sain t-gobain annu al report 2008 annual report

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holders of the parent contracted 7.3% to €1,378 million, while earnings per share were down 9.3% at €3.60 versus €3.97. Capital expenditure was scaled back 5.5% over the year to €2,149 million, representing 4.9% of sales versus 5.2% in 2007. Second-half expenditure was down 12% compared with the same period of the previous year. Most of the capital projects concerned energy-saving products developed by the Innovative Materials - Flat Glass and Construction Products businesses and targeted expansion projects in emerging markets, such as the new float line in Egypt. Cash flow from operations (excluding the increase in the provision for fines in the Flat Glass Division) contracted 6.3% to €3,524 million. Before the tax impact of capital gains and losses and asset impairment charges, the figure came to €3,487 million, down 6.1% from €3,712 million in 2007. Free cash flow – corresponding to cash flow from operations less net capital expenditure – amounted to €1,375 million, a decline of 7.7% year-on-year. Before the tax impact of capital gains and losses and asset impairment charges, free cash flow was down 7% to €1,338 million, representing 3.1% of net sales. Financial investments totaled €2,358 million, including €1,528 million for the Maxit acquisition completed in March 2008 and €635 million for acquisitions of local merchants by the Building Distribution Sector. Expenditure was scaled back in the second half to €180 million from €652 million in the first, excluding the Maxit acquisition. At December 31, 2008, the Group had total debt of €11,679 million, representing a gearing ratio of 80% versus 65% at the previous year-end. Capital Expenditure and Financial Investments 26 Capital expenditure (excluding finance leases) (in € millions) 2008 2007 2006 By division and business Innovative Materials - Flat Glass 576 523 448 Innovative Materials - High-Performance Materials 223 238 225 Ceramics & Plastics and Abrasives 200 192 161 Reinforcements 23 46 64 Construction Products 758 830 844 Interior Solutions 528 621 632 Insulation 223 199 145 Gypsum 305 422 487 Exterior Solutions 230 209 212 Exterior Fittings and Industrial Mortars 151 133 142 Pipe 79 76 70 Building Distribution 291 353 315 Packaging 283 309 335 Other 18 20 24 Group Total 2,149 2,273 2,191 By geographical segment France 554 536 485 Other Western European countries 682 698 749 North America 220 368 363 Emerging countries and Asia 693 671 594 Group Total 2,149 2,273 2,191 Saint-Gobain - 2008 Annual Report Financial investments (in € millions) Investment Estimated full-year net sales 2008 acquisitions Innovative Materials - Flat Glass 23 17 Innovative Materials - High-Performance Materials 47 25 Construction Products 1,591 1,322 of which Maxit 1,528 1,237 Building Distribution 635 1,111 Packaging 62 63 Holding companies TOTAL acquisitions 2,358 2,538 of which in emerging countries 229 2007 acquisitions Innovative Materials - Flat Glass 19 16 Innovative Materials - High-Performance Materials 70 45 Construction Products 226 332 Building Distribution 582 1,304 Packaging 18 - Holding companies 50 - TOTAL acquisitions 965 1,697 of which in emerging countries 139 132 2006 acquisitions Innovative Materials - Flat Glass 14 - Innovative Materials - High-Performance Materials 6 4 Construction Products 142 222 Building Distribution 355 630 Packaging 67 15 TOTAL acquisitions 584 871 of which in emerging countries 208 238
Results by Sector The Innovative Materials Sector Innovative Materials sales grew 1.3% like-for-like over the year despite a 7.8% fall in the fourth quarter triggered by the sharp contraction in the automobile market and the worsening global economic environment. The Sector’s operating margin improved to 12.9% in 2008 from 12.6% the previous year. Innovative Materials Sector - Flat Glass Contribution to the Group 2008 2007 2006 % of net sales 13 13 12 % of operating income 19 17 13 % of cash flow from operations 21 18 16 Key figures (in € millions) 2008 2007 2006 Net sales 5 549 5 611 5 083 Operating income 701 717 480 Cash flow from operations 733 677 529 Capital expenditure (1) 576 523 448 2008 business review Flat Glass sales in 2008 totaled €5.5 billion, down 1.1% on a reported basis from 2007 but up 1% like-for-like, reflecting the euro’s appreciation against other currencies. Sales of float glass rose 1.3% like-for-like. Unit sales to the construction industry in Europe contracted slightly year-on-year, undermined by a sharp drop in the fourth quarter, and prices also softened. However, the impact on income was partly offset by good growth in value-added products, led by an 8.3% increase in layered glass sales. Outside Europe, unit sales rose in Latin America – led by Brazil – and in Asia, although demand weakened at the end of the year. Sales by Les Vitrages de Saint-Gobain in the building transformation and specialty markets were slightly above 2007 levels. Trends were uneven, with falls in Spain, the United Kingdom and Poland contrasting with resilient performances in France, Germany and most other European countries. The product mix continued to be enhanced, with the development of layered glass products and specialty products such as safety glass. Sekurit’s sales declined 4.1% on a reported basis and 3.3% like-for-like, due to sustained first-half growth in the automobile market giving way to a sharp dive in the last quarter. Europe was particularly badly hit, with automobile production plunging 26% compared with the same period of 2007. The other car-producing countries also experienced downturns, but to varying extents, with falls of 14% in China, 25% in Brazil and 14% in South Korea. Flat Glass operating income held relatively firm at just over €701 million. Improved manufacturing performance helped to limit the consequences of low volumes and the cost inflation experienced in the first half, while the restructuring measures undertaken in 2007, particularly in South Korea and China, drove a marked improvement in the region’s results. Operations in India continued to grow at a satisfactory rate. Outlook for 2009 After the downturn observed in the automobile and habitat and construction markets in the second half of last year, the economic environment looks set to remain difficult in 2009. However, the easing of inflationary pressures on feedstock and energy costs should help to preserve margins. Priority has been given to swiftly aligning production capacity with market demand and speeding up implementation of programs to cut production costs and overheads. In order to maintain the level of free cash-flow, routine capital expenditure will be scaled back, without however compromising future growth drivers such as solar energy solutions and intelligent glass. Despite the slowdown observed in some countries such as Spain, the solar market will play a key role in leading the development of the Flat Glass business. Research and Development spending will remain high, to ensure that the Flat Glass Division remains at the forefront of innovation, particularly in solar energy solutions and in energy-saving solutions for the homebuilding and renovation market and the automobile market. Innovative Materials Sector – High-Performance Materials Contribution to the Group 2008 2007 2006 % of net sales 10 11 12 % of operating income 15 14 13 % of cash flow from operations 12 13 13 Key figures (in € millions) 2008 2007 2006 Net sales 4 165 4 752 4 938 Operating income 543 585 500 Cash flow from operations 437 487 432 Capital expenditure (1) 223 238 225 MANAGEMENT REPORT 27 (1) Excluding finance leases. Sales data by Sector include inter-sector sales. Saint-Gobain - 2008 Annual Report
Page 1 and 2: 2008 annual report
Page 3 and 4: Contents 05 • Strategy and busine
Page 5 and 6: 3 STRATEGY AND BUSINESSES Jean-Loui
Page 7 and 8: Strategy and Businesses of Saint-Go
Page 9 and 10: Responding to recession by demonstr
Page 11 and 12: The High-Performance Materials Divi
Page 13 and 14: High-Performance Materials Business
Page 15 and 16: Insulation products are made from m
Page 17 and 18: Construction Products Businesses an
Page 19 and 20: Finland, Estonia, Lithuania and Pol
Page 21 and 22: ecovered glass can be recycled inde
Page 23: The “Germ-free Surfaces” progra
Page 26 and 27: 24 2008 results dampened by the fin
Page 30 and 31: 28 2008 business review 2008 sales
Page 32 and 33: 30 The Division also continued to e
Page 34 and 35: 32 In the Nordic countries, Dahl de
Page 36 and 37: Sustainable development 34 Sustaina
Page 38 and 39: Environment Challenges Action taken
Page 40 and 41: 38 I. Products and services contrib
Page 42 and 43: 40 Sun Saint-Gobain is a major supp
Page 44 and 45: 42 a British trade association that
Page 46 and 47: 44 Mobilizing resources to deploy t
Page 48 and 49: 46 EHS auditors are drawn from a po
Page 50 and 51: 48 Lastly, we make every effort to
Page 52 and 53: To help them to implement the plan,
Page 54 and 55: 52 Wood dust is primarily an issue
Page 56 and 57: 54 BRØDRENE DAHL’S PROGRAM FOR R
Page 58 and 59: 56 2008-2010 OBJECTIVE Saint-Gobain
Page 60 and 61: 58 warehouses and other similar spa
Page 62 and 63: product developed in 2006 by Lapeyr
Page 64 and 65: 62 Internships during a student’s
Page 66 and 67: 64 Geographical and job mobility is
Page 68 and 69: 66 SAINT-GOBAIN AND THE BROAD-BASED
Page 70 and 71: 68 Honest, open, high quality socia
Page 72 and 73: 70 Construction Products The Constr
Page 74 and 75: 72 IV. Values supporting responsibl
Page 76 and 77: 74 INTERNATIONAL CORPORATE FOUNDATI
Page 78 and 79:
76 In countries facing certain soci
Page 80 and 81:
78 for example, 91% of the Group’
Page 82 and 83:
ENVIRONMENTAL INDICATORS 2007 2008
Page 84 and 85:
Trading volume since September 2007
Page 86 and 87:
Trading volume since September 2007
Page 88 and 89:
Changes in capital over the last fi
Page 90 and 91:
88 The decision to grant stock opti
Page 92 and 93:
Information Policy and 2009 Financi
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92 Yuko HARAYAMA Professor at Tohok
Page 96 and 97:
Other directorships and positions h
Page 98 and 99:
96 Director’s name and current ma
Page 100 and 101:
98 • Committees of the Board. Thr
Page 102 and 103:
100 The Committee’s remit, as def
Page 104 and 105:
• The Annual General Meeting of J
Page 106 and 107:
4. Stock options granted to the Cha
Page 108 and 109:
106 Management compensation In Grou
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Fees paid by the Group to the Audit
Page 112 and 113:
110 Related party agreements Relate
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112 The audits are based on a 20-st
Page 116 and 117:
114 being applied. The TAS framewor
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Statutory Auditors’ report Prepar
Page 120 and 121:
Commitment concerning the payment o
Page 122 and 123:
120 Restructuring risks The Group h
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122 • Volumes are not material, o
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124 or any specific illness or phys
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The level of coverage is considered
Page 130 and 131:
Consolidated balance sheet at 31 De
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Consolidated income statement (in
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Statement of recognized income and
Page 136 and 137:
Notes to the consolidated financial
Page 138 and 139:
136 Non-current assets held for sal
Page 140 and 141:
138 asset’s fair value less costs
Page 142 and 143:
140 Fair value of financial instrum
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142 Other business income and expen
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2006 In 2005, the Group acquired th
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NOTE 4 Other intangible assets Pate
Page 150 and 151:
NOTE 6 Investments in associates (i
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150 NOTE 8 Inventories Dec. 31, Dec
Page 154 and 155:
Movements relating to stock options
Page 156 and 157:
The plan costs are calculated under
Page 158 and 159:
The following tables show the funde
Page 160 and 161:
Actuarial assumptions used to measu
Page 162 and 163:
The effective tax rate paid by the
Page 164 and 165:
Provisions for claims and litigatio
Page 166 and 167:
isks is hedged wherever possible wi
Page 168 and 169:
Bond issues On June 13, 2008, Saint
Page 170 and 171:
NOTE 19 Financial instruments Deriv
Page 172 and 173:
NOTE 21 Business income by expense
Page 174 and 175:
The weighted average number of shar
Page 176 and 177:
174 In addition, as of December 31,
Page 178 and 179:
NOTE 28 Related-party transactions
Page 180 and 181:
Innovative Construction Building Pa
Page 182 and 183:
Information by geographic area Fran
Page 184 and 185:
182 Principal fully consolidated co
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II - Justification of our assessmen
Page 188 and 189:
Income statement at December, 31 (i
Page 190 and 191:
Balance sheet at December, 31 ASSET
Page 192 and 193:
Cash flow statement (in € thousan
Page 194 and 195:
Risk management/Financial instrumen
Page 196 and 197:
NOTE 5 Intangible assets Intangible
Page 198 and 199:
Changes in Compagnie de Saint-Gobai
Page 200 and 201:
Grant stock options exercisable for
Page 202 and 203:
9.4 Compagnie de Saint-Gobain Group
Page 204 and 205:
NOTE 12 Debt and payables Total deb
Page 206 and 207:
12.1 Perpetual bonds In 1985, Compa
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NOTE 14 Investment portfolio Countr
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COMPANIES Capital Reserves % Book v
Page 212 and 213:
NOTE 18 Fees paid to the Statutory
Page 214 and 215:
Asbestos-related litigation in Braz
Page 216 and 217:
Statutory Auditors’ report on the
Page 218 and 219:
Main subsidiaries by country and de
Page 220 and 221:
Saint-Gobain Vetrotex Deutschland G
Page 222 and 223:
Saint-Gobain Construction Products
Page 224 and 225:
Saint-Gobain Building Distribution
Page 226 and 227:
Subsidiaries: Saint-Gobain Technica
Page 228 and 229:
CHINA €1 = CNY 10.227 Saint-Gobai
Page 230 and 231:
Table of concordance 1 Person respo
Page 232 and 233:
COMPAGNIE DE SAINT-GOBAIN France He
Page 234 and 235:
Notes 232 Saint-Gobain - Financial
Page 236:
Saint-Gobain photo library ; p1 ©
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