RISULTATI GRUPPO 2009> Sales prices: +0.8% over the year.
> Cost savings over the year: €1,100m.
> Second-half operating income and recurring net income well above the first half: respectively, +38% and +94%.
> Free cash flow¹ for the year above €1bn (€1,019m), and reduction of €1.4bn in working capital requirements (WCR).
> Sharp reduction in capex: -€900m and tight rein on acquisitions, down to €204m.
> Balance sheet strengthened: €3.1bn of net debt paid down; gearing ratio cut to 53% of equity.
2009 KEY FIGURES (€m)
FY 2009 H1 2009 H2 2009 Change H2/H1
Net sales 37,786 18,715 19,071 +1.9%
(-13.7%)
OI 2,216 930 1,286 +38%
(-39.3%)
Rec. net
income³ 617 210 407 +94%
Operating performance
Against the backdrop of an unprecedented economic and financial crisis affecting virtually all sectors and countries across the globe, trading for the Group was sluggish throughout 2009 in most of its businesses and geographic areas. However, there was a relative improvement over the second half of the year compared with the first half, in terms of both like-for-like growth and profitability. Gains in profitability were chiefly attributable to the cost cutting program implemented. The Group therefore considers that business bottomed out overall in 2009. Nevertheless, the global economic climate remained very challenging in the second half of the year. Only Asian and Latin American countries saw a significant pick-up in trading between the first and second half of the year (around 20%), and have now put the crisis behind them. While trading in both Western and Eastern Europe along with North America seems to have stabilized overall at a low level (particularly in Construction), certain industries such as the automotive sector saw an improvement in the second half of the year. Household consumption, in turn, remained relatively less affected by the downturn in the economic climate in 2009.
The Group as a whole reported a 13.2% decline in like-for-like sales for 2009 (-15.5% in the first half and -10.8% in the second). This decline is due to a sharp 14.0% fall in sales volumes over the year (-17.2% in the first half and -10.6% in the second). Sales prices, in contrast, held firm over the year in all business sectors except Flat Glass, allowing the Group to benefit from a positive spread between prices and the cost of raw materials and energy. However, prices slipped 0.2% in the second half of the year after a rise of 1.7% in the six months to June 30, due mainly to a strong performance in the comparative period. The cost savings realized by the Group drove a significant rise in its operating margin in the second half of the year, up to 6.7% versus 5.0% in the first half.
Performance of Group business sectors
All of the Group’s business sectors with the exception of Packaging were hit by a sharp decline in sales volumes and profitability over the year, although there was a relative improvement in the second half compared with the six months to June 30.
After being the hardest hit by the economic crisis in the first half of 2009, Innovative Materials staged the strongest recovery in the second half of the year, in terms of both sales and profitability, lifting the sector’s operating margin from 2.7% in the first half to 6.7% in the following six months.
- Flat Glass posted a strong like-for-like advance in sales in the second half of the year compared with the six months to June 30, powered by a sharp upturn in sales volumes in Asia and Latin America, and in Automotive Flat Glass across the globe, as well as a steep rise in the price of commodity products (float glass) in Europe during the second half of the year. Buoyed by the impact of the cost cutting program launched in 2009 and by the fall in the cost of raw materials and energy, the operating margin for the second half jumped to 6.0% of sales, versus 0.6% of sales in the first half of 2009.
- High-Performance Materials (HPM) also saw like-for-like trading rally between the first and second six months of the year. This reflects the upturn in Asian and Latin American economies, and more generally, the recovery of some HPM markets linked to industrial output. HPM reported a significant improvement in its operating margin over the second half of the year, up to 7.8% versus 5.5% in the first half, boosted by the cost savings achieved and upbeat sales prices amid falling raw materials and energy costs.
Trading in the Construction Products (CP) Business Sector stabilized over the second half of 2009 compared with the first half, both for the sector as a whole and for each of its businesses. The restructuring measures carried out and a positive price impact in Exterior Solutions throughout the year pushed the sector’s operating margin up to 9.5% in 2009 from 8.9%, with the increase gathering pace in the second half of the year (9.9% versus 9.1% in the six months to June 30).
- Owing to a more favorable basis for comparison (particularly in the UK and US), the like-for-like decline in Interior Solutions sales was smaller in the second half of 2009 compared to the first (down 14.8% versus 19.5%). The operating margin crept up slightly in the second half, to 6.9% compared with 6.7% for the previous six months, as the cost savings achieved were partly offset by the erosion in sales prices in the six months to December 31, 2009.
- Exterior Solutions also saw a relative improvement in sales volumes in the second half of the year compared to the first six months, chiefly in North America, Asia and emerging countries. Over the year as a whole and in the six months to December 31, the sector’s profitability also continued to benefit from a favorable price effect (despite a much higher basis for comparison in the second half of the year compared with the first six months) and from the positive impact of the restructuring measures carried out. Consequently, its operating margin rose significantly over the year, up to 11.8% versus 8.1%, with the increase picking up pace in the second half (12.5% versus 11.2% in the six months to June 30).
Building Distribution also saw a slight improvement in trading in the second half of the year compared with the first, with sales declining only 9.9% after 14.5% in the first half. While the UK and Spain remained the hardest hit by the economic crisis, their performance now benefits from a weaker comparative period (second-half 2008). Germany and Scandinavia continued to hold up well in the second half of the year. Most other European countries and the United States reported a slight slowdown in the pace of decline compared with the first half. Upbeat sales margins and especially the restructuring measures carried out helped drive a significant improvement in the sector’s operating margin, up to 3.4% in the second half of the year from 1.4% in the first half.
Packaging continued to turn in a solid performance despite the crisis, with sales and operating income for the year virtually unchanged from 2008. However, its like-for-like trading slipped 3.8%, as the positive momentum in sales prices failed to fully offset the decline in sales volumes in Europe. The operating margin for the sector improved slightly on 2008, up to 12.7% compared with 12.5% previously.
