Saint-Gobain

17,1% Saint-Gobain
Habitat, construction, design, manufacturing and distribution of building materials

SAINT-GOBAIN IS BUILDINGOUR FUTURE

SAINT-GOBAIN IN BRIEF

Why did we invest in Saint-Gobain?

Saint-Gobain focuses on the housing market and aims to be the world leader through high-performance solutions and materials that meet the industrial challenges of tomorrow. As the European or global leader in all its activities, with very strong local positions, Saint-Gobain boasts a strong capacity for innovation in developing high-value building materials. The Group bases its development on three pillars: building products, innovative materials and specialized distribution. Each of these segments has specific growth drivers with their common denominators being energy efficiency and expansion in emerging markets.

What were the highlights of 2010?

Saint-Gobain’s consolidated sales for 2010 came in at €40,119 million, versus €37,786 million for 2009, representing a 6.2% rise on a reported basis and 1.9% like-for-like. Second-half performance, based on a constant number of working days, confirmed the upswing in sales volumes observed in the second quarter. The upward trend in prices, which also began in the second quarter, continued, reflecting the price increases implemented in all of Saint-Gobain’s sectors and divisions over the past few months. Saint-Gobain continued to pursue its action plan priorities in 2010, amid a broadly improving but still fragile economic climate with persistently strong disparities from one country to the next. The Innovative Materials business sector delivered the group’s best organic growth performance, surging 12.3% from 2009. In general, the sector continued to benefit from robust momentum in emerging market countries and Asia, where 37.6% of the year’s sales were made, and vigorous trading in industrial markets in both North America and Western Europe. Like-for-like sales for Construction Products remained stable over the year as a whole and in the second half, with improved second-half trading conditions in Western and Eastern Europe offset by the fall in sales in the United States (due to inventory run-downs by distributors in the third quarter). However, Construction Products sales improved further in the fourth quarter (up 3.7%) across all regions,
and particularly Eastern Europe. Building Distribution saw a 1.5% decline in year-on-year trading, but got back on the growth track in the second half of 2010 (up 1.0%). This upbeat trend was chiefly fueled by a gradual recovery in Germany, the UK and Scandinavia as from March. Packaging continued to report robust trading conditions and virtually stable earnings. Volumes and prices maintained their healthy 2009 levels. Operating income also rose sharply to €3,117 million, a margin of 7.8% versus 5.9% in 2009.This marked improvement in profitability enabled the group to generate free cash flow(1) of €1.5 billion, despite the increase in its capital expenditure.

What is the outlook for development?

2010 saw the Group emerge from the downturn and gradually return to growth. Overall in 2011, the Group expects more upbeat trading conditions in its main markets. However, trends will continue to vary widely from one region to the next. The Group’s targets for 2011 are:
- robust organic growth, with a bullish first quarter thanks chiefly to very weak comparative figures;
- double-digit growth in operating income (at constant exchange rates(2)), despite the rise in energy and raw material costs;
- free cash flow of €1.3 billion, after the €500 million increase in capex;
- a persistently solid financial structure.
Leveraging its very robust financial structure and significantly leaner cost base, the group intends to pursue a profitable growth and expansion strategy over the next few years, with the aim of becoming the reference in Sustainable Habitat. By 2015, the group expects sales to reach €55 billion and anticipates operating income of €5.5 billion.

(1) Excluding the tax effect of capital gains and losses on disposals, asset write-downs and material non-recurring provisions.
(2) Based on average exchange rates for 2010.

WENDEL’S INVOLVEMENT