Saint Gobain : Half-Year Financial Report 2021 - PDF

Half-year financial report 2021

Including:

• Half-yearmanagement Report 2021
• Condensed consolidated Financial Statements as of June 30, 2021
• Statutory Auditors' review report on the 2021 half-year financial information
• Statement by the persons responsible for the 2021 interim financial report

Compagnie de Saint-Gobain

Tour Saint-Gobain • 12, place de l'Iris • 92400 Courbevoie ∙ France ∙ Tél. [phone] ∙ www.saint-gobain.com S.A. with a share capital of € 2,130,231,228 ∙ 542 039 532 R.C.S. Nanterre ∙ Siret 542 039 532 000 40 - APE 7010 Z

PRESS RELEASE

Paris, July 29, 2021, 6:00pm

First-half 2021 results

New records for all performance indicators

• +11.9% in organic growth versus first-half 2019 and +27.4% versus first-half 2020:

1. +7.6% in volumes versus first-half 2019: strong momentum on underlying markets and

market share gains

• 1. +4.3% in prices versus first-half 2019 (+3.9% versus first-half 2020), an acceleration in a far more inflationary environment
• +53% in like-for-like operating income versus first-half2019, to €2,376 million
• 10.7% operating margin in first-half 2021 versus 7.6% in first-half2019
• Successful conclusion of "Transform & Grow", with objectives significantly exceeded: 10.4% operating margin on a rolling 12-month basis
• +34% in EBITDA versus first-half 2019 to €3,248 million, and EBITDA margin at 14.7%
• +60% in recurring net income versus first-half2019 to €1,506 million
• +47% in free cash flow versus first-half 2020 to €2,461 million with a conversion ratio of 84%

2021 operating income target raised:

record figure for the full year

Enhanced growth and profitability profile

as a leading player in light and sustainable construction

Benoit Bazin, Chief Executive Officer of Saint-Gobain, commented:

"These first-half 2021 record results surpass even our second-half 2020 performance. This success reflects the profound positive changes in our organization from "Transform & Grow" - streamlined, agile and closely aligned with its customers - thanks to our extremely committed teams who have stepped up to the challenge across the globe in this unprecedented period. It also reflects structural changes in our markets, which should show an acceleration in growth over the coming years. With divestitures of €5.3 billion in sales either closed or signed since the end of 2018, the Group continues to optimize its profile. Saint-Gobain is now on a new growth and profitability trajectory and is affirming its position as a leading player in decarbonization solutions for construction and industry, thanks to its comprehensive range of integrated and light solutions providing customers with sustainability and performance.

Against this supportive backdrop, we are targeting a very strong increase in operating income over full-year 2021 to a new all-time high, and for second-half 2021 we are confident in the Group's ability to deliver like-for-like operating income close to the previous record of second-half 2020."

Group operating performance

First-half consolidated sales were up 11.9% on first-half2019 on a like-for-likebasis (up 9.0% in the first quarter and 14.7% in the second). This acceleration in organic growth was supported by the Group's comprehensive range of solutions for sustainability and performance. It reflects market share gains and very good momentum across our segments, particularly renovation in Europe, and construction in the Americas and in Asia-Pacific. Overall, our main industrial markets continued their sequential improvement, excluding the automotive market in Europe.

Group volumes were up by 7.6% on first-half 2019 and the price increase accelerated to 4.3% (3.9% versus first-half 2020, of which 2.6% in the first quarter and 5.1% in the second) amid increased energy and raw material cost inflation.

On a reported basis, sales totaled €22,131 million, up 24.6% year-on-year and up 2.1% on first- half 2019. The 2.6% negative currency effect compared to first-half 2020 mainly reflects the depreciation of the US dollar, Brazilian real and other emerging country currencies.

Changes in Group structure had a negative 0.2% impact compared to first-half 2020, due to the ongoing optimization of the Group's profile, with total divestitures of €5.3 billion in sales either closed or signed since the end of 2018. The sale of the Pipe business in China was finalized on July 28, while closing of the transaction relating to the sale of Saint-Gobain's Distribution activities in the Netherlands is expected to occur on July 30, 2021.

In terms of acquisitions, the Group has integrated several companies on targeted fast-growingmarkets such as Brüggemann in turnkey modular timber construction solutions in Germany and Strikolith in exterior insulation systems in the Netherlands. Over the first six months of 2021, Continental Building Products (plasterboard in the US) generated USD 289 million in sales and USD 82 million in EBITDA (versus USD 50 million in first-half 2020), representing an EBITDA margin of 28.4% (20.8% in first-half 2020). Synergies exceeded USD 20 million in the first half of 2021.

Note that in light of the hyperinflationary environment in Argentina, this country which represents less than 1% of the Group's consolidated sales, is excluded from the like-for-like analysis.

Consolidated operating income hit a new record in first-half2021, at €2,376 million (after €2,028 million in second-half 2020), a like-for-like rise of 53% on first-half 2019.

The Group's operating margin hit another all-timehigh of 10.7% in first-half2021 (after a record 10.0% in second-half 2020), compared to 7.6% in first-half 2019.

Over the past 12 months, the Group's operating margin was 10.4% (versus 7.7% in 2018), significantly exceeding the objectives set out in "Transform & Grow", and benefiting from:

• A structural improvement linked to the success of "Transform & Grow", with a 60 bps increase thanks to €250 million in recurring and structural savings in the context of the new organization, and an additional 60 bps increase linked to the successful optimization of the Group's profile;
• A structurally improved volume dynamic with a very good leverage effect, adding around 60 bps to the margin, thanks in particular to increased demand on the renovation market post-pandemic,which the Group has been able to take full advantage of thanks to its new organization close to customers in each country or market;
• One-offor temporary impacts adding around 90 bps to the margin: generation of a positive price-cost spread of around €235 million (€110 million in second-half 2020 and €125 million in first-half 2021), a low level of overhead costs thanks to reduced discretionary spending, and post-coronaviruscatch-up effects.

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Operating performance by segment (like-for-likesales)

High Performance Solutions (HPS): slight growth in sales versus first-half 2019 and sequential margin improvement

HPS sales were up by 2.0% on first-half 2019, benefiting from the improvement in our main industrial markets excluding European automotive. The operating margin was 13.5% versus 13.0% in first-half 2019 and 14.4% in first-half 2018, continuing its sequential improvement after 11.1% in second-half 2020.

• The Mobility business saw strong sales growth against a prior-year comparison basis affected by automotive manufacturing plant shutdowns. However, sales remained around 3% down on the first half of 2019, owing to the contraction in the European market, while sales to the Americas and China were up sharply. Supply chain tensions related to the shortage of semi- conductors weighed on trading in the second quarter to some extent. Mobility continued to outperform the automotive market in the period, thanks to its increasing exposure to electric vehicles and to high value-added products.
• Businesses serving Industry also rebounded strongly against a weak first-half 2020 comparison basis and were up slightly on first-half 2019. Surface finishing solutions were notably driven by Do-It-Yourself (DIY) markets. Activities related to our customers' investment cycles continued to report a sequential improvement, but remained down on first-half 2019.
• Businesses serving the Construction Industry, little affected by the pandemic in first-half 2020, continued to deliver double-digit growth and to benefit from gains in market share and upbeat trends in textile solutions for external thermal insulation systems (ETICS).
• Life Sciences, which was up in first-half 2020, enjoyed double-digit growth with good momentum in the pharmaceutical and medical sector, buoyed by its recent capacity investments.

Northern Europe: growth in sales driven by renovation and a good margin level

Sales in Northern Europe progressed by 9.9% compared to first-half 2019 in a Region in which the UK was the only country to have been severely impacted by the coronavirus pandemic in first-half 2020. All countries in the Region reported growth, due in particular to households reallocating savings towards renovation spending. The operating margin for the Region came in at 7.9% versus 6.0% in first-half 2019, buoyed by good volume trends, an optimized business profile, structural cost reductions and post-coronavirus adaptation measures.

Nordic countries, which were up in first-half 2020, continued to deliver solid growth, particularly thanks to the success of our omnichannel digital strategy in a supportive renovation market. Germany enjoyed stronger momentum on dynamic construction markets, and notably in modular timber construction, other light and sustainable construction, and related construction chemicals applications. The UK saw an acceleration in growth in the period compared to first-half 2019, led by double-digit growth in the second quarter in sales to trade professionals via Distribution, which benefited from the network optimization carried out in 2019 and 2020. Eastern Europe reported robust growth.

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Southern Europe - Middle East & Africa: strong sales momentum in the renovation market and record margin

Sales for the Southern Europe - Middle East & Africa Region enjoyed strong momentum, up 13.1% on first-half 2019, reflecting the Group's outperformance on flourishing renovation markets and households prioritizing spending on renovation. The operating margin for the Region came in at a record 9.1% (a clear sequential increase after 8.0% in second-half 2020), up from 5.0% in first-half 2019, thanks to the very good volume dynamic in the renovation market, productivity gains from our teams, and the impact of divestments and structural cost reductions.

France's compelling performance drove the Region's growth, with market share gains and robust demand for renovation work which benefited the Group's energy efficiency solutions both manufactured and sold on a large scale thanks to the unrivalled presence of Saint-Gobain's Distribution network, our digital services for trade professionals and our intermediation platform for end-customers. The full impact of France's household stimulus package MaPrimeRénov' for home renovation contributed to the good overall dynamic, with more than 380,000 projects submitted in the first half. In terms of renovation of public buildings, the first effects of the stimulus plan should begin to be felt in late 2021 or early 2022. Spain advanced, particularly in light construction solutions and construction chemicals, despite the closure of a flat glass manufacturing plant in 2020 as part of the optimization of our industrial footprint. Italy continued to benefit from support for energy-efficient renovation in the form of tax credits, which helped accelerate growth. Benelux, which was relatively unaffected by the lockdown measures in first-half 2020, was also up. The acquisition of Strikolith in the Netherlands has enhanced the Group's offering in the fast-growing exterior insulation systems market. Middle East and African countries progressed very strongly.

Americas: sharp growth in sales and record margin

After delivering an already strong performance with 15.7% growth in the second half of 2020, sales for the Americas were up 25.2% on first-half 2019 in very dynamic markets. The first-half performance also benefited from double-digit price increases. The operating margin for the Region came in at a record 17.0% versus 9.0% in first-half 2019, mainly supported by double-digit growth in volumes and by a clear positive raw material and energy price-cost spread.

• North America progressed by 19.9% versus first-half 2019, driven by particularly strong demand in single-family homes, and by the acceleration in the price increase - in both interior and exterior solutions - in a far more inflationary environment. Sales synergies are bearing fruit and accelerating sales growth. Our extremely agile local organization enabled us to overcome strong tensions on supply chains, leading all businesses to report a clear increase in sales. Light construction continued to deliver an excellent performance, thanks particularly to the successful integration of Continental Building Products.
• Latin America achieved further vigorous growth in terms of both volumes and prices, enabling it to manage inflation. Despite a challenging health situation for part of the first half, especially in Brazil, the Region reported impressive growth of 37.1% compared to first-half 2019, driven by façade solutions, construction chemicals applications and interior solutions. Thanks to the local organization and an approach in which the Group's full range of solutions can be offered to customers, Latin America continues to see sales synergies and market share gains.

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