In this tough climate, we maintained our priority focus on sales prices in order to pass on the rise in raw material and energy costs over the full year, and also rolled out a new cost cutting program.
We expect the business trends observed in the second quarter to continue through the second half, although Asia and emerging countries should witness timid growth. Against this backdrop, in the second half of 2012 we are firmly reinforcing our new action plan: focusing on sales prices, stepping up our cost cutting program and scaling back our capital spending and financial investments compared to second-half 2011, while maintaining a tight rein on operating working capital.
Overall, in view of the deterioration in the economic climate since the beginning of 2012,we are now expecting for the year as a whole a measured rise in our sales prices, a limited decline in our volumes, and second-half operating income to be moderately down on our first-half performance. In addition, we confirm our target of maintaining high levels of free cash flow and a strong balance sheet."
1. Excluding capital gains and losses on disposals, asset write-downs and material non-recurring provisions.
2. Working Capital Requirement.
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Saint-Gobain - First-half 2012: The Group Rolls out a New Action Plan to Address the Deteriorating Economic Climate
First-half 2012highlights: - Organic growth: down 0.8% over the first half, down 2.3% in the second quarter - Sales prices: up 2.2% over the first half (up 2.6% excluding Flat Glass) - New cost cutting measures: savings of €170m in the first half; €500m in 2012; full-year impact: €750m - Sharp improvement in operating WCR[2] over 12 months: down 5.1 days, representing a gain of €340m - Free cash flow[3] after changes in operating WCR (over 12 months): up 21.0% to €1,367m - Ongoing strong balance sheet: net debt/EBITDA ratio at 2.1 and net debt/equity at 54%Pierre-André de Chalendar, Chairman and Chief Executive Officer of Saint-Gobain, commented:Besides the impact of one less working day and of very average weather conditions in Europe, trading for the Group in the second quarter was also affected by the general slowdown in the economic environment in Western Europe - which the continued upturn in US construction markets could not wholly offset.