Compagnie de Saint-Gobain SA · EURONEXT:SGO
Compagnie de Saint-Gobain SA — Saint-Gobain — H1 2005 Earnings Presentation
60 slides from Compagnie de Saint-Gobain SA's earnings presentation, Aug 1, 2005
Slide 1: Analyst – Investor meeting
Analyst – Investor meeting London August 1, 2005
Slide 2: First-half 2005 results; BPB plc
A First-half 2005 results B BPB plc
Slide 3: First-half 2005 results
First-half 2005 results 1 First-half 2005 highlights 2 First-half 2005 results 3 Operating performance in first-half 2005 4 Outlook and targets for second-half 2005
Slide 4: First-half 2005 highlights
—— A —_= —— —— — —— — | aftm SAINT-GOBAIN First-half 2005 highlights —
Slide 5: Saint-Gobain in H1 2005: key figures
Saint-Gobain in H1 2005: key figures Change Change H1-2005/ €m H1-2005/ H1-2004 H1-2004 at constant exchange rates* Net sales 16,877 +7.0% +7.4% Operating 1,372 +4.6% +4.9% income Business income 1,268 +10.5% +10.5% Net income, 642 +10.9% excluding capital gains Net income 632 +13.9% * average excha
Slide 6: H1-2005: A difficult start followed by a vigorous second quarter
H1-2005: A difficult start followed by a vigorous second quarter > Organic growth*: 2.0% at end-June 2005 4.1% 2.0% -0.7% Q1-2005/ Q2-2005/ H1-2005/ Q1-2004 Q2-2004 H1-2004 * on a like-for-like basis
Slide 7: H1-2005: A buoyant economic climate despite a harder-than-expected first quarter
H1-2005: A buoyant economic climate despite a harder-than-expected first quarter Rising energy costs Europe: > Stable manufacturing markets > Business in residential construction markets remained buoyant in France, Scandinavia, Spain and Portugal US: > Satisfactory industrial growth > Strong househo
Slide 8: Operations launched since start-2005
Operations launched since start-2005 > Further acquisitions: around 30 transactions bringing onboard more than €1bn in full-year sales > Expansion in Asia and emerging countries ▪ Various capital investments in Russia, Eastern Europe and China ▪ Acquisition of a controlling interest in Hankuk Glass
Slide 9: First-half 2005 results
—— A —_= —— —— — —— — | aftm SAINT-GOBAIN First-half 2005 results N
Slide 10: 2. First-half 2005 results
2. First-half 2005 results A. Group B. Update on asbestos-related claims in the United States
Slide 11: Saint-Gobain: Key H1 figures (€m)
Saint-Gobain: % H1-2004 H1-2005 Key H1 figures (€m) Change 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% Interest and other financial charges, net (261) (26
Slide 12: Net sales
Net sales (€bn) +2.4% 16.9 +5.4% - 0.4 % 15.8 -0.4 % +7.0% +2.0% on a like-for-like basis H1-2004 Structure Volumes Prices Currency H1-2005 sales sales • Strong increase in prices • Significant contribution from acquisitions
Slide 13: Sales price trends
Sales price trends ▪ % annual change on a comparable structure basis ▪ Group composite index ▪ Current prices in local currencies +2.4% +1.7% +0.8% 2003/2002 2004/2003 H1-05/H1-04 Continuing strong upward trend in sales prices
Slide 14: Volume trends
Volume trends ▪ % annual change on a comparable structure basis ▪ Group composite index +2.9% +1.7% H1-2005/ H1-2004 2003/2002 2004/2003 -0.4% Recovery in sales volumes during the second quarter
Slide 15: Operating income
Operating income (in €m) +4.6%* 1,372* 1,312* +4.9%* at constant exchange rates 8.3% 8.1% Total Group Operating income 10.5% 10.4% Excl. Distribution % of sales 4.8% 4.9% Distribution H1-2004 H1-2005 * Including costs relating to the Group Savings Plan and stock options (€23m in H1-04, €26m in H1-05
Slide 16: Interest and other financial charges
Interest and other financial charges (in €m) +1.9% 261 266 H1-2004 H1-2005
Slide 17: Net income
Net income Net income, (in €m) excl. capital gains +13.9% +10.9% 642* 632* 579* 555* H1-04 H1-05 H1-04 H1-05 Strong growth in net income * Including pre-tax asbestos-related charge of €54m in H1-05 (€50m in H1-04)
Slide 18: Net debt and equity
Net debt and equity (in €m) 12 10.8 10.9 Net debt* 7.4 7.5 6.2 Equity '06/30/2004 12/31/2004 06/30/2005 Interest cover 5.0 5.1 5.2 Net-debt-to-cash-flow (12m) 37% 42.4% 36.6% Net debt/equity 69% 57% 62%
Slide 19: Operating working capital
Operating working capital (in €m and number of days) 5,360 5,336 5,625 In €m 65 d 60 d 60 d Number of days 06/30/03* 06/30/04* 06/30/05** Continuing tight rein on working capital * French GAAP ** IFRS
Slide 20: Cash flow and capital expenditure
Cash flow and capital expenditure In €m (excl. taxes on capital gains) 1,360* 1,252* €762m* €698m* 598 554 7.9% 3.5% 8.1% 3.5% (% of sales) H1 2004 H1 2005 Cash flow Capital expenditure • Ongoing high levels of cash flow • Continued capital spending in emerging countries * Including pre-tax asbestos
Slide 21: Investments and disposals
Investments and disposals > Bolt-on acquisitions €374m ▪ Building Distribution €337m ▪ High-Performance Materials €37m > Development in emerging countries (historic businesses) €174m > Other investments €15m Total €563m > Disposals €95m
Slide 22: 2. First-half 2005 results
2. First-half 2005 results A. Group B. Update on asbestos-related claims in the United States
Slide 23: Update on asbestos-related claims against CertainTeed in the United States
Update on asbestos-related claims against CertainTeed in the United States > First-half 2005 litigation trends > Current status of US asbestos legislation
Slide 24: Asbestos-related litigation against CertainTeed: first-half 2005 trends
Asbestos-related litigation against CertainTeed in the US First-half 2005 litigation trends > Number of new claims continues to level out > Slight drop in pending claims > Average cost of settlements in line with prior ranges > Additional charge of €54 million to the provision in H1-2005 4
Slide 25: Asbestos-related litigation: new claims filed
Asbestos-related litigation against CertainTeed in the US New claims filed - First-half 2005 2003 2004 Q1 2005* Q2 2005* Total 62,000 18,000 6,000** 4,000 * estimated ** including 3,000 mass claims in KY 62,000 > Claims fell or leveled out in New claims (last 12 months) virtually all States 23,000 1
Slide 26: Asbestos-related litigation: claims resolved
Asbestos-related litigation against CertainTeed in the US Claims resolved - First-half 2005 2003 2004 Q1 2005* Q2 2005* Resolved 54,000 20,000 7,000** 6,000 Pending 108,000 106,000 102,000 100,000 ** after 3,000 claims transferred to an “inactive docket” > The number of claims resolved was slightly
Slide 27: Asbestos-related litigation against CertainTeed in the US
Asbestos-related litigation against CertainTeed in the US Pending claims New claims/Resolved claims 140,000 New claims 90,000 Resolved claims 80,000 120,000 Pending claims 70,000 100,000 60,000 80,000 50,000 60,000 40,000 30,000 40,000 20,000 20,000 10,000 0 0 2000 2001 2002 12m, end 2003 12m, end 2
Slide 28: Asbestos legislation reform update
Asbestos-related litigation against CertainTeed in the US Legislation reform update Federal reforms State reforms > May 26, 2005: bipartisan vote > Favorable developments in by the Senate Judiciary several States Committee on the Asbestos Trust ▪ Legislation (TX, FL, GA, OH) Fund bill ▪ Judicial dec
Slide 29: Operating performance in first-half 2005
Operating performance in first-half 2005
Slide 30: Organic growth at end-June 2005
Organic growth at end-June 2005 % change in H1-2005/H1-2004 net sales on a like-for-like basis Group average : +2.0% +3.9% +2.3% +1.4% +0.8% +0.9% Building Flat Glass Packaging CP** HPM Distribution CPA* +3.3% Building Materials +6.4% Reinforcements -4.2% Insulation +6.1% * CPA = Ceramics, Plastics
Slide 31: Flat Glass
Flat Glass Net sales (in €m) Operating income (in €m and as % of sales) +4.2% 2,329 2,236 240 -2.9% 233 10.7% 10.0% H1-2004 H1-2005 H1-2004 H1-2005 +0.8% on a like-for-like basis
Slide 32: Packaging
Packaging Net sales (in €m) Operating income (in €m and as % of sales) 1,978 -0.1% 1,977 246 -10.2% 221 12.4% 11.2% H1-2004 H1-2005 H1-2004 H1-2005 +0.9% on a like-for-ilke basis
Slide 33: Construction Products
Construction Products Net sales (in €m) Operating income (in €m and as % of sales) +6.0% 283 +4.1% 3,096 267 2,973 Building 1,293 1,361 7.5% 7.6% Materials 11.4% 11.6% Insulation 964 1,045 Pipe 726 700 8.3% 8.4% H1-2004 H1-2005 H1-2004 H1-2005 +3.9% on a like-for-like basis 9.0% 9.1%
Slide 34: High-Performance Materials
High-Performance Materials Net sales (in €m) Operating income (in €m and as % of sales) +8.8% 271 2,383 +1.3% 2,415 249 Ceram. 11.8% 13.4% Plastics 1,752 1,788 Abrasives Reinfor. 644 638 6.5% 4.9% H1-2004 H1-2005 H1-2004 H1-2005 +1.4% on a like-for-like basis 10.4% 11.2%
Slide 35: Building Distribution
Building Distribution Net sales (in €m) Operating income (in €m and as % of sales) +13.7% 7,364 363 +16.7% 6,474 311 4.8% 4.9% H1-2004 H1-2005 H1-2004 H1-2005 +2.3% on a like-for-like basis
Slide 36: Cash flow by sector
Cash flow by sector (in €m and as % of sales) H1-04 H1-05 274 258 254 256 260 263 258 240 233 214 3.5% 10.5% 11.4% 13.3% 8.9% 3.3% 10.1% 11.2% 11.8% 8.7% Distrib. HPM Flat Glass Packaging CP
Slide 37: Capital expenditure by sector
Capital expenditure by sector (in €m and as % of sales) H1-04 H1-05 164 148 131 107 106 106 104 90 101 89 1.8% 4.4% 7.0% 5.1% 3.6% 1.7% 3.8% 6.6% 4.5% 3.4% Distrib. HPM Flat Glass Packaging CP
Slide 38: Cash flow and capital expenditure
Cash flow and capital expenditure (in €m and as % of sales) Capital expenditure Free cash flow 274 258 254 260 233 96 127 148 170 144 164 131 106 104 89 1.8% 4.4% 7.0% 4.5% 3.4% Distribution HPM Flat Glass Packaging CP Free cash flow = Cash flow – Capital expenditure * CP = Construction Products
Slide 39: Organic growth by geographic area (end-June 2005)
Organic growth by geographic area (end-June 2005) % change in like-for-like sales: H1-2005/H1-2004 Group average: +2.0% +6.0% +5.1% +3.6% -1.3% France Other western European North Emerging countries countries America and Asia
Slide 40: Operating income by geographic area
Operating income by geographic area (in €m and as % of sales) H1-04 H1-05 490 440 436 417 259 269 200 173 7.6% 6.9% 9.4% 12.0% 7.6% 6.6% 9.1% 8.7% France other western North America Emerging European countries and Asia countries
Slide 41: Capital expenditure by geographic area
Capital expenditure by geographic area (in €m and as a % of sales) H1-04 H1-05 196 183 184 150 125 115 106 93 2.1% 2.8% 3.7% 9.9% 2.6% 3.2% 9.0% 2.1% France other western North America Emerging European countries and Asia countries
Slide 42: Cash flow and capex by geographic area
Cash flow and capex by geographic area (in €m and as % of sales) Capital expenditure Free cash flow 480 448 355 264 224 203 7 131 184 196 125 93 2.1% 2.6% 3.2% 9.9% France other western North America Emerging countries European countries and Asia Free cash flow = Cash flow – Capital expenditure
Slide 43: Developments in the Building Distribution Sector in H1-2005
Developments in the Building Distribution Sector in H1-2005 > 24 acquisitions bringing onboard €540m in full-year sales > 59 new stores opened, including our first store in Shanghai, China (“La Maîson”) > Three new geographic leadership positions: ▪ WAV-A-Keramika: no. 1 in Slovakia/ranked 2 in Czec
Slide 44: Developments in the HPM Sector in H1-2005
Developments in the HPM Sector in H1-2005 > Strong expansion in Asia and emerging countries: - Five new plants in Asia and Eastern Europe - First-half net sales: €629m (up 15.8% on H1-2004) > Large-scale projects underway to boost organic growth: Diesel vehicle particulate Refractors Proppants: filt
Slide 45: Developments in historic businesses in emerging countries during H1-2005
Developments in historic businesses in emerging countries during H1-2005 > Capital expenditure up 36% > Flat Glass: - start-up of float-line in China in April 2005 - float-line in India (Sept. 2005) - float-line in Romania > CP: - Insulation: . Russia . Romania . China - Building Materials (mortars)
Slide 46: Summary of first-half 2005
Summary of first-half 2005 > Hike in sales prices offset rising raw materials and energy costs > Upturn in sales volumes during Q2 > Growth remains driven by: - High-Performance Materials Operating income up 8.8% - Building Distribution Operating income up 16.7% > Solid balance sheet structure
Slide 47: Outlook and targets
Outlook and targets A. Outlook for second-half 2005 B. Targets for FY 2005
Slide 48: Outlook for second-half 2005: Europe
Outlook for second-half 2005 Macro-economic environment Europe: > Capital spending and production set to remain buoyant > Continued boom in the construction market in France, Spain and Scandinavia. Slight decline in the UK. > German economy still hit by sluggish construction market and flat domestic
Slide 49: Outlook for second-half 2005: US and emerging countries
Outlook for second-half 2005 Macro-economic environment US: > Continued satisfactory levels of industrial activity > Residential construction market expected to remain buoyant until year-end > Sustained household consumption, despite rising energy costs Emerging countries: > Vigorous growth expected
Slide 50: Outlook for second-half 2005: Saint-Gobain's businesses
Outlook for second-half 2005 Saint-Gobain's businesses HPM and Building Distribution Sectors to continue expansion > Ongoing robust performance of High-Performance Materials > Strong growth in Building Distribution Other Sectors: well-positioned overall > Further progress in all businesses in the Co
Slide 51: Continuation of the upturn observed in Q2
Continuation of the upturn observed in Q2 > Full-year effect of acquisitions in the Building Distribution Sector > Overall, the European and US housing markets are set to hold firm > Favorable price effects and productivity gains > Robust growth in emerging countries
Slide 52: Targets for FY 2005
Targets for FY 2005 > Confirmation of 2005 target: 6% growth in operating income, at constant exchange rates*, thanks to a continuation of the favorable trends observed in Q2 > Sustained high levels of free cash flow * average exchange rates for 2004
Slide 53: First-half 2005 results; BPB plc
A First-half 2005 results B BPB plc
Slide 54: Why have we approached BPB?
Why have we approached BPB?
Slide 55: Why have we approached BPB? Creating a leader in building interior solutions
Why have we approached BPB? The opportunity to create a leader in building interior solutions > Building interior solutions (partitions, ceilings, insulation,…), the core business of SG Insulation and BPB, presents attractive characteristics for Saint-Gobain : - Growth - High profitability and stron
Slide 56: BPB: the leader in plasterboard
BPB : the leader in plasterboard 2005 sales by region > BPB is a leading producer of plasterboard and related systems, and has a global Emerging footprint Markets 6% N. and W. Europe Leader in Western Europe N. America 25% 22% Strong market positions in North America Strong presence in high-growth e
Slide 57: Strong complementarities with our Construction Products Sector
Strong complementarities with our ‘Construction Products Sector’ > We target the same client base (contractors, distributors, installers) > We offer complementary products > Our respective geographical locations can facilitate rapid expansion in emerging markets
Slide 58: Why are we considering sizeable acquisitions now?
Why are we considering sizeable acquisitions now ? Saint-Gobain is now in a position to pursue a more aggressive acquisition strategy, thanks to : > A sound financial position > A more favourable evolution of the asbestos issue > Attractive interest rates environment A new stage in external growth
Slide 59: What next?
What next? > On 22 July, Saint Gobain made an approach to BPB to buy the company for 675p a share in cash > Our proposal was fully financed and subject to very limited due diligence. It was rejected by BPB. While we were surprised by their response and disappointed that the management of BPB did not
Slide 60: Analyst – Investor meeting
Analyst – Investor meeting London, August 1, 2005