COD Compagnie De Saint-gobain

The worldwide leader

in light & sustainable construction

2024 ANNUAL RESULTS

Record operating margin and free cash flow

·    Sales growth in H2 2024, with a sequential improvement in organic growth

·    Record operating margin (11.4%), free cash flow (€4.0bn) and recurring EPS, despite a difficult environment in new construction in Europe

·    More than 2/3 of pro forma operating income now generated in high-growth geographies: North America, Asia and emerging countries

·    4 strategic acquisitions finalized over the past 12 months for €5bn: CSR, Bailey, OVNIVER (Cemix brand) and FOSROC

·    Strong value creation for shareholders: total shareholder return (TSR) of 32% in 2024. Dividend of €2.20 (up 5%) recommended for 2024. Share buyback program completed one year earlier than expected, with a new €400m target set for 2025

·    2025 outlook: the Group expects an operating margin of more than 11.0%

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

"Our 2024 results once again demonstrate the success of Saint-Gobain's new profile, with the Group delivering a very strong operating performance despite a mixed macroeconomic environment. The roll-out of our comprehensive range of sustainable and innovative solutions for our customers along with our local performance-driven organization have enabled us to report new record results. Over the past 12 months, Saint-Gobain also completed four landmark acquisitions, which are perfectly aligned with our strategy of worldwide leadership in light and sustainable construction and located in regions with strong structural growth: CSR in Australia, Bailey in Canada and, in construction chemicals, Cemix in Mexico and FOSROC in India and the Middle East. I'm once again extremely grateful for the dedication and talent shown by all our teams, who are key to our success.

I am confident that 2025 will be another successful year for Saint-Gobain, thanks to a good dynamic in most of our regions, a gradual recovery in Western Europe, and the integration of our recent acquisitions. In this context, the Group is expecting an operating margin of more than 11.0% in 2025, above the initial objective of its strategic plan.

After the success of the "Grow & Impact" plan, we will share the Group's new ambitions at our Investor Day on October 6, reflecting the continuation of our strategy of worldwide leadership in light and sustainable construction along with our growth and outperformance plan."

Successful strategic execution

Strong financial performance

·    All of the Group's financial objectives set out in the "Grow & Impact" plan in 2021 have been achieved, setting the Group on a financial trajectory marked by growth in earnings, cash flow and value creation. On average over the four-year period 2021-2024, the Group delivered organic growth of 3.9%¹, operating margin of 10.8%, a free cash flow conversion ratio of 59% and ROCE of 15.4%.

Attractive profitable growth profile

·    An acceleration in the Group's geographic development in regions with strong profitable growth: North America (34%) and Asia and emerging countries (34%) now account for 68% of operating income (pro forma for recent changes in Group structure) and Western Europe 32%;

·    Creation of a worldwide leader in construction chemicals, with €6.5 billion in annual sales (pro forma for recent changes in Group structure): the acquisitions of Cemix and FOSROC reinforce Saint-Gobain's presence in high-growth emerging countries, particularly Mexico, India and the Middle East, and perfectly complement the geographical positions and technologies of Weber, Chryso and GCP;

·    A local organization: 90% of CEOs are native to their country, resulting in close proximity to customers, good pricing power, efficiency gains, high accountability and a capacity to adapt quickly to ever-changing environments across the globe;

·    Around 40% of Group sales rotated since 2018: €9.6 billion in sales have been divested (EBITDA margin of less than 5%) and €6.8 billion in sales acquired (EBITDA margin of around 20%);

·    Smooth integration of recent acquisitions, with synergies confirmed: Chryso and GCP reported an EBITDA margin of 20%, up 140 basis points in 2024 (following a rise of more than 400 basis points in 2023); CSR, an EBITDA margin of 18.1% on a full-year basis (consolidated as of July 9, 2024); and recent Canadian acquisitions, an EBITDA margin of 19% on a full-year basis for Bailey (consolidated as of June 3, 2024), Building Products of Canada (2023) and Kaycan (2022);

·    Strongly value-creating shareholder return policy: total shareholder return of 156% over a four-year period, with €5.6 billion returned to shareholders through share buybacks and dividends. With €2 billion worth of shares bought back since 2021, the Group has completed its five-year program (2021-2025) one year earlier than expected, and is announcing a new €400 million target for 2025.

Differentiated offer of sustainable solutions: a competitive advantage

·    Sustainable solutions offer: almost 3/4 of sales, based on differentiated and innovative systems for faster and higher-quality construction, reinforcing the Group's mix along with its ability to capture a larger part of the value chain:

o  Oraé^® (low-carbon glass in Europe and India), Gyproc SoundBloc Infinaé 100 (the Group's first plasterboard made from 100% recycled gypsum, in the UK), ClimateFlex^® (a roofing technology offering enhanced resistance to extreme weather events), Lanaé^® (a glass wool designed from c.50% recycled glass and a biosourced binder), Enaé^® (a new range of mortars with a low carbon footprint), EnveoVent (high-performance façade systems), and EnviroMix^®C-Clay (a range of admixtures developed by Chryso enabling the reduction of cement's carbon footprint by up to 40% with the use of calcined clay);

o 

·    Environmental performance supporting the Group's range of sustainable solutions and aligned with the Group's objectives:

o  34% pro forma reduction in scope 1 & 2 CO₂ emissions (to 8.9 million tonnes¹) compared with 2017, with CSR and Bailey consolidated on a full-year basis;

o  67% of electricity from carbon-free sources, versus 57% in 2023. Four major new power purchase agreements signed in 2024 (France, Italy and Romania).

Combining growth with responsibility

·    Outstanding employee engagement, with all indicators up since 2019: 89% of the Group's employees took part in the me@Saint-Gobain annual survey, with an engagement rate of 84% and with 89% of employees proud to work for Saint-Gobain (versus a benchmark average of 75%);

·    Solid safety performance: the Group's accident frequency rate with and without lost time (TRAR at 1.4) has been halved over the last seven years;

·    Thought leadership in accelerating the transition to more sustainable construction: as part of the "Sustainable Construction Observatory" launched by Saint-Gobain in 2023, "Sustainable Construction Talks" were held in New York during the Climate Week, in Brussels, and at the World Economic Forum in Davos, to highlight the construction industry's role in the achievement of sustainable development goals and to present climate change adaptation solutions.

Group operating performance

Sales were robust, at €46.6 billion as reported, down 2.2% at constant exchange rates over the year, with a return to growth in the second half, supported by acquisitions and the sequential improvement in organic growth. The currency effect was a negative 0.7% on sales for the year, and a negative 1.1% in the second half.

Changes in Group structure had a positive 1.4% impact on sales in the year and a positive 3.9% impact in the second half, benefiting mainly from recent acquisitions in Asia-Pacific (CSR in Australia), North America (Bailey and Building Products of Canada) and construction chemicals, even before the integration of Cemix (mid-January 2025) and FOSROC (during February 2025). The optimization of the Group's profile also continued with the effect of divestments, particularly in distribution (UK), pipe with the sale of the drainage business for buildings (PAM Building), glass processing activities, foam insulation (UK) and railing and decking (US).

On a like-for-like basis, sales were down 3.6% over the year, with as expected a clear sequential improvement between the first half (down 4.9%) and the second (down 2.3%). Activity remained stable or increased in the second half in all segments excluding Europe, where new construction markets remained difficult, notably in France.

Group prices were down 0.6% over the year and down 0.3% in the second half, generating a positive price-cost spread over the year and a slightly positive spread in the second half, thanks to disciplined execution and the reduction in certain raw material and energy costs in 2024. Volumes were down 3.0% over the year, with a sequential improvement between the first half (down 3.9%) and the second (down 2.0%), in line with the Group's expectations for the year.

Operating income was €5,304 million, representing a new record high at constant exchange rates (2023 exchange rates). The operating margin also hit a new all-time high of 11.4% in 2024 (versus 11.0% in 2023). Despite a difficult environment in Europe, all segments reported either an increasing or stable operating margin, reflecting the strength of the Group's strategic positioning and its very good operating performance.

Segment performance (like-for-like sales)

Europe: sequential improvement in sales and margin growth

Sales in Europe were down 6.3% over the year but improved significantly between the first half (down 7.9%) and the second (down 4.5%) with new construction markets strongly down, while renovation (around 60% of sales) was more resilient. Despite the decrease in volumes, the operating margin increased slightly to a new record-high of 8.4%, thanks to an optimized business profile, proactive productivity measures, a well-managed price-cost spread, a positive mix and growth in specified sales.

-  Northern Europe was down 4.9% over the year, with a clear sequential improvement between the first half (down 7.1%) and the second (down 2.5%), confirming that the Region has already hit a low point. Volumes were positive in all of our main countries in the fourth quarter, except in Nordic countries, which continued to suffer from the significant decline in new construction. In the UK, volumes returned to growth, driven by the comprehensive range of solutions and systems. Germany reported a second consecutive quarter of volume growth, despite an uncertain macroeconomic situation. Eastern Europe saw good momentum in volumes throughout the year.

-  Southern Europe, Middle East & Africa contracted 7.3% over the year, with a slight sequential improvement between the first half (down 8.6%) and the second (down 5.9%). All countries appear to have already hit a low point, including France in fourth-quarter 2024 amid political uncertainty. Saint-Gobain continued to outperform significantly in France thanks to its strong exposure to renovation and its comprehensive range of innovative solutions, with the new construction market remaining significantly down. Thanks to its specified sales offer adapted to each market segment, Saint-Gobain Solutions France was able to win several major tenders in the education, health and commercial sectors. France's leading indicators were also encouraging in terms of lending activity and the increase in the number of transactions for existing properties. Spain and Italy delivered solid growth with market share gains, along with the Middle East and Africa which reported double-digit growth thanks to the success of recent acquisitions and investments.

Americas: sales growth and record margin

The Region delivered 1.1% organic growth in 2024 (1.0% in the second half), driven by the good level of activity in North America and by the expected improvement in Latin America quarter after quarter. Operating income hit a new record high (€1.8 billion), along with the operating margin at 18.0% (versus 16.8% in 2023), supported by rigorous pricing and cost management as well as an upturn in activity in the second half in Latin America.

-  North America was up by 1.9% over the year (virtually stable in the second half), driven by prices and resilient volumes in the renovation market, while new construction stabilized at a good level. The Group benefited from the recent integration of its Canadian acquisitions (Kaycan, Building Products of Canada and Bailey), and from its comprehensive range of light construction solutions with high value-add for customers. Given the saturation of its production facilities, the Group has launched additional capacity to meet the needs of a structurally growing market, requiring a catch-up in residential construction. This new capacity for plasterboard, roofing and glass mat underlayment should come on stream from mid-2025.

-  Latin America contracted slightly, down 1.4% over the year thanks to the recovery in the second half (up 4.9%), driven by Brazil which benefited from market share gains in light construction, namely façade and plasterboard with a third production line opened in the first half. The other countries in the Region benefited from the enhanced offering and mix, especially Mexico. The acquisition of Cemix, completed on January 15, 2025, will strengthen Saint-Gobain's construction chemicals presence in the fast-growing markets of Mexico and Central America.

Asia-Pacific: sales growth and margin remaining at a record high

The Region delivered 0.6% organic growth in 2024, driven by good momentum in India, despite the downturn in China. The operating margin remained at a record high of 12.6%, supported by volumes, as well as good pricing and cost management.

India saw further market share gains, with significant volume growth of approximately 10%, benefiting from the strength of the Saint-Gobain brand in the country and from its comprehensive and innovative range of sustainable solutions, allowing the Group to outperform in multi-family housing and non-residential markets. In a new construction market that remains sharply down in China, the Group continued to outperform thanks to its exposure to renovation and to its digital sales model. South-East Asia reported growth, driven by its second-half performance and strong momentum in Indonesia, benefiting from the enhancement of its range of innovative solutions, as well as from Vietnam, which won new customers thanks to the rollout of customized logistics and digital solutions. The integration of CSR in Australia - completed on July 9, 2024 - is progressing well, with a good operating performance in the second half.

High Performance Solutions (HPS): sequential improvement in organic growth and slight growth in operating margin

HPS reported like-for-like sales down 1.9% over the year, with a sequential improvement between the first half (down 3.5%) and the second (down 0.3%). The operating margin was up slightly at 12.1%, thanks to well-managed costs and prices which offset the lower volumes.

-  Businesses serving global construction customers were up by 0.5% over the year and accelerated to grow 3.9% in the second half, driven by both Adfors reinforcement solutions against a weaker comparison basis, and by the Construction Chemicals business unit (up 3.1%). The good trends in Chryso and GCP sales continued, driven by infrastructure projects and the innovation drive for decarbonization in the construction sector. In 2024 Chryso contributed to the construction of the largest hydroelectric plant in India, supplying cutting-edge admixtures that met high-level technical specifications. Eight new industrial sites or production lines were opened in the year (new plants in the Philippines, Vietnam, Australia, Colombia, Brazil and Finland; two new lines in India) - leveraging Saint-Gobain's global reach to set up production facilities in record time at existing production sites - and construction work began on six new facilities (US, Canada, Mexico, UK, Turkey and Morocco). The completion of the FOSROC acquisition further strengthens the Group's construction chemicals presence in countries with strong structural growth (India, Middle East and Asia-Pacific).

-  Mobility sales contracted 2.2% over the year, but the business captured market share on high value-added models thanks to its differentiation and investments for innovation. It also benefited from productivity gains, notably with the optimization of its industrial footprint, following the closure of Spain's Avilès plant in June 2024.

-  Businesses serving Industry were down 2.8% over the year, but stabilized in the second half (up 0.6%), supported by decarbonization technologies and a rebound in sales of specialty materials, which saw growth in their order book at the end of 2024.

Analysis of the 2024 consolidated financial statements

The 2024 consolidated financial statements were approved by Saint-Gobain's Board of Directors at its meeting of February 27, 2025 and have been audited and certified by the statutory auditors.

1.    Calculated based on the weighted average number of shares outstanding (499,715,108 shares in 2024, versus 507,282,902 in 2023).

2.    Recurring net income: net attributable income excluding capital gains and losses on disposals, asset write-downs, amortization of intangible assets related to PPA, IFRS 3 acquisition costs and other non-recurring items (material non-recurring provisions, impacts of hyperinflation, etc.).

Two items have been removed from recurring net income: hyperinflation (-€61 million in 2024 versus -€39 million in 2023) and amortization of intangible assets related to PPA (-€233 million in 2024 versus -€181 million in 2023). Netted of related tax effects and minority interests, the impact amounts to -€227 million in 2024 versus -€174 million in 2023.

3.    Capital expenditure = investments in tangible and intangible assets.

4.    Free cash flow = EBITDA less depreciation of right-of-use assets, plus net financial expense, plus income tax, less capital expenditure excluding additional capacity investments, plus change in working capital requirement.

5.    Free cash flow conversion ratio = free cash flow divided by EBITDA, less depreciation of right-of-use assets.

6.    Investments in securities net of debt acquired: €3,684 million in 2024, of which €3,465 million in controlled companies.

EBITDA was up 2.9% to a new record high of €7,205 million, with the margin up 90 basis points to 15.5%. EBITDA includes stable non-operating costs of €236 million.

The net balance of capital gains and losses on disposals, asset write-downs and the impact of changes in Group structure represented an expense of €691 million (€784 million in 2023). It reflects €291 million in asset write-downs relating essentially to site closures and disposals (€238 million in 2023), €233 million in Purchase Price Allocation (PPA) intangible amortization (€181 million in 2023), and €167 million in disposal losses and impacts relating to changes in Group structure (€365 million in 2023).

Recurring net income rose 1.7% to a record high of €3,474 million. The tax rate on recurring net income was 24%.

Capital expenditure totaled €2,049 million. The Group opened 24 new plants and production lines focused on the structurally high-growth markets of North America, Asia and emerging countries, as well as construction chemicals.

Free cash flow came in at a new record-high of €4,031 million. The conversion ratio remained stable at 62%, with very good management of operating working capital requirement (WCR), which represented 12 days' sales at end-2024 compared to 13 days' sales at end-2023.

ROCE was 14.3% in 2024, resulting in strong value creation for our shareholders.

Investments in securities totaled around €2.9 billion (net of CSR short- and medium-term monetizable real estate assets), including mainly €1.9 billion for the CSR acquisition in Australia and €0.6 billion for Bailey in Canada. Other notable acquisitions included His Yalıtım in insulation in Turkey, ICC in technical insulation in the US, Glass Service (digital solutions to accelerate the decarbonization of glass furnaces), and acquisitions in construction chemicals (Kilwaughter in the UK, Izomaks in Saudi Arabia, IMPTEK in Ecuador, Technical Finishes in South Africa and R.SOL in France). Overall, the Group's acquisitions in 2024 represent full-year sales of around €1.8 billion and around €375 million in EBITDA (including synergies from year 3 onwards), or 7.7x EBITDA.

Divestments represented €221 million and reflected disposals of tangible assets, PAM Building and foam insulation activities in the UK.

Net debt was €9.8 billion with a net debt to EBITDA ratio of 1.4x versus 1.1x at end-2023. Pro forma for the recently completed acquisitions of Cemix and FOSROC, the net debt to EBITDA ratio remains at the lower end of the target range (between 1.5x and 2.0x).

Attractive shareholder return policy

In 2024, the dividend paid and share buybacks carried out represented around €1.5 billion:

·    A dividend of €1,045 million was paid in respect of 2023;

·    An amount of €420 million was allocated for share buybacks in 2024 (net of employee share creation), reducing the number of shares outstanding to 497 million at end-2024 (502 million at end-2023).

Saint-Gobain's Board of Directors decided to recommend to the Shareholders' Meeting on June 5, 2025 the payment of a cash dividend up 5% to €2.20 per share for 2024 (€2.10 for 2023). The ex-dividend date has been set at June 9, 2025 and the dividend will be paid on June 11, 2025.

With €2 billion in share buybacks since 2021, the Group has completed - one year earlier than expected - the objective announced in 2021 under its "Grow & Impact" plan (2021-2025). The Group will continue its policy with a new target of €400 million in share buybacks for 2025 (net of employee share creation).

Strategic priorities and 2025 outlook

In 2025 the Group will continue to implement the strategic priorities of its "Grow & Impact" plan:

1) Continue our initiatives focused on profitability and free cash flow generation

·    Constant focus on margin through management of the price-cost spread and ongoing productivity and industrial cost-saving initiatives;

·    Capital expenditure around 4.5% of sales, with strict allocation to structurally high-growth markets.

2) Outperform our markets by strengthening our profitable growth profile

·    Enrich our comprehensive range of integrated, differentiated and innovative solutions offering sustainability and performance for our customers;

·    Leverage the full potential from the integration of recent acquisitions;

·    Continue to enhance the Group's profile through value-creating acquisitions and divestments.

3) Continued focus on our ESG roadmap as worldwide leader in light and sustainable construction

·    Promote our positive-impact sustainable solutions - low-carbon and with high-recycled-content - among our customers;

·    Extend the decarbonization of construction to the entire value chain, playing our full role as leader in light and sustainable construction across the globe.

In a macroeconomic environment that remains contrasted, Saint-Gobain will continue to demonstrate a very strong operating performance in 2025. Assuming no major disruption linked to geopolitics, the Group expects the following trends:

·    Europe: construction markets stabilizing, with a gradual recovery country-by-country expected in the second half;

·    Americas: a good level of activity maintained in North America and Latin America;

·    Asia-Pacific: growth led mainly by India, South-East Asia and the integration of CSR in Australia;

·    High Performance Solutions: dynamic growth in Construction Chemicals; Mobility to hold firm thanks to its high value-added solutions; gradual recovery in growth expected for most industrial markets.

Saint-Gobain expects an operating margin of more than 11.0% in 2025

Financial calendar

An information meeting for analysts and investors will be held at 8:30am (GMT +1) on
February 28, 2025 and will be streamed live on Saint-Gobain's website: www.saint-gobain.com