Compagnie De Saint-gobain Sa · EURONEXT:SGO
Compagnie De Saint-gobain Sa — Saint-Gobain — FY2007 Earnings Presentation
67 slides from Compagnie De Saint-gobain Sa's earnings presentation, January 2008
Slide 1: 2007 Estimated Results and Outlook for 2008
2007 Estimated Results and Outlook for 2008 Analyst – Investor meeting January 2008
Slide 2: Agenda
1 2007 Highlights 2 2007 Estimated Results 3 Operating Performance 4 Group Strategy 5 Outlook and Objectives for 2008
Slide 3: 2007 Highlights
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Slide 4: Saint-Gobain in 2007: Targets exceeded
Saint-Gobain in 2007: Targets exceeded 2006 2007 estimated Total Total Change 2007/2006 at actual at constant (€m) (€m) exchange exchange rates rates** Sales 41,596 43,421 +4.4% +5.8% Operating 3,714 4,108 +10.6% +11.4% income Recurring net 1,702 2,114 +24.2% income* Net income 1,637 1,487 -9.2% * e
Slide 5: 2007: Sharply contrasting market conditions
2007: Sharply contrasting market conditions > In terms of geographical markets: - Robust trading in emerging countries - Sharp downturn in housing starts in the US - Overall healthy business environment in Europe > During the year: - Seasonal trends: - exceptional Q1 2007 (weather conditions) - high
Slide 6: Another strong growth performance for Saint-Gobain
Another strong growth performance for Saint-Gobain > Organic growth: 5.0% > Rise in operating margin: 9.5% (8.9% in 2006) > Strong contribution from activities linked to energy efficiency in European construction (Flat Glass, Insulation, Gypsum, Mortars, Building Distribution) > Good performance fro
Slide 7: Vigorous implementation of strategy
Vigorous implementation of strategy > 64 acquisitions in the construction market representing total full- year sales of €1.6bn (excluding Maxit) > Disposal of Desjonquères (March 31) and of the Reinforcements & Composites business (November 1) > Fast-paced development in Asia and emerging countries:
Slide 8: 2007 Estimated Results
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Slide 9: Key figures (€m)
Key figures (€m) 2006 2007 % change Sales 41,596 43,421 +4.4% Operating income 3,714 4,108 +10.6% Non-operating costs (367) (290) Provision for Flat Glass fines (694) Capital gains and losses and exceptional asset (25) 32 write-downs Business income 3,322 3,156 Net financial expense (748) (701) Inco
Slide 10: Sales
Sales In €bn +1.3% 43.421 +3.7% +4.4% 41.596 +0.7% -1.3% +5.0% on a like-for-like basis 2006 sales Exchange rate Structure Prices Volumes 2007 sales
Slide 11: Organic growth
Organic growth % change in sales on a like-for-like basis 6.9% 7.1% 6.7% 6.3% 5.0% 3.1% 2006/ 2007/ 2006/ 2007/ 2006/ 2007/ 2005 2006 2005 2006 2005 2006 H1 H2 Full year
Slide 12: Operating income
Operating income (€m and as % of sales) +11.4% at 4,108 +10.6% constant 3,714 exchange rates 8.9% 9.5% Group total Operating income as % 10.9% 12.1% excl. Distribution of sales 5.7% 5.7% Distribution 2006 2007e
Slide 13: Half-year operating income
Half-year operating income at constant exchange rates (€m and as % of sales) +11.4% over the full +16.6% 2,117 +6.4% 2,021 year 1,899 1,815 2006 2007e Operating income as % of sales 8.8% 9.6% 9.0% 9.3% H1-H1 H2-H2
Slide 14: Outstanding claims
Outstanding claims Asbestos claims against CertainTeed in the US > Approximately $73m* paid out ($83m in 2006) and a further €90m set aside to the provision in 2007 (€95m in 2006), bringing the total coverage to $473m at end-2007 (versus $451m at end-2006) 2006 2007* New claims 7,000 6,000 * estimat
Slide 15: Non-operating costs
Non-operating costs (€m) 2006 2007 % change Operating income 3,714 4,108 +10.6% Provision for asbestos-related (95) (90) litigation Provision for Flat Glass fines - (694) Restructuring costs (272) (200) Non-operating costs (367) (984) Gains/(losses) on sales of non- 175 394 current assets Asset writ
Slide 16: Net financial expense and income taxes
Net financial expense and income taxes (€m) 2006 2007 Net financial expense (748) (701) > At December 31, 2007, 88% of net debt is at fixed rates > Average maturity ~ 5 years 2006 2007 Income taxes (899) (926) Tax rate on recurring net income 35% 31% > The exit from the consolidated tax regime had a
Slide 17: Net income
Net income Recurring net income* Recurring EPS* (€m) 2,114 (€) 5.65 4.62 1,702 +24.2% +22.3% 2006 2007e 2006 2007e > Net income (€1,487m) down 9.2% and EPS (€3.97) down 10.6% * excluding capital gains and losses, asset write-downs and provision for Flat Glass fines
Slide 18: Free cash flow
Free cash flow (in €m, excluding the tax impact of capital gains and losses and exceptional asset write-downs) Cash flow from 3,712 operations* 3,374 2,730 2,273 2,191 5.2% Capital 5.3% expenditure 1,756 +21.6% 5.0% +21.5% 1,183 1,439 Free cash 974 2.8% 3.3% flow 2.8% 2005 2006 2007e • Maintenance c
Slide 19: Working capital requirements (at December 31)
Working capital requirements (at December 31) -4 days (€m and in no. of days) 4,951 5,123 4,773 4,888 4,529 4,642 59d 54d 51d 49d 44d 40d 2002 2003 2004 2005* 2006 2007e 2002 and 2003 under French GAAP 2004 and 2005 under IFRS * 2005 excl. Gypsum
Slide 20: Net debt and shareholders’ equity
Net debt and shareholders’ equity €bn 15.3 14.5 11.6 Net debt 9.9* Shareholders' equity 31/12/2006 31/12/2007e Net debt/equity 80% 65% Interest cover 5.0 5.9 Net debt/EBIDTA** 2.2 1.7 > *€12bn after Maxit acquisition ** EBITDA = Operating income + depr./amort.
Slide 21: Return on capital employed
Return on capital employed 23.8 13.4* 12.6 21.3 2006 2007e 2006 2007e ROCE (%) ROI (%) excl. Packaging * after integration of Maxit Value creation picking up pace
Slide 22: Acquisitions and divestments in 2007
Acquisitions and divestments in 2007 (share value) > Acquisitions €965m o/w Building Distribution €582m Construction Products €226m Innovative Materials (Flat Glass and HPM) €89m > Divestments €1,253m o/w Saint-Gobain Desjonquères €520m Reinf. & Composites €365m Miscellaneous €368m
Slide 23: Operating Performance
Operating Performance A. Results by sector B. Results by geographic area
Slide 24: Organic growth
Organic growth Group : +5.0% % change in 2007e/2006 sales on a like-for-like basis Construction Products +2.5% 23.5%* Interior Solutions +2.9% Building Distribution Exterior Solutions +2.1% +5.7% 45%* 23.5%* Innovative Materials +6.8% 8%* Flat Glass +11.2% Packaging HPM +2.2% Ceram-Plast.-Abr. +4.5%
Slide 25: Flat Glass
Flat Glass Sales Operating income Cash flow from (€m) (€m and as % of sales) operations & capex +10.4% 5,611 (€m and as % of sales) 5,083 677 717 +49.4% 523 480 9.4% 12.8% 12.1% 9.3% 2006 2007e 2006 2007e Cash flow Capex +11.2% like-for-like
Slide 26: Flat Glass - Highlights
Flat Glass - Highlights > Robust demand (construction and automotive glass) both in Europe and emerging countries. Strong rise in prices on construction markets in Europe > Evolving product mix (particularly energy-saving products): +26% in terms of volume for value-added coated glass > Growth in As
Slide 27: High-Performance Materials
High-Performance Materials Sales Operating income Cash flow from (€m) (€m and as % of sales) operations & capex 4,938 (€m and as % of sales) 4,752 activities sold -3.2% 487 585 500 +9.6% 4267 4159 238 11.2% 12.7% 10.2% 5.0% 2006 2007e 2006 2007e Cash flow Capex Like-for-like +2.2%, o/w 10.1% 12.3% C
Slide 28: High-Performance Materials - Highlights
High-Performance Materials - Highlights > Healthy worldwide industrial demand, particularly in Asia & emerging countries (30% of sales, up 16% in 2007) > Sustained organic growth in Ceramics, Plastics & Abrasives (+4.5%) > Further improvement in operating margin > Robust growth (+8%) in markets link
Slide 29: Construction Products
Construction Products Sales Operating income Cash flow from (€m) (€m and as % of sales) operations & capex (€m and as % of sales) 10,876 +2.2% 11,112 1060 1,375 -4.5% 1,313 830 Interior 6,424 6,628 Solutions 16.0% 14.8% Exterior 4,476 4,516 9.5% 7.5% Solutions 7.8% 7.4% 2006 2007e 2006 2007e Cash fl
Slide 30: Construction Products - Highlights
Construction Products - Highlights > Sustained organic growth, powered mainly by the energy efficiency drive in western Europe (+6.4%), and Asia & emerging countries (+24%) > Sharp slowdown in the US (23% of sales): -14% > Capex: 53% growth investments 27% in emerging countries > Î 7 new countries:
Slide 31: Building Distribution
Building Distribution Sales Operating income Cash flow from (€m) (€m and as % of sales) operations & capex (€m and as % of sales) +10.8% 19,480 17,581 825 +10.1% 1,102 1,001 353 5.7% 5.7% 4.2% 1.8% 2006 2007e 2006 2007e Cash flow Capex +5.7% like-for-like
Slide 32: Building Distribution - Highlights
Building Distribution - Highlights > Strong organic growth in sales: +5.7% Very strong first quarter boosted by weather conditions Excellent performance (+20%) in emerging countries (>€1bn in sales) > Strong growth in operating income and stable operating margin > Ongoing European consolidation (52
Slide 33: Packaging
Packaging Sales Operating income Cash flow from (€m) (€m and as % of sales) operations & capex (€m and as % of sales) 4,080 425 activities sold 3,546 +2.0% 376 401 +24% 309 3,330 3,398 304 378 9.1% 11.1% 12.0% 8.7% 2006 2007e 2006 2007e Cash flow Capex +5.5% H1 H2 H1 H2 like-for-like 9.2% 9.1% 11.0%
Slide 34: Packaging - Highlights
Packaging - Highlights > Excellent year in terms of volumes and prices, particularly in Europe > Sharp rise in profitability: - operating income: +29% like-for-like - operating margin: +2 points (as % of sales) > Sale of Desjonquères on March 31, 2007 under very good conditions (€690m, or 14x EBIT 2
Slide 35: Operating Performance
Operating Performance A. Results by sector B. Results by geographic area
Slide 36: Organic growth by geographic area
Organic growth by geographic area % change in 2007e/2006 sales on a like-for-like basis Group: +5.0% Asia & emerging +16.5% countries 15%* France North 28%* America +5.2% 13%* -7.1% 44%* Other western +6.0% Europe * Breakdown of 2007 sales
Slide 37: Operating income by geographic area
Operating income by geographic area (€m and as % of sales) 2006 2007e 1,869 1,506 1,096 970 799 701 537 344 8.5% 9.4% 10.3% 11.5% 7.7% 8.2% 5.9% 9.1% France Other western North America Emerging Europe countries and Asia
Slide 38: Capital expenditure by geographic area
Capital expenditure by geographic area (€m and as % of sales) 2006 2007e 749 698 671 594 536 485 363 368 4.1% 4.1% 6.4% 10.0% 3.9% 3.5% 5.3% 9.7% France Other western North America Emerging Europe countries and Asia
Slide 39: Group Strategy
Group Strategy A. A Group focused on construction B. Fast-paced development in emerging countries C. Innovation, Environment and Energy efficiency D. Operational excellence * Vitrage & MHP
Slide 40: Saint-Gobain’s ambition
Saint-Gobain’s ambition Worldwide leadership in construction markets, offering innovative solutions to meet the fundamental challenges of our era: growth, energy, environment ➜ Worldwide leadership: local solutions tailored to the needs of both emerging and developed countries ➜ Solutions: associati
Slide 41: Refocus on construction markets
Refocus on construction markets Dahl/Optimera/ Sanitas Troesch BPB Norandex Maxit Acquisitions: 2.4 3.4 0.6 1.2 > €10bn* ~60% ~85% 2004 2005 2006 2007 2008 construction construction Disposals: 0.3 0.7 > €5bn Calmar Reinf. Sales in €bn & Composites 0.6 3.5 Desjonquères Packaging * o/w €2.5bn in bolt-
Slide 42: A business model generating vigorous, balanced growth
A business model generating vigorous, balanced growth Building Distribution Organic growth in Construction sales 05-07: 6.3% Products Customer/market Organic growth in 30% knowledge sales 05-07: 5.4% New store formats 35% New countries Leadership/Brands Emerging countries Energy efficiency 35% Innov
Slide 43: The success of Interior Solutions
The success of Interior Solutions: Successful creation of the world leader Since 2006, 10 acquisitions totaling €240m and implantation in 5 new countries 6,628 5,854 26% 14.8% €112m €100m 13%-14% 12% 6%-7% 7.6% Average organic 2005 2007 OI* ROI ROCE Cost growth sales sales synergies 2006-2007 2007 O
Slide 44: The success of Distribution in Scandinavia
The success of Distribution in Scandinavia: Profitable acquisitions • 4 structural acquisitions (Dahl, Optimera, and DLH and Famar Desi in 2008) • 33 bolt-on acquisitions in 3 years • More than 400 points-of-sale €3.1 * bn 2004-2007 growth: Sales CAGR 27% p.a. ~€1.5 o/w 10% organic growth bn Op. inc
Slide 45: The success of solar technology
The success of solar technology: A front-ranking player in photovoltaic glass Active in all photovoltaic glass technologies (cristalline silicon, coated glass, organic) Glass for thermal solar energy: hot water production Mirrors for solar concentration 500 30% CAGR 40% 150 76 47 2005 sales 2007 sal
Slide 46: Group Strategy
Group Strategy A. A Group focused on construction B. Fast-paced development in emerging countries C. Innovation, Environment and Energy efficiency D. Operational excellence * Vitrage & MHP
Slide 47: Fast-paced development in emerging countries
Fast-paced development in emerging countries In 2010, one-third of sales will be generated in emerging countries (excluding Building Distribution) Sales (€bn) Operating income (€m) generated in generated in emerging emerging countries countries 800 6.9 CGAR 16% 33% CGAR 30% 430 3.6 24% 2.5 17% 125 1
Slide 48: Emerging countries: significant contribution to growth
Emerging countries: significant contribution to Saint-Gobain’s growth Contribution to organic growth 36% (2005 – 2007) Contribution to growth in operating income (2005 – 2007) 47%
Slide 49: Saint-Gobain’s strategy in emerging countries
Saint-Gobain’s strategy in emerging countries Nearly €7bn in sales 1.8 0.9 1.1 0.5 0.2 1.6 0.5 0.4 Cement our leadership Become a leader in all of our businesses Establish our businesses from local platforms CONFIDENTIEL
Slide 50: Emerging countries: a priority for investments
Emerging countries: a priority for investments Rest of the world 0.4% €1.1bn of capital employed Eastern Latin Europe dedicated to growth of America 33% emerging countries in 2006- 30% 2007, i.e. nearly 50% of total capital employed (excl. Building Distribution) ME/North Asia & Africa emerging 24 ne
Slide 51: Group Strategy
Group Strategy A. A Group focused on construction B. Fast-paced development in emerging countries C. Innovation, Environment and Energy efficiency D. Operational excellence * Vitrage & MHP
Slide 52: Environment, energy efficiency and innovation
Environment, energy efficiency and innovation The building industry is at the dawn of a green revolution Saint-Gobain has three outstanding assets Leadership in construction markets Building Distribution, to partner customers during the green revolution Capacity for innovation, offering new state-of
Slide 53: Flat Glass: An insulation solution to meet present and future needs
Flat Glass: An insulation solution to meet present and future needs Thermal regulations in Europe (Flat Glass) Low-emissivity glass +++ 2007 sales >€200m --- Annual growth >30% Double-skin glass façades in renovated office buildings Glass dome enveloping old buildings Strasbourg station
Slide 54: Innovative solutions for every kind of home comfort
Saint-Gobain, innovative solutions for every kind of home comfort Thermal comfort Aesthetic comfort ETICS mortars (sales +15%) Numadecor, decorative colored mortars Isover (sales +8%) Placomur: adhesive wall systems LED and OLED new-generation lighting (Gypsum) Privalite (active glass) Planitherm (S
Slide 55: Group Strategy
Group Strategy A. A Group focused on construction B. Fast-paced development in emerging countries C. Innovation, Environment and Energy efficiency D. Operational excellence * Vitrage & MHP
Slide 56: Ongoing efforts to achieve operational excellence
Ongoing efforts to achieve operational excellence in our businesses ~€220m Cost reductions: ~ €200m (yearly average) 65% personnel costs Payback from restructuring measures Restructuring costs* ≥ 1 year (annual average 2006-2007) In 2006+2007: - Closure of 35 plants/facilities, including 16 in the U
Slide 57: Update on current programs
Update on current programs Reduction in overheads (Symphonie) Scope of costs concerned ~€2bn Obj. 2010: €150m Launch of 230 projects Purchasing (Procure) Ongoing centralization (already 50% in 2007) World Class Manufacturing Launched in October 2006 All businesses concerned at end-2007 Other 150 gai
Slide 58: 2010 roadmap
2010 roadmap Vigorous roll-out of strategy Geographical expansion: organic growth investments in emerging countries Acquisitions to develop business in emerging countries, increase potential for innovation and reinforce Distribution Innovation and R&D efforts stepped up, particularly in the field of
Slide 59: Outlook and Objectives for 2008
Outlook and Objectives for 2008
Slide 60: 2008: Macro-economic uncertainties
2008: Macro-economic uncertainties > Evolution of the US economy and duration of the property crisis > Reaction of developed economies to the situation in the US and the credit crunch > Volatility of energy, transport and commodity prices > Value of US dollar and Asian currencies
Slide 61: Saint-Gobain’s end markets
Saint-Gobain’s end markets 2007 sales New construction 32% 9% 15% 4% 4% Renovation 43% 3% 5% 13% 22% Other 25% 6% 7% 6% 6% France Other western North Asia & emerging Europe America countries 28% 44% 13% 15%
Slide 62: 2008 outlook
2008 outlook I. Construction markets (Europe + US) Western Europe (~55% of operating income): trading should be healthy overall, but growth expected to slow versus 2007 > Positive outlook in France > Stability in Germany; downturn in Spain > Unfavorable basis for comparison in Q1 (2007 weather condi
Slide 63: Saint-Gobain’s key assets in 2008
Saint-Gobain’s key assets in 2008 Strong exposure to markets related to energy efficiency in European construction (~30% of sales) Strong exposure to renovation market in Europe (~35% of sales) via Building Distribution Emerging countries: ~20% of Group operating income Limited exposure to US: ~10%
Slide 64: 2008 outlook for Saint-Gobain’s businesses
2008 outlook for Saint-Gobain’s businesses > Flat Glass: energy-efficient solutions in Europe should boost trading; emerging countries expected to remain robust > High-Performance Materials (HPM): favorable outlook > Construction Products (CP): - Growth in Europe and emerging countries - Persistent
Slide 65: 2008 objectives
2008 objectives > Modest increase in Operating Income (at constant exchange rates*) and recurring Net Income** > Continuing high levels of free cash flow and solid financial structure * average exchange rates for 2007 ** excluding capital gains and losses, asset write-downs and the provision for Fla
Slide 66: 2008 objectives: Vigorous roll-out of business model
2008 objectives: Vigorous roll-out of business model In particular: > Completion of strategic repositioning on construction markets with the sale of the Packaging business > Continuing investments in emerging countries > Targeted acquisitions, potentially in our three sectors (Construction Products,
Slide 67: 2007 Estimated Results and Outlook for 2008
2007 Estimated Results and Outlook for 2008 Analyst – Investor meeting January 2008