Saint-Gobain: 2013 Results
Sharp upswing in operating income in the second half
PARIS, February 19, 2014 /PRNewswire/ --
- Organic growth at -0.3% but +2.6% in H2
- Strong negative currency impact of 2.7% on sales and 3.8% on operating income
- Sharp 9.9% year-on-year upswing in operating income in H2 2013
- Steep increase in free cash flow[2]over the year: up 40.8% to €1,157 million
- Stronger balance sheet: net debt down almost €1 billion
- 2013 dividend: stable at €1.24, 50% payable in cash, and 50% in cash or in shares at shareholders' discretion
(EURm) 2012* 2013 Change* Change*
(2012
constant
exchange
rates)
Sales 43,198 42,025 -2.7% 0.0%
EBITDA 4,413 4,189 -5.1% -1.7%
Operating income 2,863 2,764 -3.5% +0.4%
Recurring[1] net income 1,053 1,027 -2.5% +2.4%
Net income 693 595 -14.1% -6.9%
Free cash flow[2] 822 1,157 +40.8% +45.3%
Pierre-André de Chalendar, Chairman and Chief Executive Officer of Saint-Gobain, said:
"2013 confirmed our expectations of a recovery in operating income in the second half, powered by the upturn in certain Western European countries, particularly the UK and Germany, along with a brighter picture in Asia and emerging countries. Amid signs of an improvement in the macroeconomic climate, we continued to cut costs while successfully maintaining our price-focused policy.
"In 2014, trends for our different markets should improve even though the climate is likely to remain uncertain, and we expect a clear like-for-like improvement in operating income."
* Figures restated to reflect the impacts of the amended IAS 19.
1. Excluding capital gains and losses on disposals, asset write-downs and material non-recurring provisions.
2. Excluding the tax impact of capital gains and losses on disposals, asset write-downs and material non-recurring provisions.
Operating performance
After a tough first half penalized by fewer working days and poor weather conditions, the Group reported organic growth of 2.6% for the six months to December 31, 2013, with volumes up 1.5% and prices gaining 1.1%, as third-quarter trends continued in the last three months of the year.
Sales stabilized over the year as a whole, down 0.3% on a like-for-like basis with a solid 1.0% increase in sales prices despite a less inflationary environment. On a reported basis, sales retreated 2.7% due to the negative 2.7% currency impact. Changes in Group structure had a slightly positive 0.3% impact.
All of the Group's Business Sectors and Divisions reported an improvement in second-half trading, driven by more upbeat trends in their Western European markets (0.9% organic growth), as well as in Asia and emerging countries (10.4% organic growth). The upturn in North America was held in check by the decline in businesses linked to capital spending and by volatility in Exterior Products.
Despite the decline in sales, the Group's operating margin in 2013 held firm at 6.6% and rose to 7.1% in the second half.
The Group's focus on its action plan priorities continues to pay off:
- an increase in sales prices in line with objectives;
- additional cost savings of €600 million in 2013 compared to 2012, particularly in Flat Glass, which saw its margin improve to 4.0% versus 2.0% in second-half 2012;
- a €400 million reduction in capex thanks to optimized timing of expenditures and to unit cost savings, while maintaining a strong focus on growth capex outside Western Europe;
- a selective acquisitions and divestments policy;
- a stronger balance sheet, with net debt down almost €1 billion thanks to an ongoing tight rein on cash.
Performance of Group Business Sectors
Innovative Materials sales were down just 0.7% in the year on a like-for-like basis, thanks to 1.5% growth in the second half. The operating margin was 7.3%, and came in at 7.8% in the second half compared to 6.9% in second-half 2012 and 6.7% in first-half 2013, spurred by upbeat trends in Flat Glass.
- Like-for-like, Flat Glass sales moved up 0.8%, jumping 2.8% in the second half. In the six months to December 31, construction markets remained fragile in Western Europe (with prices for commodity products - float glass - stabilizing), but proved bullish in Asia and emerging countries. Automotive glass sales confirmed a double-digit rise over the year in Asia and emerging countries and stabilized over the second half in Western Europe.
Buoyed by increased cost cutting efforts, the operating margin reached 2.8% of sales in 2013, coming in at 4.0% in the second half and 1.5% in the first. - High-Performance Materials (HPM) like-for-like sales retreated 2.6%, hit by the downturn in businesses linked to capital spending (Ceramics). The other HPM businesses (Abrasives, Plastics, Textile Solutions) delivered organic growth on the back of a trading upswing in the second half and a good performance in Asia and emerging countries.
The operating margin came out at a solid 12.7% despite a sharp drop in Ceramics, thanks to stability or to improvements in other HPM businesses. Compared to the two previous six-month periods, the operating margin stabilized.
Like-for-like sales for the Construction Products (CP) Sector climbed 1.9%, rallying 5.6% in the second half. The operating margin widened to 8.7% from 8.3% in 2012. - Interior Solutions delivered 3.4% organic growth. The US saw volumes accelerate in the second half and maintained a significant price increase. Growth in Asia and emerging countries remained brisk over the year as a whole, while Western Europe was almost flat after a very tough start to the year.
The operating margin stabilized at 8.1%, coming in at 8.6% for the second half, up sharply on the two previous six-month periods (7.6% in first-half 2013 and 7.9% in second-half 2012). - Exterior Solutions reported 0.5% organic growth, with trading down 4.1% in the first half but up 5.4% in the six months to December 31, fuelled by a rebound in all of its businesses. Exterior Products in the US stabilized in the second half, after having been hit in the first six months of the year by temporary destocking by distributors. As expected, Pipe reported double-digit organic growth in the second half, powered by the rally in the Export business. Industrial Mortars delivered further good growth in Asia and emerging countries and stabilized in Western Europe in the second half. Sales prices held firm for all Exterior Solutions businesses in 2013 in a context of decreasing raw material prices.
The operating margin rose to 9.1% of sales from 8.3% of sales in 2012, buoyed by a positive raw material and energy price-cost spread and by an upturn in Pipe volumes.
After particularly poor weather conditions took their toll on its first-half performance, Building Distribution was down 1.4% on a like-for-like basis, despite recovering 1.7% in the second half, reflecting improved trading in all regions.
The UK delivered solid growth over the year as a whole, following a sharp upturn as from April. Trading stabilized in Germany and Nordic countries as growth returned in the second half. In France, the business remained sluggish but continued to prove resilient thanks to market share gains. Southern Europe was still negative but stabilized in the second half. Shrinking markets continued to penalize the Netherlands and Eastern Europe, while outside Europe, Brazil reported further robust growth and the US improved slightly in the second half.
In line with expectations, the Business Sector's operating income improved, up to €423 million in second-half 2013 from €391 million in second-half 2012 and €215 million in the six months to June 30, 2013. This drove a rally in its operating margin, which widened to 4.4% in the second half from 4.0% in second-half 2012, and came out at 3.4% for 2013 as a whole.
The Business Sector continued to consolidate its leadership positions and remained focused on its selective divestments plan (Argentina, Belgium and Eastern Europe).
Packaging (Verallia) sales retreated 1.8% on a like-for-like basis, despite a 1.9% rise in sales prices. Strong momentum in Latin America failed to offset the slowdown in trading in other regions (mainly Southern Europe and to a lesser extent, the US).
Operating income includes €65 million as a result of applying IFRS 5 (assets and liabilities held for sale) to Verallia North America (VNA) as of January 1, 2013, since depreciation of VNA's fixed assets is no longer charged to operating income. Adjusted for this one-off item, the operating margin was in line with the previous year, at 11.0%, thereby confirming the resilience of this business.
Regarding the planned divestment of VNA, negotiations between Ardagh and the Federal Trade Commission (FTC) continue apace and the Group remains confident that the sale will be finalized before the new deadline, set at April 30, 2014.
Analysis by geographic area
Over the year as a whole and particularly in the second half, the Group's organic growth was powered by Asia and emerging countries. Profitability improved in this region, was up slightly in North America, but came under renewed pressure in Western Europe.
- France posted negative 3.8% organic growth, although the pace of decline slowed in the second half to a negative 1.2%. Thanks to its exposure to renovation, the Group outperformed its markets in a challenging macroeconomic environment.
Despite a further drop in volumes, the operating margin proved resilient at 5.0%. - Other Western European countries reported a 1.2% fall in like-for-like sales for the year as a whole, but a rebound in the second half, with sales gaining 2.3%. This upturn reflects improved market conditions, especially in the UK, Germany, and to a lesser extent in Scandinavia. Trading in Southern Europe and Benelux improved, though continued to contract.
The operating margin narrowed to 4.2%, hit by a poor first-half performance at 3.1%. The operating margin rallied sharply in the second half, coming in at 5.3% compared to 4.6% in second-half 2012. - North America stabilized, posting negative organic growth of 0.3%. Despite double-digit growth in Interior Solutions fuelled by upbeat trends in construction markets and sales prices, the region was affected by a downturn in other businesses: Exterior Products declined due to lower weather-related demand and destocking, as did Ceramics, on the back of a slowdown in capital spending.
Excluding the positive one-off impact of VNA, the operating margin improved to 11.6% from 11.0% in 2012. - In Asia and emerging countries, organic growth accelerated in the second half, at 10.4%, and came in at 7.2% for the year as a whole. Latin America outperformed its underlying markets, up 12.0%. Eastern Europe and Asia reported a significant improvement in the second half, led by Poland, the Czech Republic, China and India, and posted 4.1% and 2.9% organic growth, respectively, for the year as a whole. Trading in Russia remained extremely bullish.
The operating margin jumped to 8.0% of sales versus 6.8% of sales one year earlier.
2013 consolidated financial statements
The Group's consolidated financial statements were approved and adopted by Saint-Gobain's Board of Directors at its meeting of February 19, 2014..
The comparative income statement for 2012 shown below has been restated to reflect the amendments to IAS 19 (Employee Benefits). Had the IAS 19 amendments been applied at January 1, 2012, the impacts on the financial statements for 2012 would have been the following:
- an increase of €88 million in financial expenses (€62 million after tax), as a result of using a rate of return on plan assets equal to the discount rate used for employee benefit obligations (instead of the expected rate of return on plan assets);
- an increase of €18 million in operating expenses (€11 million after tax), due to the impact of plan amendments;
- a decrease of €14 million in equity at January 1, 2012 (€10 million after tax), following the immediate recognition of €8 million in past service costs.
The impact of all these adjustments would be a €32 million decrease in equity (€21 million after tax) at December 31, 2012, and €62 million in movements in actuarial gains and losses (income and expenses recognized directly in equity).
Key consolidated data are shown below:
2012 2012
restated* 2013 % published
EURm EURm change EURm
(A) (B) (B)/(A)
Sales and ancillary revenue 43,198 42,025 -2.7% 43,198
Operating income 2,863 2,764 -3.5% 2,881
Operating depreciation and
amortization 1,550 1,425 -8.1% 1,550
EBITDA (op. inc. + operating
depr./amort.) 4,413 4,189 -5.1% 4,431
Non-operating costs (507) (492) -3.0% (507)
Capital gains and losses on
disposals, asset write-downs,
corporate acquisition fees and
earn-out payments (390) (381) -2.3% (390)
Business income 1,966 1,891 -3.8% 1,984
Net financial expense (812) (795) -2.1% (724)
Income tax (443) (476) +7.4% (476)
Share in net income of associates 12 11 -8.3% 12
Income before minority interests 723 631 -12.7% 796
Minority interests 30 36 +20.0% 30
Net income 693 595 -14.1% 766
Earnings per share[2] (in EUR) 1.32 1.08 -18.2% 1.46
Recurring[1] net income 1,053 1,027 -2.5% 1,126
Recurring[1] earnings per share[2]
(in EUR) 2.00 1.86 -7.0% 2.14
Cash flow from operations[3] 2,718 2,537 -6.7% 2,791
Cash flow from operations excl.
capital gains
tax[4] 2,595 2,511 -3.2% 2,668
Capital expenditure 1,773 1,354 -23.6% 1,773
Free cash flow
(excluding capital gains tax)[4] 822 1,157 +40.8% 895
Investments in securities 354 100 -71.8% 354
Net debt 8,490 7,521 -11.4% 8,490
* Restated to reflect the impacts of the amended IAS 19.
1. Excluding capital gains and losses on disposals, asset write-downs and material non-recurring provisions.
2. Calculated based on the number of shares outstanding (excluding treasury stock) at December 31 (551,417,617 shares in 2013 versus 526,434,577 in 2012).
3. Excluding material non-recurring provisions.
4. Excluding the tax impact of capital gains and losses on disposals, asset write-downs and material non-recurring provisions.
The comments below were drawn up based on restated 2012 figures.
Consolidated sales were down 2.7%. The currency impact was a negative 2.7%, resulting primarily from the fall against the euro of the currencies of the main emerging markets where the Group operates (particularly Latin America) and of the US dollar and pound sterling. Changes in Group structure had a slightly positive 0.3% impact, chiefly reflecting the integration of Brossette in April 2012 and of Celotex in September 2012, as well as the sale of the PVC Pipe & Foundations business in May 2013 and of certain non-core businesses within Building Distribution. Like-for-like (comparable Group structure and exchange rates), sales were down 0.3%, with the 1.0% rise in sales prices virtually offsetting the 1.3% downturn in volumes.
Operating income fell 3.5%, squeezed by the negative currency impact and by tough trading in the first half, but rallied in the six months to December 31, up 9.9%. The operating margin remained stable at 6.6% of sales thanks to cost cutting measures and to the second-half improvement up to 7.1%. Excluding Building Distribution, the operating margin for the year climbed from 8.5% to 8.8%.
EBITDA (operating income + operating depreciation and amortization) was down 5.1%. The consolidated EBITDA margin came out at 10.0% of sales.
Non-operating costs totaled €492 million due to the restructuring program, especially in Flat Glass. As in 2012, non-operating costs include a €90 million accrual to the provision for asbestos-related litigation involving CertainTeed in the US.
The net balance of capital gains and losses on disposals, asset write-downs and corporate acquisition fees was a negative €381 million versus a negative €390 million in 2012. This line includes €99 million in capital gains on disposals of assets relating mainly to the PVC Pipe & Foundations business, and €476 million in asset write-downs. Most of these write-downs relate to the restructuring measures and site closures implemented in the period, especially in Flat Glass (for €143 million), and to the impairment of part of Lapeyre goodwill in the Building Distribution Sector (for €211 million). Business income is down 3.8%.
Net financial expense fell slightly to €795 million from €812 million in 2012, as the cost of gross debt decreased, to 4.4% at December 31, 2013 from 4.7% at end-2012.
Income tax expense on recurring net income came out at 32% versus 34% in 2012. Income tax rose from €443 million to €476 million, reflecting mainly the reduction in tangible asset write-downs.
Recurring net income (excluding capital gains and losses, asset write-downs and material non-recurring provisions) retreated 2.5% to €1,027 million.
Net income shed 14.1% at €595 million.
Capital expenditure was slashed by 23.6% to €1,354 million from €1,773 million in 2012, and represents 3.2% of sales, versus 4.1% of sales one year earlier.
Cash flow from operations came in at €2,537 million, down 6.7% from €2,718 million in 2012. Before the tax impact of capital gains and losses on disposals, asset write-downs and material non-recurring provisions, cash flow from operations fell 3.2% to €2,511 million.
Due to the reduction in capital expenditure:
- free cash flow (cash flow from operations less capital expenditure) was up 25.2% to €1,183 million. Before the tax impact of capital gains and losses on disposals, asset write-downs and material non-recurring provisions, it jumped 40.8% to €1,157 million, at 2.8% of sales (1.9% of sales in 2012);
- the difference between EBITDA and capital expenditure increased to €2,835 million, up 7.4% on 2012 (€2,640 million), representing 6.7% of sales (6.1% of sales in 2012).
Operating working capital requirements (WCR) continued to improve in value terms (down €97 million to €3,417 million) and remained stable in terms of number of days' sales, at a record low of 29 days. This testifies to the Group's constant efforts to maintain a tight rein on cash.
Investments in securities totaled just €100 million (€354 million in 2012), and focused on the Group's key growth drivers.
Net debt was down 11.4% year-on-year to €7.5 billion, driven chiefly by the sharp decrease in capital expenditure and financial investments over the past 12 months. Net debt represents 42% of consolidated equity, compared to 47% at December 31, 2012.
The net debt to EBITDA ratio fell to 1.80 from 1.92 at December 31, 2012.
Update on asbestos claims in the US
Some 4,500 claims were filed against CertainTeed in 2013, slightly more than in 2012 (4,000). At the same time, 4,500 claims were settled (versus 9,000 in 2012). As a result, the total number of outstanding claims at December 31, 2013 was 43,000, stable compared with end-2012.
A total of USD 88 million in indemnity payments were made in the 12 months to December 31, 2013, a rise on the USD 67 million paid out in 2012 due to certain settlements relating to 2012 that were postponed to 2013. In light of these trends and of the €90 million provision accrual in 2013, the total provision for CertainTeed's asbestos-related claims amounts to USD 561 million at December 31, 2013 compared to USD 550 million at December 31, 2012.
Dividend
At its meeting of February 19, Compagnie de Saint-Gobain's Board of Directors decided to recommend to the June 5, 2014 Shareholders' Meeting a dividend of €1.24 per share, 50% payable in cash and 50% in cash or in shares, at shareholders' discretion.
For the payment of dividends in shares, the Board will recommend that the shareholders set the issue price for the new shares by applying a 10% discount to the average opening share price during the 20 trading days preceding the June 5, 2014 Shareholders' Meeting, after having deducted the dividend amount.
The dividend represents 67% of recurring earnings per share, and a dividend yield of 3.1% based on the closing share price at December 31, 2013 (€39.975).
The ex-date, set at June 11, will be followed by an option period of 15 days, running from June 11 to June 25. Consequently, the dividend will be paid in cash or in shares on July 4, 2014.
2013-2018 strategy
The Group will continue to roll out its strategy, focusing on the three main goals defined at its Investor Meeting on November 27, 2013:
- Improving the Group's growth potential by focusing more sharply on high value-added, asset-light activities; expanding its footprint in emerging countries; and further strengthening its business portfolio, particularly through the disposal of Verallia;
- Creating a stronger presence in differentiated products and solutions, with R&D efforts focused on local projects co-developed with its customers and on the fast-growing markets of sustainable habitat and industrial applications. Marketing initiatives will also be stepped up, with an ambitious digital strategy and the development of ever stronger brands;
- Continuing to work towards management's priorities of achieving operational excellence, with an additional cost savings plan of €800 million over 2014-2015; further progress in Corporate Social Responsibility; attractive returns for shareholders; and a persistently solid financial structure.
2014 outlook
After bottoming out in first-half 2013 and rallying in the second half of the year, operating income should see a clear improvement in 2014 on a comparable structure and currency basis, even though the macroeconomic environment remains unsettled.
The Group should benefit from the ongoing recovery in the US, satisfactory growth in emerging countries, and a more stable economic environment in Europe led by growth areas (UK and Germany). Household consumption markets should hold firm.
The Group will continue to apply strict cash discipline and to maintain a strong balance sheet in 2014, along with targeting a continuing high level of free cash flow. It will:
- maintain its priority focus on increasing sales prices amid a smaller rise in raw material and energy costs;
- pursue its cost cutting measures to unlock additional savings of €450 million (calculated on the 2013 cost base);
- step up its capital expenditure to around €1,500 million, the priority being growth capex outside Western Europe (around €550 million);
- maintain its commitment to invest in R&D in order to support its differentiated, high value-added strategy;
- plan to finalize the divestment of Verallia North America in the first half.
Financial calendar
- Sales for the first quarter of 2014: April 29, 2014, after close of trading on the Paris Bourse.
- First-half 2014 results: July 30, 2014, after close of trading on the Paris Bourse.
Appendix 1: Results by business sector
and geographic area - Full Year
2012: restated
accounts
including IAS19
impact
change on
change on change on a
a
I. SALES 2012 2013 an actual comparable comparable
(in EUR (in structure
m) EUR m) structure structure and
currency
basis basis basis
by sector and
division:
Innovative
Materials (1) 9,485 9,070 -4.4% -4.5% -0.7%
Flat Glass 5,130 4,996 -2.6% -2.6% +0.8%
High-Performance
Materials 4,376 4,086 -6.6% -6.9% -2.6%
Construction
Products (1) 11,709 11,525 -1.6% -1.8% +1.9%
Interior
Solutions 5,847 5,905 +1.0% -0.2% +3.4%
Exterior
Solutions 5,915 5,678 -4.0% -3.3% +0.5%
Building
Distribution 19,233 18,773 -2.4% -2.9% -1.4%
Packaging
(Verallia) 3,792 3,616 -4.6% -4.2% -1.8%
Including VNA 1,260 1,181 -6.3% -6.3% -3.3%
Internal sales
and misc. -1,021 -959 n.m. n.m. n.m.
Group Total 43,198 42,025 -2.7% -3.0% -0.3%
(1) including
intra-sector
eliminations
by geographic
area:
France 12,044 11,743 -2.5% -3.8% -3.8%
Other Western
European
countries 18,014 17,587 -2.4% -2.6% -1.2%
North America 6,179 5,917 -4.2% -3.6% -0.3%
Emerging
countries and
Asia 8,709 8,564 -1.7% -1.1% +7.2%
Internal sales -1,748 -1,786 n.m. n.m. n.m.
Group Total 43,198 42,025 -2.7% -3.0% -0.3%
change on 2012
II. OPERATING
INCOME 2012 2013 an actual 2012 2013
Restated structure Published IAS19
(in EUR (in (in % of (in % of
m) EUR m) basis sales) sales) impact
by sector and
division:
Innovative
Materials 726 658 -9.4% 7.7% 7.3% 726
Flat Glass 104 138 +32.7% 2.0% 2.8% 104
High-Performance
Materials 622 520 -16.4% 14.2% 12.7% 622
Construction
Products 972 999 +2.8% 8.3% 8.7% 974 -2
Interior
Solutions 484 480 -0.8% 8.3% 8.1% 484
Exterior
Solutions 488 519 +6.4% 8.3% 9.1% 490 -2
Building
Distribution 762 638 -16.3% 4.0% 3.4% 761 1
Packaging
(Verallia) 414 462 +11.6% 10.9% 12.8% 414
Including VNA
(2) 132 196 +48.5% 10.5% 16.6% 132
Misc. -11 7 n.m. n.m. n.m. 6 -17
Group Total 2,863 2,764 -3.5% 6.6% 6.6% 2,881 -18
(2) after discontinuing depreciation of fixed assets as of
Januray 1st, 2013 (IFRS 5): EUR65m in 2013
by geographic
area:
France 635 582 -8.3% 5.3% 5.0% 648 -13
Other Western
European
countries 956 746 -22.0% 5.3% 4.2% 955 1
North America 680 751 +10.4% 11.0% 12.7% 683 -3
Emerging
countries and
Asia 592 685 +15.7% 6.8% 8.0% 595 -3
Group Total 2,863 2,764 -3.5% 6.6% 6.6% 2,881 -18
2012 change on 2012
III. BUSINESS
INCOME Restated 2013 an actual 2012 2013
(in EUR (in (in % of (in % of
m) EUR m) structure sales) sales) Published IAS19
basis impact
by sector and
division:
Innovative
Materials 261 249 -4.6% 2.8% 2.7% 261
Flat Glass -274 -210 -23.4% -5.3% -4.2% -274
High-Performance
Materials 535 459 -14.2% 12.2% 11.2% 535
Construction
Products 792 912 +15.2% 6.8% 7.9% 794 -2
Interior
Solutions 408 439 +7.6% 7.0% 7.4% 408
Exterior
Solutions 384 473 +23.2% 6.5% 8.3% 386 -2
Building
Distribution 614 329 -46.4% 3.2% 1.8% 613 1
Packaging
(Verallia) 387 422 +9.0% 10.2% 11.7% 387
Including VNA
(2) 131 191 +45.8% 10.4% 16.2% 131
Misc. (a) -88 -21 n.m. n.m. n.m. -71 -17
Group Total 1,966 1,891 -3.8% +4.6% +4.5% 1,984 -18
(2) after discontinuing depreciation of fixed assets as of
Januray 1st, 2013 (IFRS 5): EUR65m in 2013
by geographic
area:
France 576 294 -49.0% 4.8% 2.5% 589 -13
Other Western
European
countries 432 403 -6.7% 2.4% 2.3% 431 1
North America
(a) 521 606 +16.3% 8.4% 10.2% 524 -3
Emerging
countries and
Asia 437 588 +34.6% 5.0% 6.9% 440 -3
Group Total 1,966 1,891 -3.8% +4.6% +4.5% 1,984 -18
(a) after asbestos-related charge (before tax) of
EUR90m in 2012 and in 2013
2012 change on 2012
IV. CASH FLOW Restated 2013 an actual 2012 2013
(in EUR (in (in % of (in % of
m) EUR m) structure sales) sales) Published IAS19
basis impact
by sector and
division:
Innovative
Materials 730 580 -20.5% 7.7% 6.4% 730
Flat Glass 221 133 -39.8% 4.3% 2.7% 221
High-Performance
Materials 509 447 -12.2% 11.6% 10.9% 509
Construction
Products 638 722 +13.2% 5.4% 6.3% 641 -3
Building
Distribution 555 420 -24.3% 2.9% 2.2% 555
Packaging
(Verallia) 489 436 -10.8% 12.9% 12.1% 506 -17
Including VNA 143 116 -18.9% 11.3% 9.8% 143
Misc. (a) 306 379 n.m. n.m. n.m. 359 -53
Group Total 2,718 2,537 -6.7% +6.3% +6.0% 2,791 -73
by geographic
area:
France 378 350 -7.4% 3.1% 3.0% 387 -9
Other Western
European
countries 1,148 902 -21.4% 6.4% 5.1% 1,149 -1
North America
(a) 549 526 -4.2% 8.9% 8.9% 610 -61
Emerging
countries and
Asia 643 759 +18.0% 7.4% 8.9% 645 -2
Group Total 2,718 2,537 -6.7% +6.3% +6.0% 2,791 -73
(a) after asbestos-related charge (after tax) of
EUR55m in 2012 and in 2013
change on
V. CAPITAL
EXPENDITURE 2012 2013 an actual 2012 2013
(in EUR (in (in % of (in % of
m) EUR m) structure sales) sales)
basis
by sector and
division:
Innovative
Materials 695 412 -40.7% 7.3% 4.5%
Flat Glass 459 234 -49.0% 8.9% 4.7%
High-Performance
Materials 236 178 -24.6% 5.4% 4.4%
Construction
Products 535 433 -19.1% 4.6% 3.8%
Interior
Solutions 339 246 -27.4% 5.8% 4.2%
Exterior
Solutions 196 187 -4.6% 3.3% 3.3%
Building
Distribution 233 205 -12.0% 1.2% 1.1%
Packaging
(Verallia) 282 270 -4.3% 7.4% 7.5%
Including VNA 83 81 -2.4% 6.6% 6.9%
Misc. 28 34 n.m. n.m. n.m.
Group Total 1,773 1,354 -23.6% +4.1% +3.2%
by geographic
area:
France 300 252 -16.0% 2.5% 2.1%
Other Western
European
countries 435 373 -14.3% 2.4% 2.1%
North America 314 245 -22.0% 5.1% 4.1%
Emerging
countries and
Asia 724 484 -33.1% 8.3% 5.7%
Group Total 1,773 1,354 -23.6% +4.1% +3.2%
VI. EBITDA 2012 change on 2012
Restated 2013 an actual 2012 2013
(in EUR (in (in % of (in % of
m) EUR m) structure sales) sales) Published IAS19
basis impact
by sector and
division:
Innovative
Materials 1,226 1,129 -7.9% 12.9% 12.4% 1,226
Flat Glass 437 454 +3.9% 8.5% 9.1% 437
High-Performance
Materials 789 675 -14.4% 18.0% 16.5% 789
Construction
Products 1,479 1,487 +0.5% 12.6% 12.9% 1,481 -2
Interior
Solutions 805 793 -1.5% 13.8% 13.4% 805
Exterior
Solutions 674 694 +3.0% 11.4% 12.2% 676 -2
Building
Distribution 1,036 899 -13.2% 5.4% 4.8% 1,035 1
Packaging
(Verallia) 657 637 -3.0% 17.3% 17.6% 657
Including VNA 203 196 -3.4% 16.1% 16.6% 203
Misc. 15 37 n.m. n.m. n.m. 32 -17
Group Total 4,413 4,189 -5.1% +10.2% +10.0% 4,431 -18
by geographic
area:
France 1,001 948 -5.3% 8.3% 8.1% 1,014 -13
Other Western
European
countries 1,501 1,241 -17.3% 8.3% 7.1% 1,500 1
North America 906 907 +0.1% 14.7% 15.3% 909 -3
Emerging
countries and
Asia 1,005 1,093 +8.8% 11.5% 12.8% 1,008 -3
Group Total 4,413 4,189 -5.1% +10.2% +10.0% 4,431 -18
Appendix 2: Results by business sector
and geographic area - Second Half
H2-2012: restated
accounts including IAS19
impact
change on change on
H2 H2 change on a a
I. SALES 2012 2013 an actual comparable comparable
(in EUR (in structure structure
m) EUR m) structure and and
currency currency
basis basis basis
by sector and
division:
Innovative
Materials (1) 4,632 4,447 -4.0% -4.1% +1.5%
Flat Glass 2,533 2,477 -2.2% -2.2% +2.8%
High-Performance
Materials 2,104 1,975 -6.1% -6.3% +0.0%
Construction
Products (1) 5,806 5,801 -0.1% +0.1% +5.6%
Interior
Solutions 3,001 3,035 +1.1% +0.4% +5.9%
Exterior
Solutions 2,831 2,796 -1.2% -0.2% +5.4%
Building
Distribution 9,777 9,674 -1.1% -0.7% +1.7%
Packaging
(Verallia) 1,883 1,803 -4.2% -4.3% -0.6%
Including VNA 626 576 -8.0% -8.1% -3.2%
Internal sales
and misc. -490 -471 n.m. n.m. n.m.
Group Total 21,608 21,254 -1.6% -1.5% +2.6%
(1) including
intra-sector
eliminations
by geographic
area:
France 5,896 5,824 -1.2% -1.2% -1.2%
Other Western
European
countries 9,113 9,110 -0.0% -0.2% +2.3%
North America 2,987 2,839 -5.0% -4.0% +1.4%
Emerging
countries and
Asia 4,446 4,382 -1.4% -1.0% +10.4%
Internal sales -834 -901 n.m. n.m. n.m.
Group Total 21,608 21,254 -1.6% -1.5% +2.6%
H2 H2 change on H2 H2 H2 2012
II. OPERATING
INCOME 2012 2013 an actual 2012 2013
(in (in % of (in % of
Restated EUR m) structure sales) sales) Published IAS19
(in EUR
m) basis impact
by sector and
division:
Innovative
Materials 318 346 +8.8% 6.9% 7.8% 318
Flat Glass 50 100 +100.0% 2.0% 4.0% 50
High-Performance
Materials 268 246 -8.2% 12.7% 12.5% 268
Construction
Products 454 514 +13.2% 7.8% 8.9% 454
Interior
Solutions 237 262 +10.5% 7.9% 8.6% 237
Exterior
Solutions 217 252 +16.1% 7.7% 9.0% 217
Building
Distribution 391 423 +8.2% 4.0% 4.4% 391
Packaging
(Verallia) 207 219 +5.8% 11.0% 12.1% 207
Including VNA
(2) 70 91 +30.0% 11.2% 15.8% 70
Misc. -1 2 n.m. n.m. n.m. -1
Group Total 1,369 1,504 +9.9% 6.3% 7.1% 1,369 0
(2) after discontinuing depreciation of fixed assets as of January
1st, 2013 (IFRS 5): EUR29m in H2-2013
by geographic
area:
France 300 290 -3.3% 5.1% 5.0% 299 1
Other Western
European
countries 421 482 +14.5% 4.6% 5.3% 421
North America 312 346 +10.9% 10.4% 12.2% 313 -1
Emerging
countries and
Asia 336 386 +14.9% 7.6% 8.8% 336
Group Total 1,369 1,504 +9.9% 6.3% 7.1% 1,369 0
H2 H2 change on H2 H2 H2 2012
III. BUSINESS
INCOME 2012 2013 an actual 2012 2013
(in (in % of (in % of
Restated EUR m) structure sales) sales) Published IAS19
(in EUR
m) basis impact
by sector and
division:
Innovative
Materials -4 151 n.m. -0.1% 3.4% -4
Flat Glass -198 -48 n.m. -7.8% -1.9% -198
High-Performance
Materials 194 199 +2.6% 9.2% 10.1% 194
Construction
Products 342 399 +16.7% 5.9% 6.9% 342
Interior
Solutions 203 246 +21.2% 6.8% 8.1% 203
Exterior
Solutions 139 153 +10.1% 4.9% 5.5% 139
Building
Distribution 338 156 -53.8% 3.5% 1.6% 338
Packaging
(Verallia) 186 201 +8.1% 9.9% 11.1% 186
Including VNA
(2) 70 87 +24.3% 11.2% 15.1% 70
Misc. (a) -31 10 n.m. n.m. n.m. -31
Group Total 831 917 +10.3% 3.8% 4.3% 831 0
(2) after discontinuing depreciation of fixed assets as of January
1st, 2013 (IFRS 5): EUR29m in H2-2013
by geographic
area:
France 261 90 -65.5% 4.4% 1.5% 260 1
Other Western
European
countries 111 298 +168.5% 1.2% 3.3% 111
North America
(a) 215 190 -11.6% 7.2% 6.7% 216 -1
Emerging
countries and
Asia 244 339 +38.9% 5.5% 7.7% 244
Group Total 831 917 +10.3% 3.8% 4.3% 831 0
(a) after asbestos-related charge (before tax) of
EUR45m in H2-2012 and in H2-2013
H2 H2 change on H2 H2 H2 2012
IV. CASH FLOW 2012 2013 an actual 2012 2013
(in (in % of (in % of
Restated EUR m) structure sales) sales) Published IAS19
(in EUR
m) basis impact
by sector and
division:
Innovative
Materials 338 319 -5.6% 7.3% 7.2% 338
Flat Glass 118 102 -13.6% 4.7% 4.1% 119
High-Performance
Materials 220 217 -1.4% 10.5% 11.0% 219
Construction
Products 263 418 +58.9% 4.5% 7.2% 264 -1
Building
Distribution 300 297 -1.0% 3.1% 3.1% 300
Packaging
(Verallia) 249 221 -11.2% 13.2% 12.3% 258 -8
Including VNA 61 54 -11.5% 9.7% 9.4% 61
Misc. (a) 148 136 n.m. n.m. n.m. 169 -21
Group Total 1,298 1,391 +7.2% 6.0% 6.5% 1,329 -30
by geographic
area:
France 169 170 +0.6% 2.9% 2.9% 168 1
Other Western
European
countries 514 544 +5.8% 5.6% 6.0% 515 -1
North America
(a) 259 270 +4.2% 8.7% 9.5% 289 -30
Emerging
countries and
Asia 356 407 +14.3% 8.0% 9.3% 357
Group Total 1,298 1,391 +7.2% 6.0% 6.5% 1,329 -30
(a) after asbestos-related charge (after tax) of
EUR28m in H2-2012 and in H2-2013
H2 H2 change on H2 H2
V. CAPITAL
EXPENDITURE 2012 2013 an actual 2012 2013
(in EUR (in (in % of (in % of
m) EUR m) structure sales) sales)
basis
by sector and
division:
Innovative
Materials 370 219 -40.8% 8.0% 4.9%
Flat Glass 214 121 -43.5% 8.4% 4.9%
High-Performance
Materials 156 98 -37.2% 7.4% 5.0%
Construction
Products 332 301 -9.3% 5.7% 5.2%
Interior
Solutions 218 165 -24.3% 7.3% 5.4%
Exterior
Solutions 114 136 +19.3% 4.0% 4.9%
Building
Distribution 136 137 +0.7% 1.4% 1.4%
Packaging
(Verallia) 166 160 -3.6% 8.8% 8.9%
Including VNA 44 38 -13.6% 7.0% 6.6%
Misc. 15 18 n.m. n.m. n.m.
Group Total 1,019 835 -18.1% 4.7% 3.9%
by geographic
area:
France 181 181 +0.0% 3.1% 3.1%
Other Western
European
countries 261 246 -5.7% 2.9% 2.7%
North America 181 132 -27.1% 6.1% 4.6%
Emerging
countries and
Asia 396 276 -30.3% 8.9% 6.3%
Group Total 1,019 835 -18.1% 4.7% 3.9%
VI. EBITDA H2 H2 change on H2 H2 H2 2012
2012 2013 an actual 2012 2013
(in (in % of (in % of
Restated EUR m) structure sales) sales) Published IAS19
(in EUR
m) basis impact
by sector and
division:
Innovative
Materials 575 577 +0.3% 12.4% 13.0% 575
Flat Glass 223 252 +13.0% 8.8% 10.2% 223
High-Performance
Materials 352 325 -7.7% 16.7% 16.5% 352
Construction
Products 706 755 +6.9% 12.2% 13.0% 706
Interior
Solutions 398 417 +4.8% 13.3% 13.7% 398
Exterior
Solutions 308 338 +9.7% 10.9% 12.1% 308
Building
Distribution 530 552 +4.2% 5.4% 5.7% 530
Packaging
(Verallia) 324 306 -5.6% 17.2% 17.0% 324
Including VNA 100 91 -9.0% 16.0% 15.8% 100
Misc. 12 16 n.m. n.m. n.m. 12
Group Total 2,147 2,206 +2.7% 9.9% 10.4% 2,147 0
by geographic
area:
France 485 475 -2.1% 8.2% 8.2% 484 1
Other Western
European
countries 695 726 +4.5% 7.6% 8.0% 695
North America 423 424 +0.2% 14.2% 14.9% 424 -1
Emerging
countries and
Asia 544 581 +6.8% 12.2% 13.3% 544
Group Total 2,147 2,206 +2.7% 9.9% 10.4% 2,147 0
Appendix 3: Sales by business sector and geographic area -
Fourth Quarter
change on
Q4 Q4 change on change on a
a
I. SALES 2012 2013 an actual comparable comparable
(in EUR (in EUR structure
m) m) structure structure and
currency
basis basis basis
by sector and division:
Innovative Materials (1) 2,303 2,205 -4.3% -4.5% +0.8%
Flat Glass 1,270 1,243 -2.1% -2.2% +2.5%
High-Performance Materials 1,036 965 -6.9% -7.3% -1.2%
Construction Products (1) 2,805 2,808 +0.1% +0.6% +5.9%
Interior Solutions 1,513 1,520 +0.5% +0.3% +5.5%
Exterior Solutions 1,306 1,302 -0.3% +0.8% +6.2%
Building Distribution 4,854 4,796 -1.2% -0.9% +1.3%
Packaging (Verallia) 937 876 -6.5% -6.5% -3.0%
Including VNA 293 261 -10.9% -10.9% -6.6%
Internal sales and misc. -242 -233 n.m. n.m. n.m.
Group Total 10,657 10,452 -1.9% -1.8% +2.1%
(1) including intra-sector
eliminations
by geographic area:
France 3,020 2,993 -0.9% -0.9% -0.9%
Other Western European
countries 4,472 4,451 -0.5% -0.5% +1.9%
North America 1,397 1,308 -6.4% -5.5% -0.5%
Emerging countries and
Asia 2,185 2,162 -1.1% -0.8% +10.3%
Internal sales -417 -462 n.m. n.m. n.m.
Group Total 10,657 10,452 -1.9% -1.8% +2.1%
Appendix 4: Consolidated balance
sheet
2012: restated accounts including
IAS19 impact
Dec 31, Dec 31,
Dec 31, 2012 2013 2012
IAS19
in EUR million Restated Published impact
Assets
Goodwill 10,936 10,413 10,936
Other intangible assets 3,196 3,131 3,196
Property, plant and equipment 13,696 12,635 13,696
Investments in associates 206 216 206
Deferred tax assets 1,247 1,125 1,236 11
Other non-current assets 359 407 359
Non-current assets 29,640 27,927 29,629 11
Inventories 6,133 5,997 6,133
Trade accounts receivable 5,017 4,882 5,017
Current tax receivable 204 238 204
Other accounts receivable 1,425 1,317 1,425
Assets held for sale -
Discontinued operations 936 974 936
Cash and cash equivalents 4,179 4,391 4,179
Current assets 17,894 17,799 17,894 0
Total assets 47,534 45,726 47,523 11
Liabilities and Shareholders'
equity
Capital stock 2,125 2,221 2,125
Additional paid-in capital and
legal reserve 5,699 6,265 5,699
Retained earnings and net income
for the year 10,313 10,661 10,334 (21)
Cumulative translation
adjustments (523) (1481) (523)
Fair value reserves (15) 7 (15)
Treasury stock (181) (147) (181)
Shareholders' equity 17,418 17,526 17,439 (21)
Minority interests 412 344 412
Total equity 17,830 17,870 17,851 (21)
Long-term debt 9,588 9,395 9,588
Provisions for pensions and other
employee benefits 3,470 2,785 3,465 5
Deferred tax liabilities 792 712 792
Provisions for other liabilities
and charges 2,197 2,189 2,171 26
Non-current liabilities 16,047 15,081 16,016 31
Current portion of long-term debt 1,732 1,721 1,732
Current portion of provisions for
other liabilities and charges 458 479 457 1
Trade accounts payable 6,143 5,928 6,143
Current tax liabilities 70 67 70
Other accounts payable 3,408 3,311 3,408
Liabilities held for sale -
Discontinued operations 497 473 497
Short-term debt and bank
overdrafts 1,349 796 1,349
Current liabilities 13,657 12,775 13,656 1
Total equity and liabilities 47,534 45,726 47,523 11
Appendix 5: Consolidated cash flow
statement
2012: restated accounts including IAS19
impact
(in EUR million) 2012 2013 2012
IAS19
Restated Published impact
Net income attributable to equity
holders of the parent 693 595 766 (73)
Minority interests in net income 30 36 30
Share in net income of associates, net
of dividents received (6) (3) (6)
Depreciation, amortization and
impairment of assets 1,988 1,897 1,988
Gains and losses on disposals of assets (60) (99) (60)
Unrealized gains and losses arising
from changes in fair value and
share-based payments (23) 34 (23)
Changes in inventories 252 (135) 252
Changes in trade accounts receivable
and payable, and other accounts
receivable and payable 429 22 429
Changes in tax receivable and payable (118) (8) (118)
Changes in deferred taxes and
provisions for other liabilities and
charges (623) (153) (696) 73
Net cash from operating activities 2,562 2,186 2,562 0
Purchases of property, plant and
equipment [ 2012: (1,773), 2013:
(1,354) ] and intangible assets (1,883) (1,456) (1,883)
Purchases of property, plant and
equipment in finance lease (18) (18) (18)
Increase (decrease) in amounts due to
suppliers of fixed assets (67) (12) (67)
Acquisitions of shares in consolidated
companies [ 2012: (338), 2013: (63) ],
net of debt acquired (366) (66) (366)
Acquisitions of other investments (15) (37) (15)
Increase in investment-related
liabilities 46 6 46
Decrease in investment-related
liabilities (8) (3) (8)
Investments (2,311) (1,586) (2,311) 0
Disposals of property, plant and
equipment and intangible assets 83 191 83
Disposals of shares in consolidated
companies, net of cash divested 98 153 98
Disposals of other investments and
other divestments 1 0 1
Divestments 182 344 182 0
Increase in loans and deposits (85) (54) (85)
Decrease in loans and deposits 58 42 58
Net cash used in investing activities /
divestments (2,156) (1,254) (2,156) 0
Issues of capital stock 127 662 127
Minority interests' share in capital
increases of subsidiaries 13 4 13
Acquisitions of minority interests 4 13 4
Changes in investment related
liabilities following the exercise of
put options of minority (69) 0 (69)
(Increase) decrease in treasury stock (162) 31 (162)
Dividends paid (646) (654) (646)
Dividends paid to minority shareholders
of consolidated subsidiaries and
increase (decrease) in dividends
payable (55) (61) (55)
Cash flows from (used in) financing
activities (788) (5) (788) 0
Increase (decrease) in net debt (382) 927 (382) 0
Net effect of exchange rate changes on
net debt (4) 48 (4)
Net effect from changes in fair value
on net debt (8) (7) (8)
Cash and cash equivalents classified as
assets held for sale (1) 1 (1)
Net debt at beginning of year (8,095) (8,490) (8,095)
Net debt at end of year (8,490) (7,521) (8,490)
Appendix 6: Debt at December 31, 2013
Amounts in EURbn Comments
Amount and structure of
net debt EURbn
At December 31, 84% of gross debt
was at fixed interest rates and the
Gross debt 11.9 average cost of gross debt was 4.4%
Cash & cash equivalents 4.4
Net debt 7.5
Breakdown of gross debt 11.9
Bond debt and perpetual Amounts and maturities
notes 9.9 below
April 2014 0.5
July 2014 0.7
September 2015 1.0
May 2016 0.7
December 2016 0.4 (GBP 0.3bn)
April 2017 1.3
June 2017 0.2
March 2018 0.1 (NOK 0.8bn)
October 2018 0.7
After 2018 4.3
Other long-term debt 0.7
Short-term debt 1.3 (excluding bonds)
Commercial paper (< 3 Maximum amount of bond
months) 0.1 issue: EUR3bn
Securitization 0.3 (USD 0.1bn + EUR 0.2bn)
Local debt and accrued Annual rollover; several hundreds
interest 0.9 of different sources of financing
Credit lines, cash & cash
equivalents 8.4
Cash and cash equivalents 4.4
Back-up credit-lines 4.0 See breakdown below
Breakdown of back-up
credit lines 4.0
All lines are confirmed and undrawn, with no Material Adverse Change
(MAC) clause
Expiry Covenants
December
Syndicated line: EUR2.5bn 2018 None
December
Syndicated line: EUR1.5bn 2018 None
Analyst/Investor relations
Gaetano Terrasini +33-1-47-62-32-52
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Sophie Chevallon +33-1-47-62-30-48
Susanne Trabitzsch +33-1-47-62-43-25
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