Saint Gobain : H1-2020 Results Presentation

H1 2020 RESULTS AND OUTLOOK

01 HIGHLIGHTS

02 CRISIS MANAGEMENT

1. H1 2020 RESULTS
2. OUTLOOK

2	H1 2020 RESULTS PRESENTATION

Sales	Actual	Like-for-like
€17.8bn	-18.1%	-12.3%

Operating income

€827m

Actual Like-for-like

-49.5%-49.2%

Operating margin: 4.7%, -290bps

EBITDA

€1,635m

EBITDA margin: 9.2%, -200bps

Recurring net income

€272m

EPS: €0.51, -70.7%

Net debt

€9,841m

Actual

-32.4%

-71.2%

2.4x

EBITDA

3 /	H1 2020 RESULTS PRESENTATION

First-half sales down 12.3% like-for-like

Operating income of €827m, down 49.2% like-for-like, resulting in a decline in the operating margin from 7.6% to 4.7%

Growth in like-for-like sales and operating income in June

Agility in managing the crisis thanks to the new "Transform & Grow" organization Clear-cutaction on costs with savings of €395 million in the first half

Sharp 143% rise in free cash flow generation with a conversion ratio of 129%

Disposal of Sika shares for €2.4bn, generating a cash gain of €1.5bn

Sharp reduction in net debt, to €9.8bn at end-June 2020 from €12.8bn at end-June 2019

4 /	H1 2020 RESULTS PRESENTATION

01 HIGHLIGHTS

02 CRISIS MANAGEMENT

1. H1 2020 RESULTS
2. OUTLOOK

5	H1 2020 RESULTS PRESENTATION

1	2	3		4
	Preserve			Make the
Protect the health	liquidity		Accelerate
	most of
of our teams	and financial		cost savings
	the recovery
	strength

6	H1 2020 RESULTS PRESENTATION

to manage the crisis according to local health environment

to share best practices and mutualize needs

at the heart of the recovery

Proactive and highly committed teams

7	H1 2020 RESULTS PRESENTATION

Secure liquidity

• Daily tracking of cash flows
• Optimized working capital
• Selective reduction in investments

Strengthen our balance sheet

• €1.5bn bond issued March 26, in addition to a new syndicated credit line arranged on March 23
• Disposal of Sika stake: €2.4bn
• Sharp decrease in net debt: -€3bn

A stronger financial position

8	H1 2020 RESULTS PRESENTATION

Additional adaptation savings	T&G Savings
€200m in full-year 2021	€250m achieved one year earlier

		€160m
•	Reduction in discretionary			• €80m at end-June 2020
	spending: €65m			• 2020 target raised to €130m
•	Net impact of partial
65
	unemployment: €95m				+€250m
•	Additional savings:				€130m
	€200m in full-year savings by 2021,			€120m
	of which €50m in H2 2020				50
			€50m
	Discretionary savings	95		85
	Partial unemployment savings				H2
	net of additional costs
		50		80
	Post-coronavirus savings
				H1
				35
		H1-2020	H2-2020	2019	2020

Agile response to the crisis

9	H1 2020 RESULTS PRESENTATION

Divestments	Acquisitions
	Integration of Continental Building Products
	•	Management and teams successfully integrated
	•	Synergies revised upwards for 2020 (>US$ 15m)
	•	Value creation confirmed in Year 3 despite the coronavirus impact
		in Q2 2020

Sales (US$m)

• Gradual re-start of divestment processes put on hold during the crisis

505

240

2019 2020*

EBITDA incl. synergies (US$m and %)

>110

125

25%

50

21%

2019 2020*

* 2020 estimated over 12 months (consolidated over 11 months as from February).

10	H1 2020 RESULTS PRESENTATION

By accelerating on digital

• Acceleration in omnichannel sales
• Thousands of customers joining our webinars

By optimizing customer service

	Outperformance vs market
+10%	Example of 3 distribution brands
in France*

+5%

+0%

Jan. Feb. March April May June

• Agile service and inventory management to aid a dynamic recovery
• Launch of innovative products

By preserving skills

• Continuity of local customer relations
• Industrial excellence throughout the recovery

>100% activity in June

Growth in sales and operating income**

* Growth outperforming the market (12 rolling months)

11

** Like-for-like

H1 2020 RESULTS PRESENTATION

01 HIGHLIGHTS

02 CRISIS MANAGEMENT

03 H1 2020 RESULTS

1. GROUP
2. SEGMENTS

04 OUTLOOK

12	H1 2020 RESULTS PRESENTATION

-1.3%

-12.3%

like-for-like

+0.4%

Group -18.1%

actual

Exchange rates: depreciation of Nordic krona, Brazilian real and other emerging

-4.5%

21,677	-12.7%		17,764
41 761						(€m)
(€m)

country currencies

Structure: divestments in the context of "Transform & Grow" and acquisition of Continental Building Products

H1-2019 sales Exchange	Structure	Price	Volumes H1-2020 sales
rates

13 /	H1 2020 RESULTS PRESENTATION

		+3.7%
+0.6%	+0.2%	+3.3%

+0.4%

-5.5%

-4.9%

-19.4%

-19.2%

Q1-2020/	Q2-2020/	June-2020/
Q1-2019	Q2-2019	June-2019

Prices Volumes

Volumes affected by the coronavirus pandemic, with very different situations from one country and market to the next

Clear improvement in June, up 3.7%,

benefiting from a positive calendar effect of two days at Group level

Prices held firm in a slightly deflationary environment

14 /	H1 2020 RESULTS PRESENTATION

1,638

-49.5%

actual

827

Margin held firm for 75% of consolidated sales

Positive price/cost spread: ~+€50m

Reduction in discretionary spending and partial employment measures: ~+€160m

Net recurring cost savings from "Transform & Grow": ~+€80m

~+€155m operational excellence savings to offset wage inflation

7.6%4.7%

H1-2019H1-2020

and other fixed costs

15 /	H1 2020 RESULTS PRESENTATION

	H1-2019	H1-2020		H1-2020/
€m		H1-2019
Operating income		827		-49.5%
1,638
Non-operating costs	(168)	(142)
Disposal gains (losses)	(16)	(22)
Asset write-downs and other	(201)	(712)
Business income (loss)	1,253	(49)

			%
Operating income		827		-49.5%
1,638
Operating depreciation and amortization	947	950
Non-operating costs	(168)	(142)
EBITDA	2,417	1,635		-32.4%
EBITDA margin (as a % of sales)	11.2%	9.2%		-2.0 pts

16 /	H1 2020 RESULTS PRESENTATION

	H1-2019	H1-2020	H1-2020/
€m	H1-2019
Business income (loss)		(49)
1,253
Net financial expense	(250)	(234)
Average cost of gross debt (at June 30)	2.2%	2.0%
Sika dividends	28	34
Income tax	(318)	(183)
Net attributable income (loss)	689	(434)
Recurring net income	944	272	-71.2%
Recurring EPS (€)	1.74	0.51	-70.7%

17 /	H1 2020 RESULTS PRESENTATION

	1,678	+143%
1,299
(234)	+1,088
	(183)
	(292)
	FCF conversion: 129%

2020	Finance costs	Tax	Capital expenditure	Change in WCR	Free cash flow
EBITDA*	excl. Sika		excl. additional	over a 12-month
	dividends		capacity**	period
H1 2019: €2,077m		FCF conversion: 33%			€690m

• EBITDA less depreciation of right-of-use assets: €1,635m - €336m = €1,299m (versus €2,077m in H1 2019)

• Capital expenditure = €447m, including €155m in additional capacity investments linked to organic growth

18 /	H1 2020 RESULTS PRESENTATION

			18.5	18.2
	18.7	18.4
						12.8
Net debt	9.8									9.8
Shareholders' equity
			6.7

	06-2019	06-2020	06-2019	06-2020
	Before IFRS 16**		After IFRS 16
Net debt/shareholders' equity		36%		69%		54%
52%
Net debt / EBITDA*	2.4	2.0		2.6		2.4

• EBITDA over a 12-month period ** Before IFRS 16: estimates

19 /	H1 2020 RESULTS PRESENTATION

01 HIGHLIGHTS

02 CRISIS MANAGEMENT

03 H1 2020 RESULTS

1. GROUP
2. SEGMENTS

04 OUTLOOK

20	H1 2020 RESULTS PRESENTATION

		Sales (€m)			Operating income (€m)
						and margin (%)
				-18.0%
				like-for-like
					-19.7%
			+0.5%	actual
	-1.1%	-0.6%				502
							231
	o/w*:			-18.5%
3,862					3,102	13.0%	7.4%
	Mobility (6%):		-26.8%
	Other industries (11%):	-12.0%
H1-2019	Exchange	Structure	Price	Volumes	H1-2020	H1-2019	H1-2020
sales	rates				sales

21

* Sales by segment: as a % of Group total and like-for-like growth

H1 2020 RESULTS PRESENTATION

Sales (€m)

Operating income (€m)

and margin (%)

			-8.2%
			like-for-like
				-21.2%	460
	-1.6%			actual
		+0.0%
	-11.4%					256
7,726			-8.2%	6,090	6.0%	4.2%
o/w*:
	Nordics (15%):		+3.6%
	UK (9%):		-27.6%
	Germany (4%):		-5.8%
H1-2019 Exchange Structure	Price	Volumes	H1-2020	H1-2019	H1-2020
sales	rates			sales

22

* Sales by country: as a % of Group total and like-for-like growth

H1 2020 RESULTS PRESENTATION

Sales (€m)

			-16.0%
			like-for-like	-19.2%
				actual
		+0.9%
	-0.1%
	-3.1%
7,011	o/w*:		-16.9%	5,668
	France (23%):		-16.5%
	Spain-Italy (4%):		-18.8%
H1-2019 Exchange Structure	Price	Volumes	H1-2020
sales	rates			sales

Operating income (€m)

and margin (%)

350
	99
5.0%	1.7%
H1-2019	H1-2020

23

* Sales by country: as a % of Group total and like-for-like growth

H1 2020 RESULTS PRESENTATION

		Sales (€m)			Operating income (€m)
						and margin (%)
				-6.5%
				like-for-like
					-3.7%
					actual
		+6.4%
			-0.2%			250
							190
	-3.6%			-6.3%
2,774	o/w*:				2,670	9.0%	7.1%
	North America (11%):	-5.5%
	Latin America (4%):	-8.7%
H1-2019	Exchange	Structure	Price	Volumes	H1-2020	H1-2019	H1-2020
sales	rates				sales

24

* Sales by sub-region: as a % of Group total and like-for-like growth

H1 2020 RESULTS PRESENTATION

		Sales (€m)			Operating income (€m)
						and margin (%)
				-17.5%
				like-for-like
	-0.3%				-26.8%
				actual
						85
		-9.0%	-1.3%
							46
				-16.2%
895					655	9.5%	7.0%
H1-2019	Exchange	Structure	Price	Volumes	H1-2020	H1-2019	H1-2020
sales	rates				sales

25	H1 2020 RESULTS PRESENTATION

01 HIGHLIGHTS

02 CRISIS MANAGEMENT

1. H1 2020 RESULTS
2. OUTLOOK

26	H1 2020 RESULTS PRESENTATION

In a macroeconomic and health environment which remains affected by

uncertainties, our earnings growth in June and outlook for the third quarter suggest that our operating income for second-half 2020 will improve significantly on first-half 2020

27	H1 2020 RESULTS PRESENTATION

POST-PANDEMIC WORLD

More local

More digital

-40%	58%
think that
decline in FDI*	construction will
	be more digital**

• Foreign Direct Investments in 2020. Source: UNCTAD, June 2020
• % of European building material manufacturers. Source: The impact of COVID-19 on Construction, USP

H1 2020 RESULTS PRESENTATION

28

More sustainable

30%

of the EU Recovery Plan dedicated to climate action

NET-ZERO CARBON

BY 2050

90% of new managers trained	TRAR* of 2.2 en 2019	-14.5% CO2 emissions in 2019
to "Adhere, Comply and Act"		(vs 2010)**

	24.2% women executives worldwide	8.5m tons of natural
	79% employees		raw materials avoided
	trained in 2019
29	* Total Recordable Accident Rate	H1 2020 RESULTS PRESENTATION	** At iso-production
(employees, temporary workers and permanent subcontractors)

Sales contributing directly or indirectly to lower CO2 emissions

Sales for the renovation

market*

Growth in

electric vehicle mobility**

+20% energy efficiency	-40% CO2 emissions
+10% thermal insulation	thanks to energy savings
+10% solar gain

30% heating savings	Thermally insulating glazing
Gain of up to 3 energy classes	for greater autonomy of electric vehicles
No interior surface lost	+30km autonomy

	* Estimation
30	** In 2019	H1 2020 RESULTS PRESENTATION

18 jobs	€600bn	72%	€185bn
created for every €1m invested	spent annually in the EU	Share of buildings in Europe	Annual investment needs
in energy-efficient renovation	on renovation	to be renovated by 2050	in energy-efficient renovation
	(excluding UK)
Source: BPIE	Source: Euroconstruct, Oxford	Source: internal estimate	Source: European Commission, June 2020
	Economics, EECFA, internal estimate

Energy-efficient renovation:

Job creation, economic recovery and sustainability

31	H1 2020 RESULTS PRESENTATION

Energy-efficient renovation

of a single-family house in France

Advantages*

1

2

1

2

3

4

3

54

5

Mechanical ventilation

Glass wool

External thermal insulation composite systems (ETICS)

Double-glazed windows

Heat pump Thermodynamic boiler Water radiators with thermostatic valves

€2,600

yearly energy expense

Class G

EPA1

Class D

GHG2

1 Energy performance analysis

2 Greenhouse gas emissions

-88 % €320

+4	Class C
classes

+3	Class A
classes

100% solutions manufactured or distributed by Saint-Gobain

* Calculations for a single-family house built between 1948 and 1974 based on the French report to the European Commission:

"Reports on the long-term strategy for France to mobilize investment in the renovation of private and public residential and commercial buildings in the national building stock"

32	H1 2020 RESULTS PRESENTATION

Ensure the health and safety of all in a health environment which remains uncertain

Continue to implement adaptation measures and generate robust free cash flow

Constant focus on the price-cost spread

Acceleration in cost savings: "Transform & Grow" and additional adaptation measures in the context of the pandemic Decrease in capital expenditure of more than €500m in 2020 versus 2019

Maintain a strong balance sheet and reach by the end of 2020 the medium-term objective of a reduction in the number of shares outstanding to 530 million, from 542 million at

December 31, 2019

Leverage opportunities offered by stimulus plans

The Group is ideally positioned on energy-efficient renovation markets

Comprehensive portfolio of innovative solutions to reduce the energy consumption of buildings

33	PRÉSENTATION DES RÉSULTATS - S1 2020

H1 2020 RESULTS AND OUTLOOK

This presentation contains forward-looking statements with respect to Saint-Gobain's financial condition, results, business, strategy, plans and outlook. Forward-looking statements are generally identified by the use of the words "expect", "anticipate", "believe", "intend", "estimate", "plan" and similar expressions. Although Saint-Gobain believes that the expectations reflected in such forward-looking statements are based on reasonable assumptions as at the time of publishing this document, investors are cautioned that these statements are not guarantees of its future performance. Actual results may differ materially from the forward-looking statements as a result of a number of known and unknown risks, uncertainties and other factors, many of which are difficult to predict and are generally beyond the control of Saint-Gobain, including but not limited to the risks described in Saint-Gobain's registration document available on its website (www.saint-gobain.com) and the main risks and uncertainties for the second-half 2020, presented within the half-year 2020 financial report. Accordingly, readers of this document are cautioned against relying on these forward-looking statements. These forward-looking statements are made as of the date of this document. Saint-Gobain disclaims any intention or obligation to complete, update or revise these forward-looking statements, whether as a result of new information, future events or otherwise. This presentation does not constitute any offer to purchase or exchange, nor any solicitation of an offer to sell or exchange securities of Saint-Gobain. No representation or warranty, express or implied, is made by Saint-Gobain or its managers, corporate officers, employees, contractors, representatives or advisors as to the accuracy or completeness of the information or opinions contained in this presentation.

35 /	H1 2020 RESULTS PRESENTATION

Breakdown of H1 2020

Operating income

Asia-Pacific

6%

HPS

Americas28%

23%

Southern	12%
Europe - ME	31%
& Africa

Northern

Europe

Industrial assets at June 30, 2020

Asia-Pacific

	7%	HPS
	21%
Americas
16%

	30%	26%
Southern Europe -	Northern
	Europe
ME & Africa

36 /	H1 2020 RESULTS PRESENTATION

Breakdown of H1 2020 Sales

North America

16%	25%	France

Asia &	19%
emerging
countries

40%

Other

Western Europe

37 /

+€130m€250m

€135m

€115m20

€120m

3030

€85m

50

50

€35m

3535

H1-2019

H2-2019

H1-2020

H2-2020

38 /

		Sales (€m)			Operating income (€m)
						and margin (%)
				-11.4%
				like-for-like
					-23.0%
					actual
	-1.1%					349
			+0.8%
		-10.5%
							137
9,817				-12.2%	7,558	3.6%	1.8%
H1-2019	Exchange	Structure	Price	Volumes	H1-2020	H1-2019	H1-2020
sales	rates				sales

39	H1 2020 RESULTS PRESENTATION

NEW RESIDENTIAL	1%	7%	7%	5%	2%
CONSTRUCTION
22%
NEW NON-RESIDENTIAL	1%	5%	3%	1%	1%
CONSTRUCTION
11%
RENOVATION / INFRAST.	1%	21%	21%	9%	1%
53%**
MOBILITY	6%
6%
OTHER INDUSTRIES	8%
8%
	HPS	NORTHERN	SOUTHERN	AMERICAS	ASIA-PACIFIC
* Saint-Gobain estimated end markets	17%	EUROPE	EUROPE -	15%	4%
	33%	ME & AFRICA
** Renovation: 47%
Infrastructure: 6%			31%
40 /		H1 2020 RESULTS PRESENTATION