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Saint-Gobain reports 1Q 2005 sales up 5.1%

France“s Saint-Gobain Group posted consolidated sales for the 1Q 2005, calculated in accordance with International Financial Reporting Standards (IFRS), of EUR 7,633 million, compared to EUR 7,261 mi…

France“s Saint-Gobain Group posted consolidated sales for the 1Q 2005, calculated in accordance with International Financial Reporting Standards (IFRS), of EUR 7,633 million, compared to EUR 7,261 million for the same period in 2004 (restated in accordance with IFRS), representing a rise of 5.1% on an actual structure basis and of 5.7% at constant exchange rates (based on average exchange rates for the 1Q of 2004). On a comparable structure basis, the group said sales fell by 1.4%, or by 0.7% excluding currency effects, because of the 3.2% fall in sales volumes, which was not completely offset by the sharp rise in sales prices (up 2.5% on average over the quarter). Saint-Gobain said the like-for-like sales compare unfavorably with the particularly robust business levels reported in the 1Q of 2004, which benefited from the last deliveries under the Abu Dhabi contract in the Pipe Division, and reflect the adverse impact of the severe winter on Flat Glass and Building Distribution, the most exposed of the group“s businesses to the European new construction and renovation markets. Overall, Saint-Gobain said sales prices have jumped across most of its Sectors and Divisions, on the back of the price rises implemented throughout 2004 and, for some businesses, in the 1Q of 2005. Sales volumes fell in group operations exposed to the construction market in Europe because of the severe winter weather in Western and Eastern Europe, and the lower number of working days, ranging from 1 to 3 depending on the country, compared to the same period in 2004. However, business held firm for Building Materials and Insulation Divisions, supported by a vigorous residential housing market in the US. High-Performance Materials also delivered consistent sales, in line with the forecast economic scenario presented at the beginning of 2005. The group said its performance in non-European emerging countries and Asia remains strong, with an increase of 5.5% in like-for-like sales (constant group structure and exchange rates). NEW BUSINESSES Building Distribution experienced a 13.5% surge in sales, thanks to the contribution of recent acquisitions to 1Q revenues. Like-for-like sales went down slightly, reflecting an unfavorable basis for comparison (with 1Q 2004 organic growth of 7.5% boosted by favorable climatic conditions and a higher number of working days), and the far-reaching impact of the severe winter weather throughout Europe in February and March 2005. Germany, Central Europe and the United Kingdom were the worst affected, while France and Spain achieved moderate 1Q growth, despite fewer working days. High-Performance Materials reported the group“s strongest like-for-like growth, at 2.6%, thanks mainly to an overall rise in sales volumes and prices for Ceramics & Abrasives, which are still enjoying the benefits of the upturn in manufacturing and capital spending, especially in the US. Sales prices in the Reinforcements Division rose for the first time in two years. HISTORIC BUSINESSES Flat Glass sales fell back slightly, reflecting lower volumes on the European building market compared with the 1Q of 2004, due to the severe weather conditions. Float glass prices were on an upward trend. However, prices fell back slightly in glass processing for the Building industry and in Automotive Flat Glass in Europe, the latter because of an unfavorable product mix. Business remained virtually stable on Europe“s automotive market, while it made impressive gains in emerging countries, the group said. Packaging saw a slight fall in like-for-like sales, with higher sales prices across all its activities more than offset by a drop in sales volumes in the European wine market since autumn 2004. Construction Products (CP) reported like-for-like results on a par with 1Q 2004, despite the strong fall in Pipe sales, down 8.6% on a constant structure and exchange rate basis, further to the last deliveries made under the Abu Dhabi contract at the end of 1Q 2004. Sales for the Building Materials and Insulation Divisions continued to enjoy the benefits of a buoyant construction market in the US, which was not affected by any major climatic impact. The vigorous sales posted in the US offset the impact of the severe winter weather that hit Europe in the 1Q of 2005. The breakdown of sales by geographic area reveals, on a like-for-like basis, robust business levels in France, with the exception of Pipe, and especially in the United States. Growth in other western European countries generally registered a slight contraction due to climatic conditions. Emerging countries, particularly Asia and Latin America, remained buoyant. ASBESTOS CLAIMS IN THE UNITED STATES Around 6,000 new claims were filed against Saint-Gobain“s US insulation business CertainTeed in the 1Q of 2005, including only 50 in the State of Mississippi. The slight increase compared with the same period of 2004 (5,000 new claims including 700 in Mississippi) reflects an influx of approximately 3,000 mass claims not supported by any medical proof in the State of Kentucky. Some 7,000 claims were resolved in the 1Q of 2005, compared with 5,000 in the 1Q of 2004, and 3,000 claims were transferred to “inactive dockets”. Consequently, the number of outstanding claims at 31 March 2005 continued to fall, to around 102,000, compared with 106,000 at 31 December 2004. The average cost of settlement over the past 12 months stands at USD 3,000 per claim, on a par with previous period. OUTLOOK Saint-Gobain said its 1Q performance is not representative of full-year trends, and this is particularly the case in 2005. The group expects sales volumes to improve over the next few months and therefore confirms its full-year target of 6% growth in operating income (calculated in accordance with IFRS) on a constant exchange rate basis. The group also aims to maintain strong free cash flow levels.

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