Final Results

Compagnie de Saint-Gobain 28 March 2002 FINAL RESULTS FOR 2001 - ANOTHER YEAR OF CONTINUED GROWTH: • Sales up 1.6% on a like-for-like basis • Operating income up 4.0% on a like-for-like basis • Net income excluding capital gains up 3%, to EUR 1,057 million • Free cash flow, excluding taxes on capital gains, up 34%, to EUR 1,335 million - OPERATING MARGIN (EXCLUDING BUILDING MATERIALS DISTRIBUTION) HOLDS FIRM AT 10.6% - DIVIDEND RECOMMENDED FOR APPROVAL BY THE AGM: EUR 4.50 PER SHARE, UP 4.65% - OBJECTIVE FOR 2002: GROWTH OF 0 TO 4% IN NET INCOME EXCLUDING CAPITAL GAINS - PUBLIC BUYBACK OFFER FOLLOWED BY A MANDATORY BUYOUT FOR THE MINORITY INTERESTS IN LAPEYRE, AT A PRICE OF EUR 62 PER SHARE At its meeting of Thursday, March 28, 2002, the Board of Directors of Saint- Gobain reviewed the Group's consolidated financial statements for 2001. The Group's consolidated financial statements for 2000 included the results of Essilor, which was fully consolidated up to June 30, 2000, then accounted for by the equity method up to November 15, 2000, when the Group sold its entire interest in this company. For purposes of comparability, the Group's consolidated financial statements for 2000 are also presented with Essilor accounted for by the equity method, and the comments that follow are based on this presentation. The Group's key consolidated data, which confirm the estimates published at the end of January, are as follows: 2000 2000 2001 % Change in EUR pro forma, in EUR millions Essilor by millions equity method in EUR millions (1) (2) (2)/(1) Net sales 28,815 27,837 30,390 9.2% Operating income 2,693 2,563 2,681 4.6% Dividend income 24 24 32 33.3% Interest and other financial charges, net (612) (594) (603) 1.5% Non-operating costs (158) (157) (122) -22.3% Income before profit on sales of non-current assets and taxes 1,947 1,836 1,988 8.3% Profit on sales of non-current assets, net 584 584 84 -85.6% Provision for income tax (791) (758) (721) -4.9% Amortization of goodwill (182) (171) (184) 7.6% Share in net results of equity investees 84 103 7 -93.2% Net income before minority interests 1,642 1,594 1,174 -26.3% Minority interests (125) (77) (40) -48.1% Net income 1,517 1,517* 1,134 -25.2% Earnings per share (in EUR) 17.80 17.80 13.30 -25.3% Net income excluding capital gains 1,026 1,026* 1,057 3% Earnings per share excluding capital gains (in EUR) 12.04 12.04 12.40 3% Cash flow from operations 2,643 2,530** 2,733 8% Cash flow excluding capital gains 2,747 2,634** 2,765 5% Capital expenditure 1,722 1,638 1,430 -12.7% Investments in securities 3,347 3,275 848 -74.1% Net indebtedness 8,217 8,217 7,793 -5.2% * of which Essilor: EUR 39 million ** of which Essilor: EUR 11 million The Group's performance in 2001, compared to a year of strong growth in 2000, reflects the Saint-Gobain Group's resilience in a markedly more difficult economic environment, particularly in the United States. It is attributable to the Group's more balanced operations mix, added to the ongoing profitability- boosting efforts pursued in each of the business sectors (see Appendix). The Glass Sector posted the strongest performance within the Group in 2001. Its sales and earnings were again bolstered by higher prices across all business lines and sustained demand in Flat Glass and Containers. The High-Performance Materials Sector, which had already seen a dip in sales and profitability in the first half due to the downturn in the global electronics market, was further affected in the second half due to the gradual slowdown in industrial activity and investment in both the United States and Europe, particularly after the events of September 11, without any recovery in electronics. The Housing Products Sector posted higher operating income in all three divisions. Building Materials Distribution continued to develop through both organic growth and bolt-on acquisitions, and it began to benefit from synergies. Its operating income rose strongly, bringing operating margin to 4.9%, against 4.5% in 2000 (including Raab Karcher and Meyer for the full year). The Pipe Division achieved profitability gains thanks to the cost-reduction drive undertaken in the final months of 2000. Following a dip in sales in the first half, the performance of the Building Materials Division was boosted in the second half by the industrial rationalization efforts it had carried out and by a healthy U.S. construction market. Group sales were up 9.2%. Based on a comparable Group structure, sales rose 1.1% in euros and 1.6% in local currencies. This slight rise was mainly attributable to higher sales prices (up 3.1% overall) in all Group divisions. Sales volumes however, which had already declined in the first half, contracted further in the second, essentially due to the general economic slowdown in both North America and Europe following the events of September 11th. Sales in France accounted for 28.9% of the total, with other European countries contributing 41.1%, North America 22.8% and other countries 7.2%. Operating income rose by 4.4%, and 3.8% on a comparable structure and exchange rate basis. Operating margin was 8.8%, compared to 9.2% in 2000. The change was wholly due to the increased weight of the Distribution Division. Excluding Building Materials Distribution, operating margin was unchanged at 10.6%. In line with first-half trends and despite a much more challenging economic environment in the second half, margins grew in France and other European countries, but contracted in North America due to the slowdown in markets tied to capital expenditure and industrial equipment. Margins held firm in Latin America and Asia, despite the devaluation of the Brazilian real (-19.7% on average compared to 2000). Income before profit on sale of non-current assets and taxes rose 8.1%, driven by higher operating income and a reduction in non-operating expenses that fell to EUR 123 million from EUR 157 million in 2000. Net interest and other financial charges remained almost unchanged from 2000, as gains from disposals and lower interest rates offset, over the full year, the impact of the acquisitions carried out in 2000. Profit on sales of non-current assets amounted to EUR 84 million. This mainly concerned capital gains on the disposal of the Group's entire stake in BNP Paribas, less asset write-downs and capital losses of EUR 87 million recorded by the Lapeyre Group in 2001, mainly as a result of its refocusing on sales to private individuals and craftsmen. Capital gains were considerably lower than in 2000, when the Group had sold 4 million Vivendi shares and its entire stake in Essilor. The Group's share in net results of equity investees amounted to EUR 7 million, against EUR 103 million in 2000. This sharp decrease was mainly due to the sale in November 2000 of the Group's interest in Essilor and, on the other hand, to the full consolidation of certain subsidiaries. Minority interests decreased significantly compared to 2000, to EUR 40 million from EUR 77 million, as a result of the purchase by Compagnie de Saint-Gobain of almost all minority interests in its Spanish subsidiary Saint-Gobain Cristaleria and in certain Brazilian subsidiaries, at the end of first-half 2001. Net income amounted to EUR 1,134 million, down 25.2% in relation to 2000. Earnings per share (EPS) came to EUR 13.30, down 25.3% from EUR 17.80 in 2000, based on the 85,258,628 shares outstanding at December 31, 2001. In line with the commitments made by the Group, new shares issued in the course of the year (in particular those issued under the Group Savings Plan) were offset at the end of the year by the cancellation of an approximately equivalent number of shares. Total capital stock at December 31, 2001 was therefore practically unchanged in relation to December 31, 2000 (85,213,263 shares). Excluding profit on sales of non-current assets, net income came to EUR 1,057 million, 3% higher than the EUR 1,026 million recorded in 2000. Earnings per share (EPS) rose 3% to EUR 12.40 from EUR 12.04 in 2000, based on the 85,258,628 shares outstanding at December 31, 2001. Cash flow from operations expanded by 8% to EUR 2,733 million. Excluding the EUR 32 million in tax on profit on sales of non-current assets, cash flow from operations stood at EUR 2,765 million, an increase of 5% over the EUR 2,634 million for 2000. Capital expenditure on plant and equipment came to EUR 1,430 million, down 12.7% from the EUR 1,638 million invested in 2000, and representing 4.7% of sales versus 5.9% of sales in 2000. Free cash flow (cash flow minus capital expenditure on plant and equipment) amounted to EUR 1,303 million, up from EUR 892 million in 2000. Excluding the EUR 32 million in tax on profit on sales of non-current assets, free cash flow stood at EUR 1,335 million, up 34% on the EUR 996 million recorded in 2000. Expenditure on securities amounted to EUR 848 million, including EUR 345 million for the buyback of minority interests in Saint-Gobain Cristaleria and in the Group's Brazilian subsidiaries. Net debt at December 31, 2001 stood at EUR 7.8 billion, down 5.2% compared with the amount at December 31, 2000 and representing approximately 61% of shareholders' equity, down from 67% at June 30, 2001. Annual General Meeting The Board of Directors also reviewed the accounts of Compagnie de Saint-Gobain, the parent company. Net income amounted to EUR 1,093 million for the year ended December 31, 2001, against EUR 1,015 million for 2000. At the General Meeting of the Company's shareholders, called for June 6, 2002, the Board will recommend the distribution of EUR 378 million, against EUR 357.3 million last year. The dividend per share would therefore amount to EUR 4.50, a 4.65% increase over last year. To this would be added a tax credit of EUR 2.25 per share, giving a total of EUR 6.75 per share. The dividend will be paid entirely in cash as from June 24, 2002. The Board will also recommend that the General Meeting approve a four-for-one stock split. Planned Public Buyback Offer for Lapeyre stock, to be followed by a Mandatory Buyout The Board of Directors also approved a planned filing by Compagnie de Saint- Gobain of a Public Buyback Offer, followed by a Mandatory Buyout (Offre Publique de Rachat suivie d'un Retrait Obligatoire), for the shares in Lapeyre that it does not yet hold. The offer concerns the 193,148 shares, or 0.88% of the capital stock, which now make up Lapeyre's free float following the tender offer made by the Company between February 7 and February 20 of this year, and the private purchase of a block of 605,126 Lapeyre shares. As in these previous operations, the price offered is EUR 62 per share. This offer is subject to approval by stock market authorities. Outlook: For the full year 2002, the Saint-Gobain Group confirms its objective of 0 to 4% growth in net income excluding capital gains, based on a scenario of economic recovery in the U.S. in the second half of 2002. The financial transactions carried out by the Group in February, namely the issue of 'OCEANE' bonds - which are convertible into either new or existing shares - and the buyback of minority interests in Lapeyre, will contribute to achieving this objective, given their slightly accretive impact on the Group's earnings per share as from 2002. Next results announcements: - First quarter 2002 sales: Thursday, April 25, after the Paris Stock Exchange has closed. - Estimated results for first-half 2002: Thursday, July 25, after the Paris Stock Exchange has closed. Investor Relations Department Tel: Florence TRIOU-TEIXEIRA +33 1 47 62 45 19 - mailto : florence.triou@saint-gobain.com Tel: Claire MOSES +33 1 47 62 32 36 - mailto : claire.moses@saint-gobain.com Fax : +33 1 47 62 50 62 Appendix: Results by Business Sector, Division and Geographic Area (in millions of euros) I. SALES 2000 2001 change on change on change on an actual a comparable a comparable structure structure structure and basis basis currency basis in euros by sector and division: Glass (1) 11 317 11 813 +4,4% +2,7% +3,2% Flat Glass 4 167 4 478 +7,5% +4,0% +6,0% Insulation and Reinforcements 3 254 3 274 +0,6% -2,9% -3,0% Containers 3 906 4 070 +4,2% +5,8% +5,3% High-Performance Materials & Plastics (1) 5 073 4 018 -20,8% -5,6% -5,5% Ceramics and Plastics & Abrasives 4 095 4 018 -1,9% -5,6% -5,5% Essilor 978 0 n.m. Housing Products (1) 12 596 14 824 +17,7% +2,1% +2,7% Building Materials 3 067 3 184 +3,8% +2,7% +2,7% Building Materials Distribution 7 930 10 061 +26,9% +3,2% +3,7% Pipe 1 778 1 782 +0,2% -2,3% -0,9% internal sales -171 -265 GROUP 28 815 30 390 +5,5% +1,1% +1,6% by geographical area: France 8 541 9 095 +6,7% +5,2% +5,2% Other European Countries 11 204 12 944 +15,3% +0,3% +0,9% North America 7 002 7 180 +2,5% -0,1% -3,2% Rest of the world 2 148 2 293 +6,8% -5,2% +8,1% Essilor 978 0 n.m. internal sales -1 058 -1 122 GROUP 28 815 30 390 +5,5% +1,1% +1,6% (1) including inter-divisions eliminations II. OPERATING INCOME 2000 2001 change by sector and division: Glass (1) 1 227 1 357 +10.6% Flat Glass 430 551 +28,1% Insulation and Reinforcements 423 402 -5,0% Containers 374 404 +8,0% High Performance Materials & Plastics (1) 668 392 -41,3% Ceramics and Plastics & Abrasives 538 392 -27,1% Essilor 130 0 n.m. Housing Products (1) 780 915 +17,3% Building Materials 252 294 +16,7% Building Materials Distribution 422 490 +16,1% Pipe 106 131 +23,6% misc. 18 17 n.m. GROUP 2 693 2 681 -0,4% by geographic area: France 797 870 +9.2% Other European Countries 791 979 +23,8% North America 739 580 -21,5% Rest of the world 236 252 +6,8% Essilor 130 0 n.m. GROUP 2 693 2 681 -0,4% III. CASH FLOW 2000 2001 change by sector and division: Glass (1) 1 421 1 560 +9,8% Flat Glass 489 613 +25,4% Insulation and Reinforcements 452 448 -0,9% Containers 480 499 +4,0% High Performance Materials & Plastics (1) 582 330 -43,3% Ceramics and Plastics & Abrasives 458 330 -27,9% Essilor 124 0 n.m. Housing Products (1) 702 768 +9,4% Building Materials 273 297 +8,8% Building Materials Distribution 309 339 +9,7% Pipe 120 132 +10,0% misc. -62 75 n.m. GROUP 2 643 2 733 +3,4% by geographic area: France 598 797 +33.3% Other European Countries 926 1 024 +10,6% North America 673 593 -11,9% Rest of the World 322 319 -0,9% Essilor 124 0 n.m. GROUP 2 643 2 733 +3,4% IV. CAPITAL EXPENDITURE ON PLANT AND EQUIPMENT 2000 2001 change by sector and division: Glass (1) 961 827 -13,9% Flat Glass 425 361 -15,1% Insulation and Reinforcements 258 229 -11,2% Containers 278 237 -14,7% High Performance Materials & Plastics (1) 289 173 -40,1% Ceramics and Plastics & Abrasives 205 173 -15,6% Essilor 84 0 n.m. Housing Products (1) 468 429 -8,3% Building Materials 172 134 -22,1% Building Materials Distribution 229 247 +7,9% Pipe 67 48 -28,4% misc. 4 1 GROUP 1 722 1 430 -17,0% by geographic area: France 433 368 -15,0% Other European Countries 572 534 -6,6% North America 362 316 -12,7% Rest of the World 271 212 -21,8% Essilor 84 0 n.m. GROUP 1 722 1 430 -17,0% This information is provided by RNS The company news service from the London Stock Exchange
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