Net income before profits and losses on sales of non-current assets came to EUR 471 million, down 8.5% on the year-earlier period. The decline was attributable to unfavorable exchange rates (US Dollar: -19%; Brazilian Real: -39%;, British Pound: -9%) which significantly impacted the Group's main income statement captions. At constant exchange rates*, net income was on a par with first-half 2002.
Like-for-like consolidated sales - based on a comparable Group structure and at constant exchange rates - rose 2.0% compared with first-half 2002. Changes in exchange rates negatively impacted all Group divisions (see appendix 1). However, all three sectors reported increased like-for-like sales, spurred mainly by higher sales prices.
The Glass Sector achieved moderate organic growth, with like-for-like sales up 1.6%. However, operating margin dipped slightly, to 10.2% from 10.6%. This was due to lower margins in the Containers division, caused by soaring energy costs in the United States, as well as in the Insulation and Reinforcements divisions as a result of renewed pricing pressure. The Flat Glass division, for its part, turned in the best operating income performance within the Group on a like-for-like basis. These good results were primarily attributable to strong sales in emerging markets as well as in the European automobile market, offsetting the ongoing erosion of demand from the European construction industry.
The High Performance Materials Sector posted a solid improvement in operating margin, to 9% from 7.2%, on the back of a modest 1.1% increase in like-for-like sales. This was achieved primarily thanks to the cost-cutting measures implemented in 2001 and 2002. Sales growth was held back by the persistently depressed conditions in manufacturing industry on both sides of the Atlantic, which have prevented any real recovery in corporate capital spending.
The Housing Products Sector was the star performer in terms of organic growth. The 2.7% rise in like-for-like sales was attributable to the 12.9% surge in Pipe sales, spurred by major distant export contracts. However, the sector's operating margin dipped slightly, to 6.0% from 6.7%, due to sharply higher raw materials costs for the Building Materials division in the United States. The Building Materials Distribution division continued to gain ground in its main markets, through a combination of organic and external growth, and also posted a further improvement in profitability despite the persistently dismal conditions in Germany.
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