Saint-Gobain: First-Half 2005 Results

The contribution of the Group's acquisitions to the growth figure, net of disposals, amounted to EUR848 million during the period, accounting for a rise of 5.4% in net sales. Like-for-like growth (constant structure and exchange rates) for the period was 2.0%, with 4.1% growth in the second quarter. Consolidated net income for first-half 2005 advanced 13.9% over the year-earlier period, at EUR632 million. Excluding capital gains, consolidated net income climbed 10.9% to EUR642 million, fueled mainly by the improvement in business income.

- Performances of the Group's business sectors:

Overall, despite a difficult first quarter, the Group's five sectors saw a rise in like-for-like sales over first-half 2005, with most businesses reporting a significant rise in sales prices and, in the second quarter, robust organic growth. Like-for-like second-quarter sales were up 4.1%, on the back of a 0.7% dip in the first quarter. Like-for-like sales for the Group's Flat Glass and Building Distribution Sectors - hard hit by the severe late-winter weather in the first quarter - rebounded strongly in the second quarter. Overall, the Group's first-half sales advanced 2.0% on a like-for-like basis (including a +2.4% price impact and a -0.4% volume effect).

Operating income for the Group gained 4.6%, driven by a further improvement in the Building Distribution and High-Performance Materials Sectors.

On an actual structure and exchange rate basis, the Building Distribution Sector reported a strong 13.7% rise in sales, thanks to the first-half contribution of its recent acquisitions, particularly Dahl (consolidated as from May 1, 2004) and Sanitas-Troesch (consolidated as from March 1, 2005). A strong upswing in the second quarter of the year (up 5.0% like-for-like), after a slow first quarter due to bad weather conditions, fueled a 2.3% rise in sales. French and Scandinavian markets were the main growth drivers, while Germany and, to a lesser extent, the UK, remained on a downward trend. Operating margin for the Building Distribution Sector continued to improve, coming in at 4.9% compared with 4.8% for the same period in 2004.

The High-Performance Materials Sector reported a 1.4% increase in sales on a comparable structure and exchange rate basis, with growth in volumes and sales prices in the Ceramics & Abrasives Division partially dampened by the drop in sales volumes reported by the Reinforcements Division. The profitability of the High-Performance Materials Sector has further advanced, with operating margin accounting for 11.2% of sales, compared with 10.4% for H1 2004.

First-half sales for the Flat Glass Sector inched up slightly on a constant structure and exchange rate basis, thanks to the upturn in the second quarter. However, increased start-up costs due to the fast expansion of the Flat Glass Sector in emerging countries and Asia in particular, dented profitability.

The Packaging Sector reported a slight rise in like-for-like sales, with price rises across the sector offsetting the contraction in sales volumes in the United States and in Germany, while the European wine market is stabilizing. However, the profitability of the Group's Packaging business was trimmed by rising energy costs, particularly in the US.

The Construction Products (CP) Sector posted the Group's strongest organic growth, up 3.9% despite the 3.9% drop in like-for-like sales for the Pipe Division following the last delivery under the Abu Dhabi contract at the end of first-quarter 2004. Higher prices across the Pipe business helped to offset the impact of spiraling raw materials costs on the division's operating income. Building Materials and Insulation Divisions posted organic growth of more than 6.0%, as benefits from a buoyant US and European (excluding Germany) construction market continued to filter through. Operating margin for these divisions also advanced, fuelling the improvement in operating margin for the sector as a whole.

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