Saint-Gobain: Strong Upswing in First-Half 2006 Results

Overall, the Group's five business sectors saw a rise in like-for-like sales (constant Group structure and exchange rates) over first-half 2006 (see appendix 1).

Most businesses reported a solid increase in sales volumes as well as a significant rise in sales prices, enabling them to pass on the higher costs of energy and certain raw materials at Group level. On a like-for-like basis, first-half sales climbed 6.3% (including a +3.0% price impact and a 3.3% volume effect). Business trends observed in the first quarter - which were boosted by a higher number of working days than first-quarter 2005 - sustained their momentum over the three months to June 30, 2006 (based on a constant number of working days). The Group's growth continued to be driven by businesses serving the construction markets (in particular the Construction Products and Building Distribution sectors), while businesses related to industrial markets held firm.

The Group's ongoing expansion in Asia and emerging countries continues to bolster performance, posting like-for-like growth of 10.9% in first-half

Building Distribution delivered a sharp 14.1% increase in underlying sales, fuelled by both the first-half contribution of acquisitions carried out in 2005 (particularly Optimera and Sanitas-Troesch) and by the strong 5.4% organic growth reported by the sector's main banners, namely in France and Scandinavia. The UK businesses posted moderate growth, while the German market showed the first signs of an upturn in the second quarter. The sector's operating margin continued on an upward trend, at 5.0% compared with 4.9% in the year-earlier period.

High-Performance Materials posted a 3.4% rise in like-for-like sales, reflecting strong sales volumes. Ceramics & Plastics and Abrasives delivered a further improvement in profitability, which climbed to 13.8% against 13.4% in the first six months of 2005. However, the Reinforcements division saw its operating margin narrow due to a further decrease in sales prices, as well as rising energy, raw materials and freight costs.

Operating margin for the sector as a whole slipped to 10.8% versus 11.2% in first-half 2005.

Flat Glass sales advanced 4.2% like-for-like, on the back of robust growth in sales volumes, in particular on the construction markets. The hike in the cost of energy and certain raw materials dented profitability, however, and was not, on average, fully passed on to sales prices over first-half 2006. Sales prices rose mainly in the second quarter and the full benefits of this will therefore be felt in the second half of the year, which will also be boosted by a more favorable comparison basis.

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600450 Saint-Gobain: Strong Upswing in First-Half 2006 Results

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