Compagnie De Saint-gobain Sa · EURONEXT:SGO
Compagnie De Saint-gobain Sa — FY2008 Earnings Presentation
31 slides from Compagnie De Saint-gobain Sa's earnings presentation, Feb 20, 2009
Slide 1: 2008 Results and Outlook for 2009
2008 Results and Outlook for 2009 Analyst-Investor meeting February 2009 Disclaimer This document was prepared by the Compagnie de Saint-Gobain (the “Company”) for the sole purpose of the February 20, 2009 presentation. This document is confidential and must be treated confidentially by attendees at
Slide 2: Contents / 2008 Highlights
Contents 1 2008 Highlights 2 2008 Results 3 Outlook for 2009 and Action Plan 2008 Highlights 2008 results in line with revised objectives Sharp downturn in economic climate Robust reaction to crisis
Slide 3: 2008 results in line with revised objectives
2008 results in line with revised objectives > Sales up 3.7% to €43.8bn at constant exchange rates* > Single-digit decline in operating income at constant exchange rates* and in recurring net income ÎOperating income: -9.1% (€3,649m) ÎRecurring net income: -9.5% (€1,914m) * average exchange rates fo
Slide 4: Steep fall in volumes in the 4th quarter
Steep fall in volumes in the 4th quarter Organic sales growth: volume effect in %, per quarter -0.1% -1.0% -1.7% -3.1% -9.3% Q1-2008/ Q2-2008/ Q3-2008/ Q4-2008/ 2008/ Q1-2007 Q2-2007 Q3-2007 Q4-2007 2007 Robust reaction to crisis > Robust operating measures - healthy increase in sales prices (+3.4%)
Slide 5: Regular increase in sales prices
Regular increase in sales prices Organic sales growth: price effect in %, per quarter +3.8% +3.8% +3.5% +3.4% +2.6% Q1-2008/ Q2-2008/ Q3-2008/ Q4-2008/ 2008/ Q1-2007 Q2-2007 Q3-2007 Q4-2007 2007 Sales prices hold up well, including in worst hit sectors Organic sales growth: price and volume effect i
Slide 6: Acceleration in cost reduction programs
Acceleration in cost reduction programs 2008/2007 2008/2007 target actual Cost savings (€m) 300 400 (estimations) Staff cuts 4,000 8,000 Restructuring costs (€m) 190 Cost savings in excess of targets Action on costs: swift capacity adjustments 8,000 staff cuts in 2008 (versus 4,000 announced in July
Slide 7: Swift adjustment of capacity to economic climate
Swift adjustment of capacity to economic climate > Flat Glass Europe - halt in production at 2 floats (Belgium and Portugal) for 2009 - halt in production lines at Sekurit (10% capacity in October, 25% in November and 60% in December) - closure of three processing facilities - load reductions (equiv
Slide 8: Strict financial discipline
Strict financial discipline > Large scale-back in expenditure (capex and financial investments) > Continuing high level of free cash flow* (>€1.3bn), thanks to contributions from all sectors > Ongoing improvement in working capital (gain of 2 days in 2008) and satisfactory return on capital (ROI: 20
Slide 9: Free cash flow close to 2007 level
Sharp drop in acquisitions as from fall 2008 (excl. Maxit*, in €m) 652 533 432 16,6% 15,0% 14,4% 13,9% 180 H1-2007 H2-2007 H1-2008 H2-2008 Acquisitions scaled back as from second-half 2008 * Maxit acquisition signed in 2007, completed in early 2008 Free cash flow close to 2007 level (€m and % of sal
Slide 10: Further improvement in operating working capital
Further improvement in operating working capital: gain of 2 days (-€181m) (at December 31, in €m and in no. of days) -€181m 4,951 5,123 4,773 4,858 4,677 4,529 4,642 59d 54d 51d -2 days 49d 44d 40d 38d 2002 2003 2004 2005* 2006 2007 2008 2002 and 2003 under French GAAP 2004 and 2005 under IFRS * 200
Slide 11: 2008 Results: Sales
2008 Results Group Sectors Geographic Areas Sales €bn +3.4% +3.3% 43.800 43.421 -3.1% +0.9% +0.3% on a like-for-like -2.7% basis 2007 sales Exchange rate Structure Prices Volumes 2008 sales
Slide 12: Operating income and non-operating costs
Operating income At constant exchange rates: (€m and as % of sales) -9.1% for the full yr -2.3% in H1 -16.2% in H2 +10.6% 4,108 -11.2% 3,714 3,649 Operating 8.9% 9.5% 8.3% Group total income as % of sales 10.9% 12.1% 11.0% excl. Distribution 5.7% 5.7% 4.5% Distribution 2006 2007 2008 Non-operating c
Slide 13: Outstanding claims; net financial expense and income tax
Outstanding claims Absestos claims against CertainTeed in the US > Approximately $71m paid out ($73m in 2007) and a further €75m set aside to the provision in 2008 (€90m in 2007), bringing the total coverage to $502m at end-2008 (versus $473m at end-2007) 2007 2008* New claims 6,000 5,000 Settled cl
Slide 14: Recurring net income; net debt and shareholders' equity
Recurring net income Recurring* net income Recurring* EPS (€m) H1: +3.2% (€) 2,114 -9.5% H2: -22.3% -11.5% 1,914 5.65 5.00 1,702 4.62 2006 2007 2008 2006 2007 2008 > Net income (€1,378m) down 7.3% and EPS (€3.60) down 9.3% * excluding capital gains and losses, asset write-downs and provision for Fla
Slide 15: Additional balance sheet data
Additional balance sheet data > Average cost of net debt: 5.5% (78% at fixed rates, average maturity ~4 years) > Bond debt: €9.9bn (including €1bn issued in January 2009) with annual maturities of €1bn-€1.4bn, and €2.5bn in other long-term debt (incl. €2bn Maxit loan extended until October 2010) > S
Slide 16: Organic growth by sector
Organic growth Group: +0.3% % change in 2008/2007 sales on a like-for-like basis Construction Products +1.4% 25%* Interior Solutions -5.0% Building Distribution Exterior Solutions +10.8% -1.9% 45%* 22%* Innovative Materials +1.3% 8%* Flat Glass +1.0% HPM +1.9% Packaging +7.4% * 2008 sales breakdown
Slide 17: Innovative Materials and Construction Products
Innovative Materials (Flat Glass - HPM) (€m and % of sales) Sales Operating income Cash flow from operations & capex 1,302 10,334 1,244 9,677 1,170 +1.0%* -0.8%** 5,611 Flat Glass 5,549 12.8% 12.6% 799 13.2% +1.9%* -4.0%** 10.4% HPM 4,752 4,165 12.3% 13.0% 10.5% 5.4% 2007 2008 2007 2008 Cash flow Ca
Slide 18: Building Distribution and Packaging
Building Distribution (€m and % of sales) Sales Operating income Cash flow from operations & capex 1,102 19,480 19,696 650 894 +3,7%* -17%* 291 5.7% 4.5% 3.3% 1.5% 2007 2008 2007 2008 Cash flow Capex -1.9% o/w: France +1%, UK -11.2%, like-for-like Germany -2.1%, Scandinavia +0.9% * at constant excha
Slide 19: Organic growth by geographic area
2008 Results Group Sectors Geographic Areas Organic growth by geographic area % change in 2008/2007 sales on a like-for-like basis Group: +0.3% Asia & o/w: Latin Am. (5%) : +15.4% emerging Asia (4%) : +12.1% countries East. Eur. (6%) : -0.8% +8.5% 16%* France North 28%* America +1.9% 12%* -0.9% 44%*
Slide 20: Operating income by geographic area
Operating income by geographic area – full year (€m and % of sales) 1,869 -15.2%* 2007 2008 1,530 -3.1% 1,096 1,062 -1.8%* 799 774 -11.8%* 344 8.5% 9.4% 283 11.5% 8.1% 7.7% 10.5% 5.9% 5.1% France Other Western North America Asia & emerging Europe countries * at constant exchange rates Operating inco
Slide 21: Outlook for 2009 and Action Plan
Cash flow and capex by geographic area – full year (€m and % of sales) 1,655 Free cash flow Capex 973 835 720 142 166 314 554 682 693 94 220 4.2% 3.4% 4.0% 9.4% France Other Western Europe North America Asia & emerging countries Free cash flow = Cash flow from operations – Capex Outlook for 2009 and
Slide 22: A crisis of unprecedented depth and scale
A crisis of unprecedented depth and scale > Gradual downturn in construction markets: - since July 2006 in the US, with housing starts at a record low at end-2008 - taking hold of all European countries at the end of 2007, with the UK and Spain particularly hard hit > Contraction in industrial marke
Slide 23: Construction stimulus packages: a global priority
Construction stimulus packages: a global priority Renovation and energy efficiency – Increased regulation United States United Kingdom Germany Improvement in energy efficiency of public buildings Construction and rehabilitation of Domestic housing improvements no ($31bn) and low-cost housing ($6bn)
Slide 24: Saint-Gobain at the heart of stimulus plans
Saint-Gobain: at the heart of stimulus plans for the construction industry Meet inevitable demand for energy efficiency and comfort > High-performance materials > Innovative solutions > Partnering the industry ETICS French President Nicolas Sarkozy on Saint-Gobain’s cross-disciplinary a visit to the
Slide 25: Step up measures launched in 2008
Outlook for 2009 and Action Plan • Leverage our strategic positioning in a challenging environment • Step up measures launched in 2008 and prepare for the future Step up measures launched in 2008 > Mobilize company around an effective and responsive organization > Vigorously intensify operating meas
Slide 26: A tailored organization with a strong ability to react
A tailored organization with a strong ability to react > Efficient, reliable information/warning systems > Streamlined organization > Change in executive pay schemes (bonus) • Committed, mutually-supportive staff • Highly competent teams programmed for success Operations management: continuing cost-
Slide 27: €1bn in cost savings in 2008-2009
Acceleration in cost-cutting programs 2008/2007 2008/2007 2009/2008 target actual target Cost savings (€m) 300 400 600* (estimated) Staff cuts 4,000 8,000 Restructuring costs (€m) 190 >300 €1bn in cost savings in 2008-2009 ) €1bn in cost savings in 2008-2009 €m 1,000 185 Innovative Materials Constru
Slide 28: Constant close monitoring of cash
Constant close monitoring of cash > Continuing high level of free cash flow > Capex scaled back: -€500m > Acquisition projects put on hold > Ongoing small and medium-sized divestments > Tight rein on operating working capital: <40 days Strengthen balance sheet Recommendation of Executive Management
Slide 29: Saint-Gobain rights issue
Saint-Gobain rights issue: anticipating financing needs Strengthen the Group’s financial flexibility Reduce debt/equity ratio Strengthen credit rating Provide satisfactory long-term access to all sources of financing …backed by vigorous operating measures Be better equipped to ride out the crisis Co
Slide 30: Conclusion
Conclusion An action plan that leverages all of the Group’s strengths to turn the crisis into an opportunity > Additional cost saving programs > Large cut-back in investments > Ongoing small and medium-sized divestments > Sale of the Packaging business when appropriate > Recommendation of Executive
Slide 31: 2008 Results and Outlook for 2009
2008 Results and Outlook for 2009 Analyst-Investor meeting February 2009
Compagnie de Saint-Gobain — FY2008 Earnings Presentation on 6ix