REG - Compagnie St-Gobain - Half-year Report

Compagnie de Saint Gobain SAAnnouncement

26/07/2023 18:00

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RNS Number : 3125H  Compagnie de Saint-Gobain  26 July 2023

The worldwide leader

in light & sustainable construction

 

 

 

Further record results in H1 2023

2023 outlook upgraded

 

 

·    Record margin of 11.3% and record operating income of €2,813m
despite a difficult environment

·    Significant operating income growth in North America, Asia and
emerging countries, which represent over 60% of the Group's earnings

·    Strong increase in free cash flow, up 30% at €2,192m

·    Double-digit operating margin expected in full-year 2023 for the
third consecutive year, demonstrating the Group's resilience

 

 

Benoit Bazin, Chief Executive Officer of Saint-Gobain, commented:

"In a difficult macroeconomic environment, the Group once again demonstrated
the effectiveness of its "Grow & Impact" strategy and the resilience of
its decentralized operating model. Thanks to our teams' agility,
entrepreneurial spirit and dedication, we once again delivered record
earnings, margins, and value creation in the first half of 2023. Our
organization by country has enabled the Group to outperform, both by
proactively adapting our operations on the ground but also by making selective
growth investments, including in additional production capacity and with
acquisitions such as Building Products of Canada.

 

Over 60% of our earnings are now generated in North America, Asia and emerging
countries, where trends are improving and the growth outlook is supported by
demographics and rapid urbanization. In Western Europe, renovation - our
biggest market - continues to show good resilience as expected, with stimulus
measures and regulations aimed at accelerating the path to carbon neutrality;
structural demand for new construction is growing, even though additional
financing costs are temporarily impacting the sector.

 

Despite a moderate slowdown in its markets in the short-term, in 2023
Saint-Gobain will deliver a double-digit operating margin for the third
consecutive year. Over the medium term, I am confident that the Group's new
profile places it firmly on a sustainable profitable growth trajectory."

 

A growth strategy built on sustainable solutions and innovation

Saint-Gobain continues to outperform its markets thanks to the pertinence of
its strategic positioning at the heart of energy and decarbonization
challenges, and to the strength of its local organization by country, which
enables it to offer comprehensive solutions to its customers.

 

A comprehensive range of solutions accelerating growth

Saint-Gobain's solutions for renovation, the building envelope and innovative
new light construction methods drastically reduce CO(2) emissions while
increasing user wellbeing (thermal and acoustic comfort, light, air quality
and hygiene). Each country CEO has adopted a specific local approach:

-  In France, "Saint-Gobain Solutions" is organized by market and provides
comprehensive offers for commercial buildings, educational and healthcare
facilities, and multi-family housing (social housing associations, developers
and condominiums).

As the leading player in the value chain, Saint-Gobain organized the first
"Sustainable Construction Talks" in Paris on July 4, 2023 on the theme "Global
and sustainable renovation: why and how to accelerate?", which followed the
publication in April of the first international Barometer on the
transformation of construction. The Group also showcased its comprehensive
range of solutions in three "white papers" published during the first half of
the year on educational and healthcare facilities and on the renovation of
multi-family housing.

Thanks to these efforts, the Group is capturing market share on major building
projects with environmental certification (HQE, BREEAM, LEED, BBC Effinergie,
NF Habitat), where the value of our comprehensive offers is approximately
twice as high as for traditional projects. The current renovation of Le Carré
des Invalides in Paris featuring 10 Saint-Gobain solutions is an excellent
example of such sustainable and low-carbon construction.

-  In Poland, the "Saint-Gobain Solutions" organization set up at the end of
2022 and bringing together all local brands, encourages the development of
systems and cross-selling in key segments such as premium multi-family
housing, sports complexes, and educational and healthcare facilities. During
the first half of 2023, the "Copernican Revolution Lab" for innovation was
unveiled in Warsaw. It features numerous solutions developed by the Group:
Isover insulation, Rigips plasters, Weber mortars, Ecophon ceilings and
Vetrotech fire-resistant glazing. The Group is also set to launch a digital
tool that will allow developers to build housing from prefabricated components
using Saint-Gobain's comprehensive solutions.

-  In India, Saint-Gobain is enhancing its proximity to the end customer with
a network of soon 100 "MyHome by Saint-Gobain" showrooms for consumers. For
multi-family housing, Saint-Gobain is offering a comprehensive solution as
part of the "Modern Homes" program, which features solutions based on glass
(windows, balconies, shower doors), plaster and plasterboard (ceilings,
interior walls), and construction chemicals. Thanks to this global
solutions-based approach, the Group has captured market share, notably winning
bids on 35 major non-residential projects. The "Central Vista" mega-project in
New Delhi is testimony to these efforts, with 11 Saint-Gobain solutions used.

-  In Mexico, a central specification team promoting our comprehensive offer
is accelerating sales synergies between products (glass, plasterboard, glass
wool, construction chemicals), with 50 multi-solution and façade projects in
the first half (versus 64 projects for the whole of 2022). The brand-new
Waldorf Astoria hotel in Cancun, for example, brings together the Group's
light construction solutions. Lastly, in early 2023, Mexico launched a
consulting service recommending Saint-Gobain's solutions to homebuilders.

A sustainable, innovative offer

Innovation at Saint-Gobain follows five transversal axes:

 

-  Decarbonizing production processes:

·   After achieving the world's first-ever zero-carbon (scope 1 and 2)
production of glass in 2022, Saint-Gobain delivered another world-first in
March 2023, producing glass with a furnace powered by over 30% hydrogen at its
Herzogenrath site in Germany, which will allow a reduction of up to 70% in
direct CO(2) emissions (scope 1).

·   The world's first-ever zero-carbon (scope 1 and 2) plasterboard
production began in April 2023 at Saint-Gobain's Fredrikstad plant in Norway.

·   Saint-Gobain has raised its internal carbon prices - in force since
2016 - from €75 to €100 per ton for capex investments and from €150 to
€200 per ton for R&D projects.

·   The Group uses artificial intelligence (AI) and algorithms to help
improve its industrial performance and reduce its energy consumption. In a
glass plant, production metrics are analyzed and optimized in real time using
data coming from the installation of over 400 sensors.

 

-  Light construction systems:

·   Glasroc(®) X: the Group has developed a plasterboard reinforced by
Adfors fiber glass mat, containing special additives for moisture resistance,
making it ideal for external applications. The plasterboard is now
manufactured at 23 sites across the globe, and has a carbon footprint two to
three times lighter than traditional alternatives.

·   One Precision Assemblies (OPA): in May 2023 in the US, Saint-Gobain
launched its first-ever prefabricated residential construction solution for
walls, floors, ceilings and roofing.

 

-  Sustainable solutions protecting natural resources:

·   In February 2023 in France, Saint-Gobain launched "Les Engagés", a
comprehensive range of sustainable low-carbon solutions including for example
Novelio(®) wall coverings, Isover GR 32 insulation, Placo(®) Infini 13
plasterboard (with over 50% recycled content), Webercol Flex Eco adhesives
(offering a 50% reduction in CO(2) emissions) and COOL-LITE(®) XTREME
ORAÉ(®), which combines ORAÉ(®) low-carbon glass with high-performance
thermally insulating coatings, enabling a 42% reduction in its carbon
footprint.

·   Weber mortars continue to replace cement (e.g., with blast furnace slag
or fly ash) and sand (with construction demolition materials or excavated
earth).

·   Lastly, the Group's February 2023 acquisition of Asphaltica and its
asphalt shingle recycling technology for roofing in the US gives added impetus
to initiatives promoting the circular economy.

 

-  Materials and solutions to conquer new markets:

·   Ecocem and Saint-Gobain recently announced that they would be
partnering to develop and market low-carbon solutions for binders, concretes
and mortars.

·   CarbiCrete: at the "ChangeNOW" summit in May 2023, Saint-Gobain
announced it had signed a partnership agreement with Canadian start-up
CarbiCrete to manufacture cement-free, carbon-sequestering concrete blocks.

·   Development of innovative solutions based on high-performance polymers
and ceramics, for example for hydrogen transport and fire-protection for
batteries in electric vehicles.

-  Digital tools developed to best serve customers:

·   Artificial intelligence is increasingly being used to deepen our
customer knowledge, with marketing segmentation and the introduction of
pricing strategies incorporating recommendation-based models to support
decision-making.

·   Digital services are available to our professional customers to
facilitate their day-to-day and improve their productivity. The TOLTECK app
for managing quotes and bills is used every day in France by more than 23,000
trade professionals, while the SOLU+ app makes it possible to easily estimate
cost and scale building projects and then send the order to an outlet in just
one click. Lastly, the CAP RENOV+ solution simulates over 20,000 renovation
projects every month in France, giving value to the associated gains in
comfort and energy savings, and integrating the government aid compatible with
a given project.

·   Digitalization is an opportunity to provide value-added services all
along the value chain. In Vietnam, 4 million QR codes have been printed on
products, helping to optimize deliveries and offer a personalized customer
experience.

·   An experts' hub of 150 data scientists supports these initiatives.

 

Group operating performance

 

First-half 2023 once again demonstrated the Group's resilience with a record
operating margin of 11.3%.

 

Like-for-like sales rose 1.6% versus first-half 2022, driven by High
Performance Solutions, Asia-Pacific and the upturn in trading in North
America. In an environment that remains inflationary, the Group continues to
effectively serve and support its customers while managing energy and raw
material cost evolution. Prices were up by 7.9% over the period (up 10.2% in
the first quarter and up 5.9% in the second quarter, reflecting sequential
price stability), owing to price increases implemented last year and certain
additional measures taken locally, generating a positive price-cost spread
overall.

 

As expected, volumes contracted, down 6.3% over the first half (down 7.0% in
the second quarter including a negative working day effect of around 2%), with
a moderate slowdown in markets reflecting a contrasting situation: a marked
decline in new construction but good resilience overall in renovation. In each
local market, the Group is taking the proactive commercial and industrial
measures necessary to continue to outperform its markets and maintain its
excellent operating performance. Action plans are implemented by country CEOs
to adapt to their environment and optimize in real time their P&Ls:
commercial efficiency to outperform the market and adaptation of costs where
needed (optimization of production capacities, fixed and variable costs and
discretionary expenses).

 

On a reported basis, sales were down by 2.1% to €25.0 billion, with a
negative currency impact of 1.4%. The Group structure impact reduced sales by
2.3% and results from the ongoing optimization of the Group's profile, both in
terms of disposals - mainly in distribution (UK, Poland and Denmark), glass
processing activities, Crystals & Detectors and ceramics for the steel
industry - and in terms of acquisitions, mainly in construction chemicals (GCP
Applied Technologies "GCP", Impac in Mexico, Matchem in Brazil and Best Crete
in Malaysia), exterior products (Kaycan in North America) and insulation (U.P.
Twiga in India). The integration of recent acquisitions is progressing well.

 

Operating income hit a new record in first-half 2023 at €2,813 million, a
rise of 2.1% at constant exchange rates versus first-half 2022.

 

The Group's operating margin hit another record-high of 11.3% in first-half
2023, versus 11.0% in first-half 2022, thanks notably to the rollout of
initiatives set out in its "Grow & Impact" plan: an optimized business
profile (one-third of sales rotated since 2018), increased pricing power (high
added-value solutions provided to our customers and constant focus on the
price-cost spread) and various proactive measures to adapt to local markets.

 

Segment performance (like-for-like sales)

 

Northern Europe: record margin despite a limited decline in sales thanks to
better resilience in renovation

Sales in the Northern Europe Region were down by 3.7% over the first half amid
a marked slowdown in new construction, while renovation (around 55% of sales)
proved more resilient. After several quarters of slowing volumes, the volume
decline in the second quarter was identical to the decline in the first
quarter at a comparable number of days. The operating margin for the Region
came in at a new record-high of 8.6% (versus 8.2% in first-half 2022), thanks
to an optimized business profile, well-managed pricing and proactive cost
adjustments amid a downturn in volumes.

 

Nordic countries held firm thanks to their presence across the construction
value chain, despite a clear downturn in the new construction market,
particularly in Sweden. In April, Saint-Gobain inaugurated the world's first
carbon-neutral (scope 1 and 2) plasterboard production at its Fredrikstad
plant in Norway. The UK progressed on the back of market share gains in
façade and interior solutions, and also benefited from an optimized portfolio
following the divestments of its distribution businesses. Germany and Eastern
Europe suffered in a context of high inflation and a rapid rise in interest
rates which weighed on new construction.

 

 

Southern Europe - Middle East & Africa: increase in sales supported by
resilience in renovation and a good margin level

The Southern Europe - Middle East & Africa Region saw a 2.6% rise in
sales, driven by prices and by good resilience in renovation (almost 70% of
sales), while the new construction market slowed. The Region posted a strong
operating margin, at 8.6% (versus 8.9% in first-half 2022), thanks to good
management of raw material and energy cost inflation and proactive management
of costs and industrial efficiency.

 

France continued to benefit from its strong exposure to the renovation market,
which remained at a good level despite cost inflation in a favorable
regulatory environment. The announcement by the French government in mid-July
of a 66% rise in the MaPrimeRénov' household renovation stimulus package to
€4 billion in 2024 illustrates the country's commitment to accelerate
energy-efficiency renovation of existing buildings and to reduce CO(2)
emissions in the construction sector. Saint-Gobain's position as a benchmark
across the entire renovation value chain enabled it to report further
substantial gains in market share. The rollout of low-carbon solutions is
accelerating, helping the Group's customers to meet their environmental goals.
Lastly, the introduction on May 1, 2023 of the Extended Producer
Responsibility (EPR) allows Saint-Gobain to leverage its technological and
organizational recycling and repurposing expertise.

In Spain, business was driven by good momentum in construction markets
overall, while in Italy, renovation remained robust thanks to the continuation
of the government's "Superbonus" scheme. Middle East and Africa posted strong
growth, led by Egypt and Turkey.

Since the beginning of the year, the Group has continued to optimize its
presence in the Region, signing an agreement to sell its glass processing
business in Portugal and undertaking growth investments in Egypt in
construction chemicals (acquisition of Drymix and inauguration of a site
producing adhesives and waterproofing) and in Turkey by merging with Dalsan to
create a leader in plaster and plasterboard.

 

 

Americas: sales growth and record margin

The Americas delivered 3.4% organic growth over first-half 2023, buoyed by an
upturn in North America in the second quarter. The Region's operating income
hit a new record-high, resulting in an operating margin of 17.8% (up from
16.9% in first-half 2022), mainly supported by the upturn in volumes in the US
during the second quarter.

 

-  North America progressed by 5.5% over first-half 2023 (up 15.8% as
reported, with the integration of Kaycan and GCP's waterproofing membranes),
supported by its comprehensive range of interior and exterior light
construction solutions. The new construction market has stabilized over the
last six months with positive signs towards the end of the period. Growth in
the Region accelerated in the second quarter at 9.6%, with market share gains
for the roofing and siding businesses thanks to highly successful
cross-selling strategies.

The signature in June of an agreement to acquire Building Products of Canada
in roofing will allow Saint-Gobain to reinforce its leadership in Canada, with
a comprehensive range of interior and exterior solutions.

In light of the favorable market outlook, in early July the Group announced a
USD 235 million investment to double the production capacity of its gypsum
facility in Florida - one of the most dynamic areas in the US. Lastly, the
introduction of the Inflation Reduction Act (IRA) plays a role both indirectly
- through the creation of jobs that will result in additional demand for
housing - and directly, with insulating products having been eligible for a
tax credit since January 1, 2023 owing to their role in the energy transition.

 

-  Latin America was down by 2.5% in a macroeconomic environment that remains
difficult in Brazil owing to high interest rates. Mexico benefited from the
successful integration of Impac in construction chemicals, with an
acceleration in sales synergies in distribution networks, and plans to invest
in a new Chryso plant at its Impac site in Monterrey. The other countries in
the Region were driven by an increase in sales prices, an enriched offer and
mix, and a geographic footprint and product range extended by bolt-on
acquisitions. Thanks to the successful integration of Termica San Luis, a
leader in insulation in Argentina, Saint-Gobain has consolidated its strong
operating performance in the country.

As of May 2023, the Group's three glass facilities in Brazil have replaced 8%
of their natural gas consumption with biogas. In Mexico, the Cuautla glass
facility now uses 100% solar electricity alongside natural gas.

 

 

Asia-Pacific: good sales momentum and a very good margin level

The Asia-Pacific Region reported 6.4% organic growth and a strong 12.5%
operating margin (12.7% in first-half 2022).

 

India delivered a good performance against a high comparison basis in
first-half 2022, on the back of market share gains, an integrated and
innovative range of solutions, the successful integration of recent
acquisitions in insulation (Rockwool India Pvt Ltd. and U.P. Twiga) and the
start-up of new capacity, notably in glass. Saint-Gobain continues to play a
pioneering role in promoting "green" buildings in the country by offering its
sustainable construction solutions. Particularly noteworthy was the first-ever
production of low-carbon glass in the country in June 2023, allowing a 40%
reduction in CO(2) emissions (scope 1 and 2) through the use of two-thirds
recycled materials as well as green electricity used alongside natural gas.
After ongoing disruptions from Covid at the start of the year, China reported
good growth. In the second quarter the Group unveiled its fourth plasterboard
facility and fifth gypsum factory in the country, in Yuzhou (Henan province),
to respond to strong demand for these light materials as a replacement for
more traditional building materials: like the Group's other gypsum plants in
China, this new site uses carbon-free electricity. South-East Asia saw sales
progress owing to the continued diversification of its range of light
solutions, and continued to strengthen its position on the light construction
market in Malaysia with the acquisition of Hume.

 

 

High Performance Solutions (HPS): good sales growth and sequential improvement
in margin

HPS achieved 6.4% organic growth over first-half 2023, benefiting from its
strong innovation capabilities, a recovery in the European automotive market,
and a good level of sales prices. The operating margin came in at 12.3%, down
slightly year-on-year owing to the negative mix effect in Mobility, but up
sharply on a sequential basis (11.1% in second-half 2022).

 

-  Businesses serving global construction customers saw sales grow by over
40% as reported, due mainly to the GCP integration. The upbeat trends in
Chryso and GCP sales continued, spurred by the innovation drive for
decarbonization in the construction sector, notably with the CO2ST(®) and
EnviroMix(®) solutions for developing cement and concrete mixes with a much
lighter carbon footprint. Chryso continued to enjoy strong growth in emerging
countries, leveraging Saint-Gobain's presence in Brazil to accelerate its
expansion through the Matchem acquisition, and in India benefiting from the
construction of a fifth site in record time. The new Construction Chemicals
organization including GCP has been in place since the end of 2022 and is
successfully deploying all expected synergies. In contrast, Adfors
reinforcement solutions were down against a high comparison basis.

 

-  Mobility saw a strong rise in sales, buoyed by a gradual catch-up in sales
prices, an outperformance linked to its strong technological positioning on
electric vehicles, and a rebound in volumes in Europe. Momentum remains
favorable in the Americas and Asia.

 

 

-  Businesses serving Industry were driven by sales prices and the demand for
cutting-edge materials and decarbonization technologies, despite a mixed
situation on industrial markets. These businesses are reaping the rewards of
their digital transformation, in particular with the implementation of
"digital twins" - allowing industrial operations to be modelled using AI-based
algorithms and energy savings of up to 10% - along with digital simulation
services helping customers increase their productivity using virtual reality
platforms.

Analysis of the consolidated financial statements for first-half 2023

The unaudited interim consolidated financial statements for first-half 2023
were subject to a limited review by the statutory auditors and adopted by the
Board of Directors on July 26, 2023.

 in € million                                                                    H1 2022  H1 2023  % change
 Sales                                                                           25,481   24,954   -2.1%
 Operating income                                                                2,791    2,813    0.8%
 Operating margin                                                                11.0%    11.3%
 Operating depreciation and amortization                                         992      980      -1.2%
 Non-operating costs                                                             -100     -55      45.0%
 EBITDA                                                                          3,683    3,738    1.5%
 Capital gains and losses on disposals, asset write-downs and impact of changes  -198     -464     -134.3%
 in Group structure
 Business income                                                                 2,493    2,294    -8.0%
 Net financial expense                                                           -194     -196     -1.0%
 Dividends received from investments                                             1        1        n.s.
 Income tax                                                                      -530     -607     -14.5%
 Share in net income of associates                                               4        3        n.s.
 Net income before non-controlling interests                                     1,774    1,495    -15.7%
 Non-controlling interests                                                       50       45       -10.0%
 Net attributable income                                                         1,724    1,450    -15.9%
 Earnings per share(2) (in €)                                                    3.34     2.84     -15.0%
 Recurring net income(1)                                                         1,814    1,821    0.4%
 Recurring(1) earnings per share(2) (in €)                                       3.51     3.57     1.7%
 EBITDA                                                                          3,683    3,738    1.5%
 Depreciation of right-of-use assets                                             -350     -340     2.9%
 Net financial expense                                                           -194     -196     -1.0%
 Income tax                                                                      -530     -607     -14.5%
 Capital expenditure(3)                                                          -590     -616     4.4%
      o/w additional capacity investments                                        241      274      13.7%
 Changes in working capital requirement(4)                                       -574     -61      89.4%
 Free cash flow(5)                                                               1,686    2,192    30.0%
 Free cash flow conversion(6)                                                    51%      65%
 ROCE                                                                            15.3%    15.7%
 Lease investments                                                               395      442      11.9%
 Investments in securities net of debt acquired(7)                               283      228      -19.4%
 Divestments                                                                     79       857      n.s.
 Consolidated net debt                                                           8,276    8,922    7.8%

 

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 weighted average number of shares outstanding
(510,080,726 shares in 2023, versus 516,797,123 shares in 2022).

3.   Capital expenditure = investments in tangible and intangible assets.

4.   Changes in working capital requirement over a rolling 12-month period
(see Appendix 4, bottom of "Consolidated cash flow statement").

5.   Free cash flow = EBITDA less depreciation of right-of-use assets, plus
net financial expense, plus income tax, less capital expenditure excluding
additional capacity investments, plus change in working capital requirement
over a rolling 12-month period.

6.   Free cash flow conversion ratio = free cash flow divided by EBITDA,
less depreciation of right-of-use assets.

7.   Investments in securities net of debt acquired = €228 million in
2023, of which €120 million in controlled companies.

EBITDA climbed to a record €3,738 million, while the EBITDA margin also hit
a record-high of 15.0% (14.5% in first-half 2022).

 

Non-operating costs were €55 million versus €100 million in first-half
2022. The net balance of capital gains and losses on disposals, asset
write-downs and the impacts of changes in Group structure represented an
expense of €464 million (versus an expense of €198 million in first-half
2022). It reflects €150 million in asset write-downs and Purchasing Price
Allocation (PPA) intangible amortization, and €314 million in disposal
losses and impacts relating to changes in Group structure, mainly translation
adjustments on divested UK distribution assets.

 

Recurring net income hit an all-time high of €1,821 million.

The tax rate on recurring net income was 25%.

 

Capital expenditure represented €616 million (€590 million in first-half
2022). Maintenance capex has been optimized as planned and reallocated to
growth capex (up 14%) in selected markets. Over the past 12 months, the Group
has opened 23 new plants and production lines to strengthen its leading
positions in high-growth markets for sustainable construction, especially in
construction chemicals - in Asia (India and China), Africa & Middle East
(Nigeria, Morocco, Egypt and Oman) and Europe (Italy and a 3D printing
facility in the Czech Republic) - along with façade and light construction
solutions (India, China and Spain).

 

Free cash flow was at €2,192 million (8.8% of sales) - a rise of 30% versus
first-half 2022 - with a free cash flow conversion ratio of 65% (51% in
first-half 2022). This was attributable to the slight increase in EBITDA and
to very good management of operating working capital requirement (WCR), which
represented 25 days' sales at end-June 2023 versus 26 days' sales at end-June
2022.

 

Investments in securities net of debt acquired totaled €228 million (€283
million in first-half 2022), primarily reflecting acquisitions in plasterboard
(Dalsan in Turkey) and in insulation (U.P. Twiga in India and Termica San Luis
in Argentina).

 

Divestments totaled €857 million (€79 million in first-half 2022),
primarily reflecting the sale of the UK distribution business for €803
million.

 

Net debt amounted to €8.9 billion at June 30, 2023. It represents 38% of
consolidated equity versus 36% at end-June 2022. The net debt to EBITDA ratio
on a rolling 12-month basis remained stable versus June 30, 2022, at 1.2.

 

 

2023 outlook

 

In a difficult macroeconomic environment, Saint-Gobain continues to
demonstrate its resilience and its strong operating performance thanks to its
focused strategy and its proactive commercial and industrial initiatives. The
Group continues to focus on developing sustainable and innovative solutions
with a positive impact, supported by strong innovation and investments for
growth.

 

2023 will therefore mark another successful year for Saint-Gobain, with the
continued implementation of its "Grow & Impact" priorities.

 

The Group confirms its assumptions for its markets in 2023, with contrasting
trends: a marked decline in new construction in certain regions but good
resilience overall in renovation, and is raising its operating margin
guidance.

 

Amid a moderate market slowdown, Saint-Gobain is now targeting for full-year
2023 a double-digit operating margin, for the third consecutive year.

 

For second-half 2023, the Group is targeting an operating margin of between 9%
and 11%, in line with the "Grow & Impact" strategic plan target.

 

 

 

Financial calendar

 

An information meeting for analysts and investors will be held at 8:30am (GMT
+ 1) on July 27, 2023 and will be streamed live on Saint-Gobain's website:
www.saint-gobain.com/ (http://www.saint-gobain.com/)

-  Site visits for investors and analysts: September 21 and 22, 2023 in the
US (Boston region) and November 13 and 14, 2023 in France (Paris region).

-  Sales for the third quarter of 2023: October 26, 2023, after close of
trading on the Paris stock market.

 

 

 

 

 

 

 

 

 

 

 

 

 

Glossary:

- Indicators of organic growth and like-for-like changes in sales/operating
income reflect the Group's underlying performance excluding the impact of:

·   changes in Group structure, by calculating indicators for the year
under review based on the scope of consolidation of the previous year (Group
structure impact);

·   changes in foreign exchange rates, by calculating indicators for the
year under review and those for the previous year based on identical foreign
exchange rates for the previous year (impact at constant exchange rates);

·   changes in applicable accounting policies.

 

- EBITDA margin = EBITDA divided by sales.

- Operating margin = operating income divided by sales.

- ROCE (Return on Capital Employed) = operating income for the period adjusted
for changes in Group structure, divided by segment assets and liabilities at
period-end.

- Purchase Price Allocation (PPA) = the process of assigning a fair value to
all assets and liabilities acquired and of allocating the residual goodwill as
required by IFRS 3 (revised) and IAS 38 for business combinations. PPA
intangible amortization relates to amortization charged against brands,
customer lists, and intellectual property, and is recognized on a separate
line, "Other operating expenses and asset impairment".

- Building labels: HQE (High Environmental Quality), BREEAM (Building Research
Establishment Environmental Assessment Method), LEED (Leadership in Energy and
Environmental Design), BBC Effinergie (Low-Consumption Building) and NF
Habitat.

 

 

All indicators contained in this press release (not defined in the footnotes)
are explained in the notes to the interim financial statements available by
clicking here:
https://www.saint-gobain.com/en/finance/regulated-information/half-yearly-financial-report
(https://www.saint-gobain.com/en/finance/regulated-information/half-yearly-financial-report)

 

Net
debt
Note 10

EBITDA
Note 5

Non-operating
costs
Note 5

Operating
income
Note 5

Net financial
expense
Note 10

Recurring net
income
Note 5

Business
income
Note 5

Working capital
requirement
Note 5

 

 

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
Saint-Gobain's control, including but not limited to the risks described in
the "Risk Factors" section of Saint-Gobain's Universal Registration Document
and the main risks and uncertainties presented in the half-year 2023 financial
report, both documents being available on Saint-Gobain's website
(www.saint-gobain.com (http://www.saint-gobain.com) ). 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, except as required by applicable laws
and regulations. 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 further information, please visit www.saint-gobain.com
(http://www.saint-gobain.com)

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