2002 Estimated Results

Compagnie de Saint-Gobain 24 January 2003 press release ESTIMATED 2002 RESULTS . STRONG OPERATING PERFORMANCE: - Sales up 1.2% on a comparable basis - Operating income advances 0.2% on a comparable basis - Operating margin holds firm at 8.5% - Strong free cash flow, at EUR 1,263 million (excluding taxes on capital gains). . FULL-YEAR NET INCOME (excluding capital gains) remains stable at EUR 1,051 million. . NET DEBT FALLS 10% to EUR 7 billion. Excluding capital gains, 2002 net income of the Saint-Gobain Group is estimated to stand at EUR 1,051 million, dipping (0.6%) compared with 2001. Based on the 341,010,680 shares outstanding at December 31, 2002, earnings per share (EPS) excluding capital gains is estimated at EUR 3.08, only 0.6% lower than last year's figure of EUR 3.10. This performance is in line with the objective set by the Group on July 25, 2002 to achieve stable net income excluding capital gains. Excluding both capital gains and the asbestos-related charge, net income would be up 5.7%. Consolidated net income is estimated at EUR 1,039 million. This is 8.4% below the 2001 figure, due to lower capital gains recorded in 2002. Based on the 341,010,680 shares outstanding at December 31, 2002, earnings per share (EPS) contracted 8.4% to EUR 3.05 from EUR 3.33 one year earlier. Note: Within the Housing Products Sector, the Pipe Division's distribution operations have been transferred, as from January 1, 2002, to the Building Materials Distribution Division, in order to set up a European organization for sales of materials in engineering markets. This transfer does not affect overall consolidated Group income as presented below, but it does impact sales and operating income data by division presented in the Appendix. Based on the estimates presented at the Board of Directors Meeting of January 23, 2003, the Group's key consolidated data for 2002 are as follows: 2001 2002 % estimated change in EUR in EUR millions millions Net sales 30,390 30,274 -0.4% Operating income 2,681 2,581 -3.7% Dividend income 32 21 -34.4% Interest and other financial charges, net (603) (503) -16.6% Non-operating costs (122) (252*) + 106.6% Income before profit on sales of non-current assets 1,988 1,847 -7.1% and taxes Profit on sales of non-current assets, net 84 3 n.m. Provision for income tax (721) (612) -15.1% Amortization of goodwill (184) (169) -8.2% Share in net results of equity investees 7 4 -42.9% Net income before minority interests 1,174 1,073 -8.6% Minority interests (40) (34) -15% Net income 1,134 1,039* -8.4% Earnings per share (in EUR) 3.33(1) 3.05 -8.4% Net income excluding capital gains 1,057 1,051* -0.6% Earnings per share excluding capital gains (in EUR) 3.10(1) 3.08 -0.6% Cash flow from operations 2,733 2,677* -2% Cash flow excluding capital gains 2,765 2,693* -2.6% Capital expenditure 1,430 1,430 0% Investments in securities 848 783 -7.7% Net debt 7,793 7,011 -10% * of which charge for asbestos-related litigation: EUR 100 million, before tax (1) EPS for 2001 has been restated to take into account the four-for-one stock split carried out on June 27, 2002. Saint-Gobain's 2002 performance, achieved against the backdrop of a challenging economic environment, testifies to the Group's resilience and its swift reaction to changing business conditions. The Glass Sector posted the strongest like-for-like growth within the Group in 2002, driven by high sales volumes across the board. Profitability eased back slightly however, due to a contraction in sales prices in the Flat Glass and Insulation/Reinforcements divisions which could not be offset by the significant increase in earnings for Containers. Business and earnings in the High Performance Materials Sector - which slowed considerably during the first half - continued to contract in the second half of the year, albeit less significantly. Markets linked to industrial investment remain severely depressed both in Europe and the United States and the electronics market has not yet shown any tangible signs of recovery. The Housing Products Sector continued down the same growth track as in the first half, slightly outstripping average growth for the Group as a whole and boosting profitability. The Building Materials division reaped the benefits of the buoyant construction market in the United States. The Building Materials Distribution division continued to expand, fuelled by organic growth and bolt-on acquisitions, and continued to leverage synergies. Operating margin for the division surged to 4.9%, from 4.5% in 2001 (pro forma, including full-year contributions from pipe distribution operations). Full-year Pipe division sales slipped slightly however, but the division reported a strong recovery in the fourth quarter, led by the first deliveries under the Abu Dhabi contract. * * * Asbestos claims in the United States: The number of new claims filed against Certain Teed in 2002 was slightly higher than in 2001 (65,000 compared with 60,000). This increase was due to an exceptional surge in the number of claims filed in Mississippi at the end of the year following the introduction of a new law more favorable to defendants as from January 1, 2003. 44,000 claims were settled during the year, leaving approximately 105,000 outstanding claims as at December 31, 2002. At December 31, 2002 the Group's total cover for asbestos-related claims against Certain Teed amounted to EUR 426 million (USD 447 million), comprised of insurance policies and provisions, including the EUR 100 million accrual booked in 2002. This cover represents approximately 4 to 5 years of indemnity payments at the current rate. In 2003, several factors may have a positive impact on the number of new claims filed, particularly newly introduced or expected amendments to legislation in certain states. * * * Analysis of the Group's 2002 key consolidated data: Group sales dipped 0.4% in 2002. Based on a comparable Group structure, sales contracted 1.7% in euros and increased 1.2% in local currencies. This rise was mainly attributable to higher sales prices in most of the Group's divisions (up 1.1% overall). Sales volumes, which declined slightly over the first nine months of the year, were almost unchanged for the year as a whole (up 0.1% compared with 2001), thanks to a recovery in the fourth-quarter. France accounted for 30% of total sales, with other European countries contributing 41.5%, North America 21.5% and other countries 7.0%. Operating income contracted 3.7%, but rose 0.2% on a comparable structure and exchange rate basis. Operating margin was 8.5% compared with 8.8% in 2001. The change was wholly due to a sharp decrease in profitability for the High-Performance Materials Sector. The modest drop in margins for the Flat Glass and Insulation/Reinforcements divisions was more than offset by growth reported by most of the other Group divisions. Profitability increased in North America, Brazil, the United Kingdom and Spain, but lost ground in other European countries. Net interest and other financial charges fell 16.6%, mainly thanks to a reduction in both net debt and interest rates, combined with the impact of a weaker US dollar against the euro during the second half of the year. Interest expense was covered 5.1 times by operating income for the year ended December 31, 2002, compared with 4.4 times for the prior-year period. Non-operating costs stood at EUR 252 million in 2002, compared with EUR 122 million in 2001. This increase was primarily due to a EUR 100 million charge recorded for asbestos-related litigation in the United States and, to a lesser extent, to an increase in reorganization costs for the High-Performance Materials Sector. Profit on sales of non-current assets amounted to EUR 3 million. Capital gains made on the disposal of certain non-strategic Group assets were almost totally offset by capital losses and asset write-downs. Goodwill amortization dropped 8.2%, as the Group wrote off in full certain cases of badwill. Minority interests fell 15%, reflecting the purchase of minority interests in Saint-Gobain Cristaleria and several Brazilian subsidiaries in 2001 and in Lapeyre in 2002. Net income contracted 8.4% in 2002 to EUR 1,039 million. Based on the 341,010,680 shares outstanding at December 31, 2002, earnings per share (EPS) amounted to EUR 3.05, an 8.4% contraction from EUR 3.33 in 2001. In line with the commitments made by the Group, new shares issued in the course of the year (in particular those issued under the Group Savings Plan) were offset at the end of the year by the cancellation of an equivalent number of shares. Total capital stock at December 31, 2002 was therefore practically unchanged in relation to December 31, 2001 (341,034,512 shares adjusted for impact of the June 27, 2002 stock-split). Excluding profit on sales of non-current assets, net income came to EUR 1,051 million, only 0.6% lower than the EUR 1,057 million recorded in 2001. Based on the 341,010,680 shares outstanding at December 31, 2002, earnings per share excluding capital gains dipped 0.6% to EUR 3.08 compared with the 2001 figure of EUR 3.10. Cash flow from operations inched back to EUR 2,677 million, after the EUR 100 million asbestos-related litigation charge (before tax), down 2% against the previous year. Excluding the EUR 16 million in tax on profit on sales of non-current assets, cash flow from operations contracted by 2.6% to EUR 2,693 million, compared with EUR 2,765 million in 2001. Capital expenditure on plant and equipment came to EUR 1,430 million, on a par with the 2001 figure of EUR 1,430 million, and represented 4.7% of sales, as in 2001. Free cash flow (cash flow minus capital expenditure on plant and equipment) totaled EUR 1,247 million compared with EUR 1,303 million a year earlier. Excluding the EUR 16 million in tax on profit on sales of non-current assets, free cash flow stood at EUR 1,263 million, 5.4% lower than the 2001 figure of EUR 1,335 million. Investments in securities totaled EUR 783 million, including EUR 350 million for the purchase of minority interests in Lapeyre and EUR 159 million for share buybacks. Net debt (excluding financial instruments) stood at EUR 7 billion at December 31, 2002, down 10% on the prior-year figure. * * * Outlook: in 2003, barring an international economic crisis, and provided the asbestos-related charge remains on a par with the 2002 figure, the Group aims to achieve moderate growth in operating income and net income excluding capital gains. * * * Next results announcements: - Final 2002 results: Thursday March 20, 2003, after the close of the Paris Stock Exchange; - First quarter 2003 sales: Thursday, April 24, 2003, after the close of the Paris Stock Exchange January 23, 2003. Investor Relations Department Tel. : Florence TRIOU-TEIXEIRA +33 1 47 62 45 19 - mailto : florence.triou@saint-gobain.com Tel. : Alexandre ETUY +33 1 47 62 37 15 - mailto : alexandre.etuy@saint-gobain.com Tel. : Claire MOSES +33 1 47 62 32 36 - mailto : claire.moses@saint-gobain.com Fax : +33 1 47 62 50 62 Appendix: Estimated Results by Business Sector, Division and Geographic Area (in millions of euros) Estimated change on change on a change on I. SALES 2001 2002 an actual comparable a comparable structure structure structure and basis basis in euros currency basis 1degrees)By sector and division: Glass (1) 11,813 11,818 +0.0% -0.8% +2.8% Flat Glass 4,478 4,423 -1.2% -1.3% +2.3% Insulation and Reinforcements 3,274 3,329 +1.7% -0.8% +1.6% Containers 4,070 4,076 +0.1% +0.0% +4.3% High-Performance Materials (1) 4,018 3,637 -9.5% -9.4% -4.8% Ceramics and Plastics & Abrasives 4,018 3,637 -9.5% -9.4% -4.8% Housing Products (1) 14,824 15,102 +1.9% -0.3% +1.6% Building Materials 3,184 3,074 -3.5% -3.5% +1.9% Building Materials Distribution proforma - (a) 10,521 10,953 +4.1% +1.1% +1.9% Building Materials Distribution proforma - (b) 10,061 10,533 +4.7% +2.0% +2.8% Pipe proforma-(a) 1,397 1,344 -3.8% -3.8% -2.2% Pipe proforma-(b) 1,782 1,710 -4.0% -4.0% -3.9% Internal sales -265 -283 2degrees)By geographical area: France 9,095 9,439 +3.8% +2.0% +2.0% Other European Countries 12,944 13,068 +1.0% -1.3% -1.2% North America 7,180 6,785 -5.5% -4.1% +1.2% Rest of the world 2,293 2,195 -4.3% -7.1% +15.1% Internal sales -1,122 -1,213 GROUP TOTAL 30,390 30,274 -0.4% -1.7% 1.2% (1) including inter-division eliminations (a 2001 proforma including the Pipe Distribution activity in the Building Materials Distribution Division (b) 2002 proforma including the Pipe Distribution Activity in the Pipe Division Estimated II. OPERATING INCOME 2001 2002 change 1degrees)By sector and division: Glass 1,357 1,325 -2.4% Flat Glass 551 494 -10.3% Insulation and Reinforcements 402 351 -12.7% Containers 404 479 +18.6% High-Performance Materials 392 244 -37.8% Ceramics and Plastics & Abrasives 392 244 -37.8% Housing Products 915 1,005 +9.8% Building Materials 294 335 +13.9% Building Materials Distribution proforma - (a) 475 534 +12.4% Building Materials Distribution proforma - (b) 490 539 +10.0% Pipe proforma-(a) 146 135 -7.5% Pipe proforma-(b) 131 130 -0.8% 2degrees)By geographical area: France 870 840 -3.4% Other European Countries 979 922 -5.8% North America 580 587 +1.2% Rest of the world 252 232 -7.9% GROUP TOTAL 2,681 2,581 -3.7% (a 2001 proforma including the Pipe Distribution activity in the Building Materials Distribution Division (b) 2002 proforma including the Pipe Distribution Activity in the Pipe Division Estimated III. CASH FLOW 2001 2002 change 1degrees)By sector and division: Glass 1,560 1,615 +3.5% Flat Glass 613 622 +1.5% Insulation and Reinforcements 448 437 -2.5% Containers 499 556 +11.4% High-Performance Materials 330 253 -23.3% Ceramics and Plastics & Abrasives 330 253 -23.3% Housing Products 768 814 +6.0% Building Materials 297 247* -16.8% Building Materials Distribution proforma - (a) 321 414 +29.0% Building Materials Distribution proforma - (b) 339 420 +23.9% Pipe proforma-(a) 150 153 +2.0% Pipe proforma-(b) 132 147 +11.4% 2degrees)By geographical area: France 797 797 +0.0% Other European Countries 1,024 1,050 +2.5% North America 593 514 -13.3% Rest of the world 319 316 -0.9% GROUP TOTAL 2,733 2,677 -2.0% (a 2001 proforma including the Pipe Distribution activity in the Building Materials Distribution Division (b) 2002 proforma including the Pipe Distribution Activity in the Pipe Division * after the asbestos-related litigation charge of EUR 100 m before tax Estimated IV. CAPITAL EXPENDITURE 2001 2002 change ON PLANT AND EQUIPMENT 1degrees)By sector and division: Glass 827 868 +5.0% Flat Glass 361 375 +3.9% Insulation and Reinforcements 229 200 -12.7% Containers 237 293 +23.6% High-Performance Materials 173 160 -7.5% Ceramics and Plastics & Abrasives 173 159 -7.5% Housing Products 429 401 -6.5% Building Materials 134 135 +0.7% Building Materials Distribution proforma - (a) 252 227 -9.9% Building Materials Distribution proforma - (b) 247 224 -9.3% Pipe proforma-(a) 43 39 -9.3% Pipe proforma-(b) 48 42 -12.5% 2degrees)By geographical area: France 368 310 -15.8% Other European Countries 534 575 +7.7% North America 316 316 +0.0% Rest of the world 212 229 +8.0% GROUP TOTAL 1,430 1,430 +0.0% (a 2001 proforma including the Pipe Distribution activity in the Building Materials Distribution Division (b) 2002 proforma including the Pipe Distribution Activity in the Pipe Division This information is provided by RNS The company news service from the London Stock Exchange

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