Interim Results

Compagnie de Saint-Gobain
28 July 2005



                                                                   July 28, 2005

    FIRST-HALF 2005 RESULTS:


    >  SALES up 7.0% to €16,877 million (up 7.4% at constant exchange rates*)


    >  OPERATING INCOME up 4.6% to €1,372 million (up 4.9% at constant 
       exchange rates*)

    >  NET INCOME up 13.9% to €632 million



     CONFIRMATION OF 2005 TARGET:


     > 6% GROWTH IN OPERATING INCOME at constant exchange rates (average 
       exchange rates for 2004)


* based on average exchange rates for first-half 2004



Consolidated first-half sales for the Saint-Gobain Group (six months ended June
30, 2005) came in at €16,877 million, up 7.0%, or 7.4% at constant exchange
rates*. The contribution of the Group's acquisitions to the growth figure, net
of disposals, amounted to €848 million during the period, accounting for a rise
of 5.4% in net sales. Like-for-like growth (constant structure and exchange
rates) for the period was 2.0%, with 4.1% growth in the second quarter.





* based on average exchange rates for first-half 2004




Consolidated net income for first-half 2005 advanced 13.9% over the year-earlier
period, at €632 million. Excluding capital gains, consolidated net income
climbed 10.9% to €642 million, fueled mainly by the improvement in business
income.


•       Performances of the Group's business sectors:


Overall, despite a difficult first quarter, the Group's five sectors saw a 
rise in like-for-like sales  over first-half 2005, with most businesses 
reporting a significant rise in sales prices and, in the second quarter, 
robust organic growth. Like-for-like second-quarter sales were up 4.1%, on 
the back of a 0.7% dip in the first quarter. Like-for-like sales for the
Group's Flat Glass and Building Distribution Sectors - hard hit by the severe
late-winter weather in the first quarter - rebounded strongly in the second
quarter. Overall, the Group's first-half sales advanced 2.0% on a like-for-like
basis (including a +2.4% price impact and a -0.4% volume effect).


Operating income for the Group gained 4.6%, driven by a further improvement in 
the Building Distribution and High-Performance Materials Sectors.


On an actual structure and exchange rate basis, the Building Distribution Sector
reported a strong 13.7% rise in sales, thanks to the first-half contribution of
its recent acquisitions, particularly Dahl (consolidated as from May 1, 2004)
and Sanitas-Troesch (consolidated as from March 1, 2005). A strong upswing in
the second quarter of the year (up 5.0% like-for-like), after a slow first
quarter due to bad weather conditions, fueled a 2.3% rise in sales. French and
Scandinavian markets were the main growth drivers, while Germany and, to a
lesser extent, the UK, remained on a downward trend. Operating margin for the
Building Distribution Sector continued to improve, coming in at 4.9% compared
with 4.8% for the same period in 2004.


The High-Performance Materials Sector reported a 1.4% increase in sales on a
comparable structure and exchange rate basis, with growth in volumes and sales
prices in the Ceramics & Abrasives Division partially dampened by the drop in
sales volumes reported by the Reinforcements Division. The profitability of the
High-Performance Materials Sector has further advanced, with operating margin
accounting for 11.2% of sales, compared with 10.4% for H1 2004.


First-half sales for the Flat Glass Sector inched up slightly on a constant
structure and exchange rate basis, thanks to the upturn in the second quarter.
However, increased start-up costs due to the fast expansion of the Flat Glass
Sector in emerging countries and Asia in particular, dented profitability.


The Packaging Sector reported a slight rise in like-for-like sales, with price
rises across the sector offsetting the contraction in sales volumes in the
United States and in Germany, while the European wine market is stabilizing.
However, the profitability of the Group's Packaging business was trimmed by
rising energy costs, particularly in the US.


The Construction Products (CP) Sector posted the Group's strongest organic
growth, up 3.9% despite the 3.9% drop in like-for-like sales for the Pipe
Division following the last delivery under the Abu Dhabi contract at the end of
first-quarter 2004. Higher prices across the Pipe business helped to offset the
impact of spiraling raw materials costs on the division's operating income.
Building Materials and Insulation Divisions posted organic growth of more than
6.0%, as benefits from a buoyant US and European (excluding Germany)
construction market continued to filter through. Operating margin for these
divisions also advanced, fuelling the improvement in operating margin for the
sector as a whole.



•     Detailed review of interim consolidated financial statements:


The Group's interim consolidated financial statements prepared in accordance
with IFRS, which were reviewed by the Board of Directors on July 28, 2005, are
summarized below:

                                                                   H1 2004            H1 2005           % change
                                                                   (IFRS)              (IFRS)
                                                                 € millions          € millions

                                                                      (1)                (2)             (2)/(1)

Net sales*                                                          15,768*            16,877*             +7.0%
Operating income                                                      1,312              1,372             +4.6%
Non-operating costs                                                   (133)              (108)            -18.8%
Other business income and expenses                                     (31)                  4              n.m.
Business income                                                       1,148              1,268            +10.5%
Financial income (expense)                                            (261)              (266)             +1.9%
Income taxes                                                          (316)              (359)            +13.6%
Share in net income of equity investees                                   3                  5            +66.7%
Income before minority interests                                        574                648            +12.9%
Minority interests                                                     (19)               (16)            -15.8%
Net income                                                              555                632            +13.9%
Earnings per share (in €)                                              1.61               1.83            +13.7%
Net income excluding profit (loss) on sales of
non-current assets                                                      579                642            +10.9%
Earnings per share excluding profit (loss) on sales of
non-current assets (in €)                                              1.68               1.86            +10.7%
Cash flow from operations                                             1,263              1,355             +7.3%
Cash flow from operations excluding capital gains tax                 1,252              1,360             +8.6%
Capital expenditure                                                     554                598             +7.9%
Investments in securities                                               534                563             +5.4%
Net debt                                                              7,431              7,463             +0.4%


* including ancillary revenue for €118 million for first-half 2005, compared
with €91 million for first-half 2004


Consolidated first-half sales climbed 7.0% on an actual structure basis and 1.5%
based on a comparable structure. At constant exchange rates*, sales were up 7.4%
on an actual structure basis and 2.0% on a comparable structure basis. Sales
prices rose 2.4% on average, while volumes dipped slightly by 0.4%.


France accounted for 32.7% of total sales, with other western European countries
contributing 40.1%, North America 16.1% and emerging countries and the
Asia-Pacific region, 11.1%. Business remained buoyant, on a like-for-like basis,
in each of these areas, with the exception of western Europe, hampered by the
slowdown in Germany and the UK.


First-half operating income advanced 4.6%, and by 4.9% stripping out the
currency effects. Operating income represents 8.1% of sales, compared with 8.3%
of sales over the same period in 2004. In accordance with IFRS, operating income
now includes the cost of stock option programs and the Group Savings Plan,
representing a total of €26 million, compared with €23 million for first-half
2004. This slight dip in operating margin reflects the increased relative weight
of the Building Distribution Sector in the Group (despite the further advance in
the sector's profitability, to 4.9% compared with 4.8% for first-half 2004), as
well as higher start-up costs due to the fast expansion of the Group in emerging
countries. Excluding Building Distribution, the Group's operating margin slipped
to 10.4% from 10.5% in first-half 2004.


The Group's operations in the US and western Europe reported an improvement in
profitability, with the exception of France, where it remained flat. In emerging
countries and Asia, first-half profitability was dented by the large-scale
investments made over the period.


* based on average exchange rates for first-half 2004



First-half business income jumped 10.5%, mainly thanks to the increase in
operating income and in profit on sales of non-current assets during the period,
coupled with the fall in non-operating costs.


Non-operating costs were scaled back slightly, to €108 million from €133 million
for the six months ended June 30, 2004. Non-operating costs include a €54
million charge in respect of asbestos-related claims against CertainTeed
(compared with a charge of €50 million in the year-earlier period).


Financial expense remained virtually flat at €266 million, against €261 million
in first-half 2004, reflecting the stability of net debt at June 30, 2005
compared with June 30, 2004.


Minority interests slipped slightly to €16 million, from €19 million in the
prior-year period.


Consolidated first-half net income came in at €632 million, a rise of 13.9% over
first-half 2004. Based on the 345,255,470 shares outstanding at June 30, 2005,
earnings per share jumped 13.7% to €1.83, compared with €1.61 in first-half 2004
(based on 345,124,327 shares).


Excluding profit and loss on sales of non-current assets, net income climbed
10.9% to €642 million, compared with €579 million for first-half 2004. Based on
the 345,255,470 shares outstanding at June 30, 2005, earnings per share rose
10.7% to €1.86, compared with €1.68 in the prior-year period.


Cash flow from operations totaled €1,355 million, up 7.3% on first-half 2004.
Excluding the tax effect of capital gains and losses, cash flow from operations
advanced 8.6% to €1,360 million, compared with €1,252 million for the six months
ended June 30, 2004.


Capital expenditure increased 7.9% to €598 million, compared with €554 million
in first-half 2004. The rise in capital spending was fueled by the ramp-up of
the capital expenditure program in emerging countries and in particular Asia (up
30.7% over the same period in 2004).


Investments in securities totaled €563 million, including €336 million in the
Building Distribution Sector.


Net debt after payment of the 2004 dividend remained virtually stable in
comparison with the year-earlier period, at €7,463 million compared with €7,431
million at June 30, 2004. The gearing ratio - based on consolidated
shareholders' equity - was 62.2%, compared with 69.1% at June 30, 2004.



•     Update on asbestos claims in the United States: some 10,000 new claims 
were filed against CertainTeed in the six months to June 30, 2005, on a
par with the last two half-yearly periods. Approximately 3,000 mass claims were
filed in the State of Kentucky, for which no proof of medical impairment has
been provided. During the same period, some 13,000 claims were resolved
(compared with 11,000 over first-half 2004), and 3,000 claims were transferred
to an 'inactive docket'. Therefore, the number of pending claims at June 30,
2005 continued on a downward trend, standing at 100,000 at June 30, 2005,
compared with 106,000 at December 31, 2004. The average cost of claims settled
over the last twelve months was approximately US$ 2,500 per claim, lower than
the average cost of settlement at March 31 (approximately US$ 3,000 per claim),
due to a more favorable claims mix than the earlier period.


On the legislative front, the bipartisan vote by the US Senate Judiciary
Committee on May 26, 2005 concerning the Asbestos Trust Fund Bill has since
prompted much debate between the Bill's advocates and its opponents. The Bill
may be put before the full Senate as from the Fall.



•      Outlook and targets: The Group expects the recovery observed in
the second quarter of 2005 to pick up pace over the next six months, and
therefore confirms, for the full year, its target of 6% growth in operating
income at constant exchange rates (average rates for 2004).



•      BPB: On July 22, the Chairman of Compagnie de Saint-Gobain contacted 
the Chairman of the Board of BPB, seeking his recommendation for a cash 
offer at 675p per share. The proposal was fully financed and subject to
limited due diligence.  The offer was rejected by BPB's Board of Directors.
Whilst Compagnie de Saint-Gobain was surprised by this response and disappointed
that the management of BPB did not wish to enter into discussions, its objective
remains to seek an agreement with BPB, for a recommended deal.


Interior fittings solutions (including partitions, ceilings and insulation) are
the core businesses of both BPB and Saint-Gobain's Insulation activity.  These
businesses have the characteristics that Saint-Gobain focuses on, such as strong
growth, profitability and high potential for free cash flow generation, together
with a multi-regional market approach.


BPB's businesses present an excellent strategic fit with Saint-Gobain's '
Construction Products' Sector, which includes Insulation. They cater to a
similar client base (contractors, distributors, craftsmen), and offer
complementary products. Furthermore, their respective geographical locations
would help to step up expansion in emerging markets.


Compagnie de Saint-Gobain has noted BPB's first quarter 2005/2006 trading
statement. It continues to examine its options in respect of BPB, which might or
might not lead to a cash offer being made for BPB.  Compagnie de Saint-Gobain
believes there is strategic merit in combining the businesses and reaffirms its
high regard for BPB's executives and senior management team.  However, it will
only enter into a deal at a price it believes creates value for its
shareholders.



Forthcoming results announcements:

- Sales for the first nine months of 2005: October 25, 2005, after close of
trading on the Paris Bourse.



Investor Relations Department


Florence Triou-Teixeira Tel.: [phone]
Alexandre Etuy Tel.: [phone]
Fax: [phone]


                      This information is provided by RNS
            The company news service from the London Stock Exchange