Compagnie de Saint-Gobain S.A.

Good morning, everyone. It's my pleasure today to present our H1 2024 results together with Sridhar, our group CFO. Two main takeaways on our first half. Once again, we delivered very strong results in H1 with a record operating margin and second important point we successfully achieved significant milestones in our strategic repositioning. Before I start, let me share with you a few recent examples of our light and sustainable solutions. Let's start, of course, with residential new build with the landmark project of the Olympics Athlete Village, where we have delivered 14 Saint-Gobain innovative sustainable solutions. It is the D-Day. As you know, we are an official sponsor, so I cannot miss the great opportunity we are so proud of having delivered on this landmark job site. Our solutions also bring many benefits in non-residential applications, such as enhanced guest comfort in hotels, or also acoustic and light solutions for offices. On renovation, some of you have visited our world-class testing facilities in partnership with the University of Salford in Manchester, where we develop and we measure the efficiency of our full-scale renovation solutions. And finally, our solutions are also used on infrastructure markets, sometimes for very critical applications. like the French Guiana Space Center, where we have put our construction chemical expertise at work. Moving to our financials now. In H1, we delivered strong, very strong results, despite a challenging market environment. Our sales for H1 were at 23.5 billion euros, New record operating margin at 11.7%, beating our previous record of 11.3% in H1 2023. a strong recurring net income at 1.7 billion euros, and also record levels of free cash flow at 2.5 billion euros, up 12% versus the first half of last year, with a 75% cash conversion ratio. Shredda will give you all the details in a few minutes. Our growth and impact has proven to be very effective. Once again, during the first half, on a strong set of financials, margin, cash, and all this is based on two things, very important. One, our solutions approach, through which we are delivering increased share of wallet within our customers, improved product mix, and also increased pricing power. Second, Also, we have achieved very significant milestones in terms of how we have strategically repositioned the group towards high growth markets and construction chemicals. These milestones, you know them, three important moves that we have announced and sometimes closed in the first half. on the two strategic axis where we have allocated very rigorously our capital over the last years. First on our geographic axis, growth angle, Canada, Australia. And the second one is on construction chemical, which has been the third milestone achieved announced in the first half with the acquisition of FOSROC. Altogether, those three moves will add 2 billion euros of sales and 450 million euros of EBITDA after 100 million euros of synergies in year three. So I'm very confident that our strategy will continue to drive consistent and strong success going forward. Now, Fredard, the floor is yours to take us through all the financial metrics.

Thank you, Benoit. Good morning, everyone. Let me give you some details of our first half 2024 results. Starting with sales, volumes continue to be impacted by the weakness in the new construction in Europe, but were supported by growth in the Americas and in Asia Pacific. However, sequentially, we saw an improvement in volumes and stability in prices. The structural effect turned positive in Q2 as we continue our strategic repositioning with important acquisitions in the high growth markets of North America, Asia, and emerging markets, and also in construction chemicals. Now let us look at the operating margins. If you look at We have actually reached a new record high of 11.7% and operating income remained close to its record high despite the low volumes. We achieved a positive price-cost spread in all segments thanks to our robust pricing discipline and also the tailwind from certain raw materials and energy costs. and I remain very confident that we will deliver a positive price-cost spread for the full year, although the spread will be much smaller in H2 than H1 due to the comparison basis. This demonstrates the resilience of the transformed Sangam. Now let us look at the other lines of P&L below operating profit. So you see here we once again achieved a new record EBITDA margin and an EBITDA in Euro terms close to its all-time high. Non-operating costs came to its normal level for a first half year in line with our guidance of around 250 million for the full year that we gave in capital market day. Capital gains and losses are much lower than last year, which was impacted, if you remember, negatively by the divestments of the UK distribution business in the last year first quarter. Recurring earnings per share is also at a very good level. Now let's look at the cash situation. We have, again, a record level of cash flow and a very good pre-cash flow conversion ratio. The strong cash culture that we have installed throughout the organization has started clearly showing a good payoff. And we see that the free cash flow is now structurally higher year after year in all the businesses. The strong free cash flow generation has enabled us to maintain a strong balance sheet while at the same time we are investing for growth and also delivering attractive shareholder returns. The net debt to EBITDA ratio was 1.4 times at the end of June. And if we also include the acquisition that we are going to pay in CSR in the second half, which is already closed now, and the FOSROC which will come typically, technically next year, but if I take even FOSROC into account, we are talking about the range which we articulated in capital market 1.5 times to two times, we would be at the low range of this range that we set for ourselves. Now let us look at the results by segments. So if you just look at the Europe overall, the new construction remained down, while the renovation market accounting for 60% of our sales continues to be resilient. Importantly, we saw a sequential improvement of volumes between Q1 and Q2, bringing us close to a low point. In Spain and Italy, in Eastern European countries, and in Middle East and Africa, we are seeing volume growth. We have trough in the UK, and we are close to low point in Nordic countries and Germany. In France, the new construction market remains significantly down, but we continue to outperform thanks to our strong exposure to the renovation market with our comprehensive solutions. We expect it to take a few quarters before we reach a low point in France. Despite the challenging environment, the operating margin remains stable at a record level of 8.7%. Turning to the Americas, the growth was supported by North America. North America saw a good growth in both volumes and prices in H1. Despite the tough comparison basis as expected in Q2, particularly in roofing business, this good growth performance was driven by a dynamic renovation market in roofing, while the new construction remained at a good level. We saw further market share gains to our comprehensive differentiated offer in the U.S. market. And in Canada, we are benefiting from the integration of our recent acquisitions by CAN, Building Products of Canada, and BELE. In Latin America, the markets remain down and we began to stabilize in Q2 with volumes almost flat in the second quarter. The region saw, again, a new record operating margin and operating profit of 945 million euros, and when you look at the margin, we're talking about 19%. Now looking at Asia-Pacific, organic growth in Asia-Pacific was driven by India, where volume growth continued and once again outperformed the market. We continue to play a very leading role in shaping the market through our differentiated and value-added low-carbon offer. In China, in a difficult new construction market, we continue to capture market share against a very high comparison basis in Q2 of last year. Southeast Asia remained at a good level, driven by Malaysia, Indonesia, and Singapore. Again, the region achieved a new record operating margin. Now let us look at the global customer markets. If you see high performance solutions, like for like sales, down by 3.5%, but sequentially, there's a good improvement in Q2. Businesses serving the global construction customers saw a continued weakness in reinforcement glass grid solutions, but a progression in Q2, as well as growth in construction chemicals, which were up 3.1% for life for life. Mobility sales stabilized against a high comparison basis. We continue to invest in innovation and optimize our footprint with the closure of the plant in Spain. Businesses serving industry declined due to the weak industrial markets, especially those linked in particularly to the investment cycles of our customer. And the operating margin remains stable at 12.3%, even though the volume is down. So to sum up, you have seen that we have delivered an excellent performance, even though the market environment remains very difficult. So I remain very confident that we are going to deliver once again in 2024 an excellent year for Sangamon. And now I pass on the floor to Benoit. Thank you.

Thank you, so let me update you on our strategy now. At the worldwide leader in light and sustainable construction, Saint-Gobain is stronger and more resilient than ever. Why is that? Because we have repositioned the group on strong markets. And second, also because we have put in place all the levers to outperform and deliver very well on what we can control. We have a disciplined capital allocation with clear areas for growth investment to meet one goal, strengthen the group profitable growth profile. We make growth investment along two clear axes. geographic and construction chemicals. In recent years, we have rotated around 40% of our sales thanks to a very decisive M&A approach. We have also allocated 70% of our growth capex to North America, Asia, emerging markets, All together, thanks to this decisive capital allocation, two-thirds of our operating income now comes from North America, Asia, and emerging markets, and we enjoy a well-balanced geographic footprint. I will now zoom on each of these markets. In North America, Asia, and emerging markets, there are structural needs supporting the demand for light and sustainable construction. In the US and Canada, there is a significant structural housing shortage, plus an aging housing stock that does require renovation, notably in the must-have roofing replacement renovation, which is, as you know, important to us. In Asia, we have a continued urbanization, expecting around 1.2 billion additional urban residents by 2050, so a big need for construction, productivity, light construction, and performance. This means that we see a huge growth potential driven by higher penetration of light and sustainable solutions. I take two examples. For instance, we anticipate a 5 to 10x increase in plasterboard consumption in emerging markets compared to developed markets where we are today. Same on re-mixed mortars with a 10x in years to come in terms of increased penetration in emerging markets in order to deliver productivity on the drop sites. We have made several acquisitions in the past three years. expand in those high growth geographies and notably we have built strong leadership positions in Canada where we have tripled our size in the last three years and more recently we have finalized on July 9th the acquisition of CSR where we have now established a leadership position in the very attractive Australian market. I would like to bring to you Paul Dalton, who is our CEO of CSR, and hear from Paul in a short video.