% Change on Change on a Change on a 9 months to September 30, 2004 2003 2004e an actual comparable comparable structure structure structure and basis basis currency basis Insulation 1 401 1 482 +5,8% +5,0% +8,3% Reinforcements 933 962 +3,1% -0,1% +4,4% II.OPERATING INCOME (H1 2004) Change on 2003 2004e an actual structure basis Insulation 72 103 +43,1% Reinforcements 62 37 -40,3% III. CASH FLOW (H1 2004) Change on 2003 2004e an actual structure basis Insulation 99 115 +16,2% Reinforcements 80 68 -15,0% IV. CAPITAL EXPENDITURE (H1 2004) Change on 2003 2004e an actual structure basis Insulation 32 48 +50,0% Reinforcements 54 45 -16,7% Appendix 3.a Insulation Division : historical data. Sales, Operating Income, Cash Flow, Capital expenditure Sales Operating Income Amount Change Amount Change In on an on a millions actual comparable on a comparable In millions on an actual of euros structure structure structure and currency of euros structure basis basis basis basis 1993 1410 -1,7% 135 +6,3% 1994 1512 +7,2% 167 +23,7% 1995 1500 -0,8% -0,8% +1,9% 154 -7,8% 1996 1473 -1,8% -2,1% -2,6% 140 -9,1% 1997 1555 +5,6% +5,6% +2,6% 143 +2,1% 1998 1655 +6,4% +3,2% +3,6% 161 +12,6% 1999 1871 +13,1% +7,6% +6,6% 225 +39,8% 2000 1975 +5,6% +6,4% +0,9% 217 -3,6% 2001 1982 +0,4% -0,8% -0,9% 195 -10,1% 2002 1971 -0,6% -3,0% -0,8% 184 -5,6% 2003 1909 -3,1% -3,1% +3,1% 168 -8,7% 2004e 2018 +5,7% +5,0% +8,1% 242 +44,0% Cash Flow Capital Expenditure Amount Change Amount Change In on an millions actual In millions on an actual of euros structure of euros structure basis basis 1993 154 +0,0% 79 -12,2% 1994 173 +12,3% 76 -3,8% 1995 183 +5,8% 86 +13,2% 1996 174 -4,9% 94 +9,3% 1997 182 +4,6% 164 +74,5% 1998 190 +4,4% 183 +11,6% 1999 239 +25,8% 206 +12,6% 2000 255 +6,7% 131 -36,4% 2001 233 -8,6% 90 -31,3% 2002 231 -0,9% 78 -13,3% 2003 210 -9,1% 89 +14,1% 2004e 267 +27,1% 145 +62,9% Appendix 3.b Reinforcements Division: historical data. Sales, Operating Income, Cash Flow, Capital expenditure Sales Operating Income Amount Change Amount Change In on an on a millions actual comparable on a comparable In millions on an actual of euros structure structure structure and currency of euros structure basis basis basis basis 1993 470 -0,8% -48 -108,7% 1994 577 +22,8% 9 -118,8% 1995 681 +18,0% +15,3% +23,5% 91 +911,1% 1996 687 +0,9% +0,9% -0,6% 100 +9,9% 1997 780 +13,5% +12,3% +5,6% 87 -13,0% 1998 835 +7,1% +2,2% +2,3% 112 +28,7% 1999 995 +19,2% +5,1% +3,1% 133 +18,8% 2000 1291 +29,7% +21,1% +12,4% 206 +54,9% 2001 1303 +0,9% -6,2% -6,3% 207 +0,5% 2002 1370 +5,1% +2,5% +5,1% 167 -19,3% 2003 1212 -11,5% -14,5% -6,1% 97 -41,9% 2004e 1264 +4,3% -0,2% +4,0% 74 -23,7% Cash Flow Capital Expenditure Amount Change Amount Change In on an millions actual In millions on an actual of euros structure of euros structure basis basis 1993 -21 -210,5% 23 -76,5% 1994 47 -323,8% 29 +26,1% 1995 126 +168,1% 62 +113,8% 1996 118 -6,3% 75 +21,0% 1997 103 -12,7% 60 -20,0% 1998 133 +29,1% 81 +35,0% 1999 150 +12,8% 139 +71,6% 2000 196 +30,7% 127 -8,6% 2001 214 +9,2% 139 +9,4% 2002 205 -4,2% 120 -13,7% 2003 144 -29,8% 143 +19,2% 2004e 134 -6,9% 107 -25,2% This information is provided by RNS The company news service from the London Stock Exchange

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