Saint-Gobain: H1-2017 Results

PARIS, July 27, 2017 /PRNewswire/ --

  • Organic growth at 3.5% with volumes up 1.7% despite a negative impact of around €220 million (1.1%) resulting from the June 27, 2017 cyber-attack, fully in line with our July 13, 2017 announcement
  • Prices up 1.8%, offsetting the rise in raw material and energy costs at Group level
  • Reported sales up 4.4%, aided by a positive 0.8% Group structure impact and a positive 0.1% currency effect
  • Operating income up 7.1% on a reported basis and 6.6% like-for-like, despite the negative impact of the cyber-attack, estimated at €65 million, or 4.4% of first-half operating income
  • Recurring net income up 20.4% and free cash flow up 19.4%
  • 18 acquisitions in first-half 2017 in line with investor day objectives
  • Objectives for full-year 2017 confirmed


    (EURm)                     H1 2016 H1 2017 Change  like-for-like

    Sales                      19,549  20,409    +4.4%      +3.5%

    EBITDA                      1,957   2,071    +5.8%

    Operating income            1,368   1,465    +7.1%      +6.6%

    Recurring net income[1]       624     751   +20.4%

    Free cash flow[2]             823     983   +19.4%

Pierre-André de Chalendar, Chairman and Chief Executive Officer of Saint-Gobain, commented: 

"The first half of 2017 confirmed the encouraging trends seen in 2016, particularly in France. Excluding the one-off impact of the cyber-attack, the Group grew at its fastest rate since the first half of 2011 translating into double-digit growth in operating income. The focus on sales prices paid off, allowing us to offset the rise in raw material and energy costs at Group level. Overall, the results were in line with our expectations, and we can therefore confirm with confidence our 2017 objectives." 

  1. Recurring net income excluding capital gains and losses on disposals, asset write-downs and material non-recurring provisions. 
  2. Free cash flow excluding the tax impact of gains and losses on disposals, asset write-downs and material non-recurring provisions, and less capital expenditure.

Operating performance 

First-half reported sales increased 4.4% year-on-year to €20,409 million, including a positive 0.1% currency impact resulting mainly from the depreciation of the euro against the Brazilian real and US dollar, offset by the fall in pound sterling. The positive 0.8% Group structure impact essentially reflects the consolidation of acquisitions made in Asia and emerging countries (Emix, Solcrom, Tumelero), in new niche technologies and services (H-Old, Isonat, France Pare-Brise), and to further strengthen our positions in Building Distribution (particularly in Nordic countries).

On a like-for-like basis, sales increased 3.5%, driven both by prices (up 1.8%), which continued to rise in a more inflationary cost environment, and by volumes (up 1.7%). Volumes increased across all Business Sectors and regions, with a slightly negative calendar impact over the first half (around +3% in Q1 and around -3.5% in Q2).

The Group's operating income climbed 7.1% on a reported basis and 6.6% like-for-like, while its operating margin[1] widened to 7.2% versus 7.0% in first-half 2016.

On June 27, 2017, Saint-Gobain experienced an important cyber-attack, which led to information system downtime and supply chain disruptions. IT systems were quickly restored and all of our operations had returned to normal by July 10. All efforts were made to ensure the continuity of our business and in particular to keep any impact on our customers to a minimum. The cyber-attack is not expected to have any impact on commercial relations going forward.

The cyber-attack is estimated to have had a negative impact of €220 million on first-half sales and of €65 million on first-half operating income. Over the full year, the negative impact is estimated at less than €250 million on sales and €80 million on operating income, with July including additional losses in some businesses in the first few days of the month, a claw-back of June sales, and costs associated with re-starting operations. Overall, just over half the impact of the cyber-attack concerned Building Distribution, while the rest concerned the Group's industrial businesses, particularly Construction Products. From a geographical perspective, Western European countries were the hardest hit, especially Nordic countries, Germany and France.

Performance of Group Business Sectors  

Innovative Materials sales increased 4.1% like-for-like, driven by Flat Glass. There was another significant improvement in the Business Sector's operating margin, up to 12.3% from 11.2% in first-half 2016.

  • Upbeat trends continued in Flat Glass, which reported 5.6% organic growth over the first half. The automotive business enjoyed further good momentum led by Asia and emerging countries; sales in Europe remained healthy. Construction markets benefited from an upturn in volumes in Western Europe and an increase in float prices; Asia and emerging countries posted further growth despite Brazil remaining down. Organic growth combined with optimized operating leverage and a positive price-cost spread for raw materials and energy, drove a further rally in the operating margin, up to 9.9% from 8.8% in first-half 2016.
  • High-Performance Materials (HPM) sales rose 2.5% on a like-for-like basis over the first half, spurred by volumes amid a measured rise in raw material and energy costs. All HPM businesses advanced in the first half, with a strong second quarter for Ceramics in particular. The operating margin benefited from operating leverage on volumes, moving up to 15.0% from 14.0% in first-half 2016.

  1. Operating margin = Operating income expressed as a percentage of sales.

Construction Products (CP) sales were up 3.7% like-for-like over the first half. The operating margin for the Business Sector was 9.3% compared to 9.4% in the same period of 2016, affected by the cyber-attack and by a timelag between pricing and cost increases.

  • Interior Solutions reported 4.1% organic growth in the first half, with an increase in volumes and prices amid strong inflation in raw material and energy costs. Trading in Western Europe and in Asia and emerging countries improved in terms of both volumes and prices, with prices continuing to rise during the second quarter. North America also advanced, with a slight acceleration in prices since the first quarter. The operating margin slipped to 9.9% versus 10.2% in first-half 2016, reflecting the impact of the cyber-attack and the rise in raw material and energy costs.
  • Exterior Solutions like-for-like sales climbed 3.4% in the first half. Exterior Products saw an increase in both volumes and prices over the period, with a more difficult second quarter as expected due to the combined impact of significant stockpiling by distributors in North America early in the year and a tough comparison basis against last year (favorable weather conditions in the US). Prices increased in the Pipe business against a backdrop of rising raw material costs, but volumes continued to suffer from the lack of major export contracts. Mortars reported good organic growth overall, led by Asia and emerging countries in particular despite persistently tough conditions in Brazil. Overall, the operating margin came in at 8.4%, up from 8.3% in first-half 2016 despite the impact of the cyber-attack.

Building Distribution like-for-like sales rose 3.2%. Trading in France continued to recover, spurred by brisk momentum in new-builds and with positive pricing. Nordic countries were particularly hard hit by the cyber-attack, although Norway and Sweden still delivered good gains. Germany, which was also hard hit, contracted slightly, while France was affected albeit to a lesser extent. The UK continued to enjoy a steady pace of growth, driven by prices. Spain and the Netherlands posted further strong growth, while a tough macroeconomic environment continued to affect Brazil. The operating margin was 2.7%, compared to 2.8% in first-half 2016, squeezed by supply chain disruptions resulting from the cyber-attack.

Analysis by region 

    The Group reported organic growth and a slight improvement in margins in all of its regions over the first half, with the calendar impact slightly negative during the period (around +3% in Q1 and
around -3.5% in Q2).

  • France confirmed its improvement in the first half, with organic growth at 2.2% buoyed by good momentum in the new-build market. Renovation showed the first signs of improvement at the end of the first half. The decline in Pipe continued to weigh on performance in the absence of major export contracts. The operating margin stood at 2.5% versus 2.4% in first-half 2016.
  • Other Western European countries reported further organic growth, at 2.7% for the first half. Good market conditions continued to benefit Nordic countries as well as the UK despite a lack of visibility. Germany was down slightly. The region's operating margin stood at 6.0% versus 5.9% in first-half 2016.
  • North America posted 2.5% like-for-like growth in the first half, driven by construction. Industry made small gains overall, despite contrasting trends between end-markets. The operating margin was up slightly, at 11.8% versus 11.6% in the same period in 2016.
  • Asia and emerging countries delivered further good organic growth, at 6.7% for the first half, led by all regions despite the ongoing slowdown in Brazil. Asia advanced, with strong trading in China and India. Eastern Europe continued on an uptrend, driven by Poland and the Czech Republic. The region continued to produce a good operating margin, at 10.7% of sales compared to 10.6% of sales in first-half 2016.

Analysis of the consolidated financial statements for first-half 2017 

The unaudited interim consolidated financial statements for first-half 2017 were subject to a limited review by the statutory auditors and were approved and adopted by the Board of Directors on July 27, 2017.

                                                  H1 2016 H1 2017 change
    EURm                                            (A)     (B)   (B)/(A)

    Sales and ancillary revenue                    19,549  20,409    4.4%

    Operating income                                1,368   1,465    7.1%
    Operating depreciation and amortization           589     606    2.9%
    EBITDA (operating income + operating
    depr./amort.)                                   1,957   2,071    5.8%

    Non-operating costs                             (180)   (166)   -7.8%
    Capital gains and losses on disposals, asset
    write-downs, corporate acquisition fees and
    earn-out payments                                (32)       7 -121.9%
    Business income                                 1,156   1,306   13.0%
    Net financial expense                           (287)   (231)  -19.5%
    Income tax                                      (261)   (297)   13.8%
    Share in net income (loss) of associates            2     (1)    n.s.
    Net income before minority interests              610     777   27.4%
    Minority interests                                 14      23   64.3%
    Net attributable income                           596     754   26.5%
    Earnings per share[2] (in EUR)                   1.08    1.36   25.9%

    Recurring net income[1]                           624     751   20.4%
    Recurring[1] earnings per share[2] (in EUR)      1.13    1.35   19.5%

    Cash flow from operations[3]                    1,260   1,407   11.7%
    Cash flow from operations (excluding capital
    gains tax)[4]                                   1,251   1,410   12.7%
    Capital expenditure[5]                            428     427   -0.2%

    Free cash flow[6]                                 823     983   19.4%

    Investments in securities                          68     136  100.0%
    Net debt                                        6,624   6,816    2.9%

1. Recurring net income: net attributable income excluding capital gains and losses on disposals, asset write-downs and material non-recurring provisions.            

2. Calculated based on the number of shares outstanding at June 30 (554,424,460 shares in 2017, versus 552,574,120 shares in 2016).

3. Cash flow from operations = operating cash flow excluding material non-recurring provisions.

4. Cash flow from operations excluding capital gains tax = (3) less the tax impact of capital gains and losses, asset write-downs and material non-recurring provisions.

5. Capital expenditure: investments in property, plant and equipment.

6. Free cash flow = (4) less capital expenditure.

Consolidated sales advanced 3.5% like-for-like, led both by prices (up 1.8%) in a more inflationary cost environment, and by volumes (up 1.7%). On a reported basis, sales were up 4.4%, with a positive 0.1% currency impact resulting mainly from the depreciation of the euro against the Brazilian real and US dollar, offset by the fall in pound sterling. The positive 0.8% Group structure impact essentially reflects the consolidation of acquisitions made in Asia and emerging countries (Emix, Solcrom, Tumelero), in new niche technologies and services (H-Old, Isonat, France Pare-Brise), and to further strengthen our positions in Building Distribution (particularly in Nordic countries).

Operating income increased 7.1% based on reported figures and 6.6% like-for-like. The operating margin widened to 7.2% of sales from 7.0% of sales in first-half 2016.

EBITDA (operating income plus operating depreciation and amortization) climbed 5.8% to €2,071 million, while the EBITDA margin moved up to 10.1% of sales from 10.0% of sales in the same period in 2016.

Non-operating costs totaled €166 million, with a fall in restructuring costs compared to first-half 2016. The €45 million accrual to the provision for asbestos-related litigation involving CertainTeed in the US remained unchanged from the last few half-year periods.

The net balance of capital gains and losses on disposals, asset write-downs and corporate acquisition fees represented income of €7 million versus an expense of €32 million in first-half 2016. Business income therefore rose 13.0% to €1,306 million.

Net financial expense improved significantly, down 19.5% to €231 million from €287 million in first-half 2016, mainly reflecting the decrease in the cost of gross debt, which stood at 2.7% at end-June 2017 versus 3.9% at June 30, 2016.

The income tax rate on recurring net income was 27% compared to 30% in the prior-year period, due in particular to a continued favorable geographical mix effect.

Income tax totaled €297 million (€261 million in first-half 2016).

Recurring net income (excluding capital gains and losses on disposals, asset write-downs and material non-recurring provisions) jumped 20.4% to €751 million.

Net attributable income surged 26.5% to €754 million.

Capital expenditure was stable at €427 million, representing 2.1% of sales compared to 2.2% of sales in first-half 2016.

Cash flow from operations was up 11.7% to €1,407 million; before the tax impact of capital gains and losses on disposals, asset write-downs and material non-recurring provisions, cash flow from operations advanced 12.7% to €1,410 million, and free cash flow increased 19.4% to €983 million (4.8% of sales versus 4.2% of sales in first-half 2016).

The difference between EBITDA and capital expenditure improved, up 7.5% to €1,644 million (€1,529 million in first-half 2016), representing 8.1% of sales (7.8% in first-half 2016).

Operating working capital requirements (operating WCR) settled at €4,333 million (€4,244 million at June 30, 2016), stable at 39 days of sales.

Investments in securities doubled, at €136 million (€68 million in first-half 2016) and correspond to targeted acquisitions made to develop innovative niches and consolidate strong positions. They include Biolink in Germany (Innovative Materials), SimTek Fence in the US (Construction Products) and Tumelero in Brazil (Building Distribution).

Net debt was up slightly at €6.8 billion from €6.6 billion at June 30, 2017, with €174 million in share buybacks over the period. Net debt represents 36% of consolidated equity, stable versus end-June 2016. The net debt to EBITDA ratio over the last 12-month rolling period was also stable at 1.7 at June 30, 2017.

Update on asbestos claims in the US                              

Some 1,600 claims were filed against CertainTeed in first-half 2017 (versus 1,700 in first-half 2016).

At the same time, around 2,300 claims were settled (versus 2,100 claims in first-half 2016), bringing the total number of outstanding claims to around 34,400 at June 30, 2017, a decrease of 700 compared to end-2016 (35,100).

A total of USD 71 million in indemnity payments were made in the 12 months to June 30, 2017, compared to USD 97 million in the 12 months to December 31, 2016, when payments for settlements dating from prior years pending documentation had adversely affected the beginning of the year.

Strategic priorities and 2017 outlook  

The Group continued to pursue its strategic priorities during the first half, in line with its strategy confirmed at the investor day on May 17, 2017:

  • €170 million in additional cost savings versus first-half 2016;
  • 18 acquisitions in the first half and 6 being finalized in July, including Glava, Kirson and TekBond;
  • buyback of 3.5 million shares, in line with the Group's long-term objectives.

After a first half in line with expectations, the economic environment should remain supportive for the Group in the second half of 2017:

  • gradual improvement of construction markets in France;
  • continued upbeat trends in other Western European countries, despite less visibility in the UK;
  • positive market conditions in North American construction;
  • further good organic growth in Asia and emerging countries, despite ongoing difficulties in Brazil.

The Group maintains its action priorities for the year as a whole:

  • its focus on sales prices amid a stronger uptick in inflation;
  • its cost savings program, generating additional savings of more than 270 million on the 2016 cost base;
  • its capital expenditure program (around €1,600 million in 2017), with a focus on growth capex outside Western Europe and also on productivity and digital transformation;
  • its commitment to invest in R&D to support its differentiated, high value-added strategy;
  • its focus on high levels of free cash flow generation.

Saint-Gobain confirms with confidence its 2017 objective of a like-for-like increase in operating income. 

Financial calendar 

- An information meeting will be held at 8:30am (GMT+1) on July 28, 2017 and will be broadcast live on

- Sales for the first nine months of 2017: October 26, 2017, after close of trading on the Paris Bourse.

All indicators contained in this press release (not defined in the footnotes) are explained in the notes to the financial statements in the interim financial report, available by clicking here:

The glossary below shows the note of the interim financial statements in which you can find an explanation of each indicator. 


Cash flow from operations   Note 3  

Net debt   Note 7  

EBITDA   Note 3  

Non-operating costs       Note 3  

Operating income   Note 3    

Net financial expense   Note 7  

Recurring net income   Note 3  

Business income   Note 3  

Important disclaimer - forward-looking statements:

This press release contains forward-looking statements with respect to Saint-Gobain's financial condition, results, business, strategy, plans and outlook. Forward-looking statements are generally identified by the use of the words "expect", "anticipate", "believe", "intend", "estimate", "plan" and similar expressions. Although Saint-Gobain believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions as at the time of publishing this document, investors are cautioned that these statements are not guarantees of its future performance. Actual results may differ materially from the forward-looking statements as a result of a number of known and unknown risks, uncertainties and other factors, many of which are difficult to predict and are generally beyond the control of Saint-Gobain, including but not limited to the risks described in Saint-Gobain's registration document available on its website ( Accordingly, readers of this document are cautioned against relying on these forward-looking statements. These forward-looking statements are made as of the date of this document. Saint-Gobain disclaims any intention or obligation to complete, update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

This press release does not constitute any offer to purchase or exchange, nor any solicitation of an offer to sell or exchange securities of Saint-Gobain. 

For any further information, please visit

Analyst/Investor relations  

Vivien Dardel

Florent Nouveau

Floriana Michalowska

Press relations 

Susanne Trabitzsch

SOURCE Saint-Gobain

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