Earnings Call: Q4 2015

Feb 26, 2016

Good morning, everybody. I will present today our 2015 results and the outlook for 2016. I will do that together with our new Chief Financial Officer, which I would like to introduce to you, Guillaume Texier, who has been with Saint-Gobain for 10 years and knows the group quite well, both in corporate and annual operations in Canada, in the U.S., where he was in our gypsum operations and then in charge of roofing, and then he was in charge of our ceramics activity. So he knows quite well the operations in the group, and he is taking over from Laurent, who is now in charge of our High-Performance Materials division. We have had a reorganization of the group where, in January, I asked Claude Imauven, who was heading our Construction Products division so far, to become Chief Operating Officer of the group to assist me in all operations with a particular emphasis to lead our digital transformation, which is going to be a very important topic for the next few years. Following that, we have had changes in the responsibility in the sectors. Benoît Bazin, who was heading Building Distribution, is now in charge of Construction Products and has been replaced by Kare Malo, who was in charge of our Nordic operations since the time of the Dahl acquisition and is now taking over our distribution division. For the rest, Laurent is replacing Benoit d'Iribarne, who will be in charge of our German activities and with a particular emphasis on our manufacturing excellence. Patrick Dupin is still in charge of our Flat Glass operations following the departure of Jean-Pierre Floris with Verallia. I will coordinate myself Innovative Materials with HPM, Laurent Guillot, and Patrick Dupin in charge of Flat Glass. I will start with the main figures. Our revenues were up 3.3% at EUR 39.6 billion. Our operating income was up 4.5% in real terms at EUR 2,636 million. Our recurring net income is up 20% at EUR 1,165 million. Our net income is growing 36%, and we have an increase in our free cash flow generation, so a very good cash generation, so up 6.4%, and our debt is falling down significantly at EUR 4.8 billion. These good sets of figures have been delivered in a very constricting macroeconomic environment. I would say in Europe overall, we had a relatively good growth except France, which was the most difficult part of the year, and which has been clearly hampering the growth of our results in 2015. But we have had good growth in Scandinavia, in the U.K., and in Southern Europe from a low base in Spain. But I think in Spain, we are going to have, from a low base, a number of good years in front of us. Germany, you remember, had a relatively difficult situation in the first half. The second half returned to growth, but the renovation market has still been weak in Germany. North America, the numbers look not very good because we have had a significant price deflation in roofing, without a big impact on our margin. In fact, our margins are staying good. It's linked with the decrease of the price of asphalt and a decrease in the price of roofing. The price momentum in the U.S. was not very good. In the industrial activities in the U.S., which is a big part of our HPM businesses, we have been clearly hit by what happened in the oil and gas markets, especially with our performance division. Some other industrial activity has remained solid. We have had good growth in Asia and emerging countries, including Latin America, despite a more challenging Brazil. We have had a slowdown in Brazil given the macroeconomic condition. I think we resist better than our markets, given our very strong position. But despite that, we have had good growth in Latin America, and overall emerging countries have delivered very. We have seen a good economy. China was slowing down in the second half. In this overall context, which was with very significant contrast, we have had very little growth in volume, mainly because of the impact of France. We managed to get 0.3% of price increase, in a clearly deflationary environment, in several of our countries. I spoke about the U.S., but also in France and Germany, we have had a deflationary environment, so I think it's a good performance. Our operating income, as reported, increased 4.5%, and in like for like, 2.2%, which was also helped by the delivery of our cost savings program, around EUR 360 million. We have had, as I said, a very good cash generation. In particular, I am very proud of our performance, which was beyond our long-term objectives. We have reduced another two days our working capital requirement, and our net debt is down very significantly. We finally disposed of Verallia, as announced in June, in October, and very good financial conditions. We have continued to optimize our business portfolio with a number of small disposals, around EUR 700 million of yearly sales, especially in distribution, in geographies where we didn't see good prospects for us in the medium term. We didn't have enough market share. Acquisitions representing around EUR 300 million of sales on a yearly basis. Of course, we had a very significant improvement in our net income, helped by the capital gain on Verallia. These are the main highlights of the year, and now I will pass on to Guillaume, who will give you more details on our results. Good morning. I would like to start by a reminder of the way Verallia is accounted for in the P&L in application of IFRS 5. The full contribution of Verallia, in 2014 and in 2015, is put on a specific line called Net Income from Discontinued Operations. The capital gain on the disposal of Verallia North America, which amounts to EUR 356 million, is on this line in 2014, as well as the equivalent for Verallia in 2015. The net results of the Verallia operations is also on the same line. This is a change to the way we presented 2014 previously, and this change impacts each line of the P&L, except obviously, the net result. Now, the bottom line is that in 2014 and 2015, Verallia only impacts the P&L on the net result line. All the other lines being on a comparable basis. The sales in 2015 show the total growth of +3.3%, with a total turnover of EUR 39.6 billion. We benefited from a positive exchange rate effect representing 3% on the full year. This was mainly due to the appreciation of the U.S. dollar and the British pound. This effect is, however, much smaller in the second half, as the dollar and the pound impact slowed down while other currencies had a negative effect, mostly in Latin America and in the Nordics, especially Norway. The perimeter effect was negative -0.1% overall in 2015. We made several interesting acquisitions during the year, which I will talk about later. But we were also quite active on the disposal side beyond Verallia, mostly in Building Distribution, where we sold several non-core parts of our business. Overall, the balance is slightly negative in turnover for 2015. Organic growth was positive 0.4%. Prices were up +0.3%, showing once again the group's ability to drive prices, even if the environment became increasingly deflationary during the year. Volumes edged up by 0.1%, and this performance was achieved despite the adverse effects of oil and gas-related businesses and the strong slowdown experienced in our pipes business. Those two businesses represent more than one-third of a point of negative volume growth this year on the group. Now let's look at price and volume in detail. The positive price effect demonstrates our price resilience even in a stable volume environment. The overall figure could have been slightly higher had it not been for the roofing effect, where we experienced price erosion but compensated by an improving cost-price spread. We also had to face negative evolution of pricing in pipes as well as in Interior Solutions in the U.S. in the second part of the year. On the volume side, the last quarter showed a positive momentum with some early signs of improvement in France at the end of the year, as well as positive growth in Germany and the Nordics. The year was impacted by the effect of ceramic proppants and by the severe downturn of our pipe activity during the second part of the year. Now moving to profitability. Overall, the group's profitability improved slightly year-on-year, from 6.6% to 6.7%, and was stable in the second half. The operating profit growth for the full year was at 2.2% on a like-for-like basis, which is at the top end of our October guidance. On a reported basis, operating profit was held by exchange rates and grew by 4.5%. Going down the P&L, we had EUR 344 million of non-operating costs, including asbestos for EUR 90 million, stable from last year. EUR 254 million of other expenses, which is a slightly better figure than last year if you take into account the fact that 2014 was positively impacted by an approximately EUR 200 million reversal of accrual related to glass competition fines. We continue to adapt our manufacturing footprint to the challenging environment and to improve our cost position. Regarding other operating expenses, we had EUR 65 million of losses on divesting non-strategic assets to be compared to a plus 41 last year, which was mostly coming from the sale of various land pieces which became available as part of our manufacturing restructuring program. In 2015, we had EUR 933 million of gross impairments, which are in fact 712 when netted from the tax effect linked to those impairments, which appears in another line of the P&L. Those impairments were firstly in Building Distribution in France, but also in the Flat Glass, proppants, and pipe businesses. Some details on the asbestos charge. As I said before, the accrual to the provision is stable at EUR 90 million. Both the number of outstanding claims and the number of new claims decreased, and the total balance sheet provision at the end of 2015 amounted to $581 million. The financing cost is down in 2015 from EUR 663 million to EUR 629 million, with the average cost of gross debt also down. The net debt decreased a lot thanks to the sale of Verallia in October, and you will see that in the following slide. As far as gross debt is concerned, it remained stable for most of the year and reduced during the last few months as we reimbursed a one billion euro bond in September. Tax rate was down from 32% to 29%. Part of this is the reversal of deferred tax liabilities as part of the impairments I was talking about on the previous slide. Part of this is also linked to the lower tax rate in some countries and a positive geographic mix effect. As stated before, the 2015 Net Income from Discontinued Operations, the last line on this table, contain both the net result of Verallia and the capital gain from the sale in October, which is of EUR 777 million. Now going to the recurring net income. The recurring net result amounted to EUR 1,165 million, which is an increase of 19.7% over 2014. This figure is clean of any Verallia effect. This translates into a recurring earning per share, showing an even slightly higher improvement at +20.1% to EUR 2.09 per share. All included, the net result rebounded sharply by 35.9% to EUR 1,295 million, and the earnings per share figure increases by 36.5% to EUR 2.32 per share. Cash flow generation. The cash flow generation grew by 9% as a consequence of the improved recurring net result, and the free cash flow moved up by 6.4% to EUR 975 million. As far as CapEx are concerned, they were in line with what we had anticipated in October. Slightly up compared to 2014, notably because of exchange rate. 550 out of the EUR 1,346 million of CapEx are growth CapEx. We completed several important projects in 2015, including plants in India and in the U.S., several Construction Products plant in emerging countries, especially in our mortars business, as well as important furnace repairs in our glass and insulation divisions, especially in the U.S. As Pierre-André mentioned previously, excellent working capital performance as we continue to harvest the benefits of a very strict cash discipline. This is a historical low, and this is substantially better than what had been guided previously as a long-term objective. Partly helped by good weather conditions at the end of the year, which led to a busy month of December. Two days improvement compared to 2014, with approximately one of those two days coming from exchange rate. In 2015, beyond the very visible Sika and Verallia transactions, we continued our bolt-on acquisition policy through EUR 227 million worth of acquisitions, which is up from EUR 95 million in 2014. Those acquisitions can be put roughly in three categories, in line with our strategic priorities. First category would be high-growth market niches and innovation. This is, for example, what we did with the Structus acquisition in the U.S., which manufactures innovative accessories for plasterboard solutions. Second category would be high-growth geographies like, for example, the majority we took in Vietnam Gypsum company or our acquisition of Cipta Mortar Utama in Indonesia, both countries showing very interesting prospects. Lastly, synergetic bolt-ons like our acquisitions in distribution in the Nordics. We were also, as I mentioned before, quite active on the disposal side as we sold EUR 700 million worth of full-year turnover in non-strategic businesses, mostly in Building Distribution, with the biggest being the divestment of our U.S. operations, where we didn't have the critical mass. Obviously, as mentioned several times before now, we sold Verallia in October in good conditions, which led to a capital gain of EUR 777 million. Last point on the slide. We bought back 13.9 million shares in 2015, out of an outstanding 559 million. Part of this was to offset the employee savings plan, as well as the payment of part of the dividend in shares. At the end of the year, the net effect was a reduction of 1.8 million of the number of shares. Some improvements on the return on investment and the return on capital employed of respectively 0.8 points to 18% and 0.4 points to 9.6%. A very strong balance sheet situation at the end of the year with a gearing of 25% and a net debt to EBITDA ratio of 1.2 times. This comes from the reduction of net debt by EUR 2.4 billion after the Verallia divestiture. Shareholders' equity increased from EUR 18.4 billion to EUR 19.3 billion. Here you have, on the plus side, the net result in corporation and also the exchange rate conversion effects, and on the minus side, the dividend distribution. The scrip part of the dividend is more than offset by shares buyback and canceling. Let's now move to sector-by-sector and region-by-region comments. Innovative Materials had a solid year with a strong contribution of Flat Glass of +5.1%, driven by strong Sekurit, but with a solid Upstream too. High-Performance Materials showed a good resilience despite the effect of oil and gas-related businesses. Construction Products is growing overall by 0.5%, with Interior Solutions at +1.9%, which is a growth entirely linked on the full year to volumes. Exterior Solutions was lower and weighed on the average, mostly because of the difficult environment in the pipes business in the second half. In this activity, I'm talking about Exterior Solutions, the volumes were positive for the year, however, with a negative price effect of 1.8%, also impacted by the roofing asphalt price decrease. Building Distribution delivered negative organic growth because of the weight of France, which was negative all along the year. But in H2, all countries except for France are in positive territory. As I mentioned before, the last quarter in France was less negative than the others. Here is a breakdown of the turnover by sector. The figure on the right is by industrial assets and is probably a little bit more relevant as it is more representative of the contribution to the results. In assets, Building Distribution represents 24%, Construction Products, 39%, and Innovative Materials are 37%. Getting a little bit more into the details of each sector. Innovative Materials, as I said before, Flat Glass had a strong organic growth story with a 5.1% increase, with both volumes and prices contributing at respectively 3.4% and 1.7%. Automotive Glass showed a very strong momentum all along the year, including in the last quarter, except for Brazil, which was negative throughout the year. The Upstream part displayed good price realization with Building Glass in Europe starting the year slowly, but seeing signs of volume improvement at the end of the year, where Building Glass outside Europe, to the opposite, was strong in the first half and slowing down in some selected emerging countries like Brazil, for example, in Q4. High-Performance Materials was impacted by the decrease in ceramics, which is itself mostly the effect of oil and gas-related businesses, especially in North America. All other activities of HPM, abrasives, plastics, and textile solutions are growing. Without Proppants, HPM growth would have been around 1.5%. In terms of profitability, I would like to highlight the good resilience of HPM, which is stable year over year at 13.4% operating profit despite its negative organic growth. The Flat Glass margin climbed from 5.9% in 2014 to 7.9% in 2015. As far as EBITDA minus CapEx is concerned, EBITDA minus CapEx was strong at EUR 928 million with EUR 529 million of CapEx focused at more than 50% on growth investments, either in fast-growing industries or fast-growing countries, or sometimes both. I will mention, for example, new Automotive Glass lines in Czech Republic, Poland or Mexico, or low-cost ceramic plant in India, or to the opposite, an expansion of a technical high-margin ceramic product in the U.S. Now moving on to Construction Products, and starting the slide with Interior Solutions. In Interior Solutions, we show a 1.9% overall growth, despite the fact that our growth in Western Europe was limited by France weighing negatively. Here again, a slightly better figure in Q4 in France. North America showed positive improvement, but with a slowdown in the second half, driven by specific price situations, more than volume, which remained positive. Emerging countries remained dynamic all along the year. Exterior Solutions experienced overall negative growth this year, with roofing in the U.S. impacting price negatively, but benefiting on the other side from an improving price-cost spread. Pipe worsened quickly in the second part of the year in all regions, export, France, Brazil, and China. Mortars showed a good momentum in Asia and emerging countries despite Brazil, as well as a good evolution in Europe in the last quarter. Profitability is a reflection of those trends, with Interior Solutions slightly up at 8.9% for the full year, affected by startup costs and pricing effect in the U.S. in the second half. Exterior Solutions at 8% profitability because of the pipe downturn in the second half. A substantial part of the CapEx is one-time heavy plant maintenance, for example, in Interior Solutions in the U.S. Another important investment is our new roofing plant in Missouri to be started in the second quarter of 2016. This will help us improve our geographical footprint, our service level, and our logistic cost in a profitable business. Building Distribution posted a negative 0.6% on the full year but was almost stable in the second half. France was in strong negative territory on the full year, but showed signs of improvement at the end of the year. Germany was disappointing in the first half, but better in the second half, although the trends are still difficult to read. The U.K. grew slightly, however, with a little bit less traction in the second half. Lastly, the Nordics showed a strong growth all along the year. Overall, Building Distribution had a positive price effect of 0.3% during the year. Operating income margin came in at 3.2% in 2015 versus 3.5% in 2014. Despite our constant restructuring efforts to lower our break-even point and improve our leverage, profitability is still very sensitive, obviously, to volumes in distribution and was affected by the negative growth. Now, by geographical areas. France was down 4.1% for the year, with construction activities less down in Q4, but pipe to the opposite, strongly negative in the fourth quarter. Other European countries all delivered positive growth, except for Germany, but with a very contrasted H1 to H2 evolution, as I was mentioning, better with H2, much better. North America was down 2%, but this included the impact of proppants. Excluding proppants, organic growth would not have been negative. Asia and emerging countries showed a 4.1% growth on a year-over-year basis, slowing down, but with a still positive in Q4 with the slowdown concentrated only on a few countries like Russia, Brazil, and China. So same slide as by sectors. Here, once again, the breakdown by industrial assets is more relevant to the results generation, with half in Europe, one-third in Asia and emerging countries, having in mind that much less than 10% of our sales and our operating profit are in those countries which are currently experiencing some economic difficulties, namely Brazil, Russia, China, and the Middle East. Other emerging countries or areas like India, Eastern Europe, or Mexico, continue their good momentum. The U.S. represents one-sixth approximately of our industrial assets, with approximately half of the turnover in the U.S. there being construction related. Looking at the results by geographical area, you can see that all areas have improved this year on both semesters, the only exception being France. North America, which was helped by exchange rate on one side, could have been better had it not been for the oil and gas effect first, and startup costs in the second half of the year. In terms of margin percentage, substantial progression in Western Europe reaching 5.9% profitability in the second half. Strong improvement also in emerging countries in the second half to 7.7% profitability, despite Brazil slowing down. France and North America, a little bit less positive for reasons which were already explained, namely volumes and pipe in France on one hand, and oil and gas-related businesses in the U.S. on the other hand. Finally, one slide on cash generation and CapEx, where you can see firstly that our EBITDA generation is well-balanced between Europe and the rest of the world, with approximately EUR 2 billion coming from Europe and EUR 2 billion coming from the rest of the world. Secondly, I think it's worth highlighting that we invested 55% of our CapEx outside Europe with a specific focus on two areas. First, North America, with investments in specific activities like roofing or ceramics, as well as what I was talking about in Interior Solutions. Second, in Asia and emerging countries with several investments in India, in Eastern Europe, for example, in textile solutions and in Sekurit, in Southeast Asia, and in Mexico. I'd like to give you a quick update on our strategy and the outlook for 2016. Our ambition remains the same, building on our worldwide leadership on sustainable habitat. We aim to create and deliver innovative and high-performance solutions to enhance our habitat and our daily life. Following the divesture of Verallia, we are concentrated on our three pillars to serve our main construction market and an additional industrial niche markets, with each of our three sectors bringing specificities, Innovative Materials, Building Distribution, and Construction Products, and leveraging strong synergies between them. The strategy doesn't change. We will continue to implement this strategy, focusing this year specifically on three subjects, boosting our strengths, answering the major trends in our markets, and accelerating the change in our portfolio. In terms of the first objective to boost our strengths, building on our strong historical presence in Western Europe. We will concentrate, as we have done and as stated three years ago, on developing our presence outside Western Europe, where we concentrate the majority of our gross investments and our acquisitions. You see that we are in line to moving our industrial asset base to get a more balanced portfolio of the group from a geographical standpoint. At the same time, we have engaged already a few years ago to reduce the capital intensity of the group in developed countries. Here again, we are on track. In fact, we are ahead of our plan, especially you remember we had a specific effort concerning our Flat Glass division, where we are already nearly reach the target we had set for 2018. We have also delivered very significant cost saving in the last few years. I think it is a strength of the group. We are going to continue to do that, and I've just launched a new plan for the three next year, 2016, 2017, and 2018, which at the same time will continue to work on the subjects where we have still room for improvement. It's an ongoing effort in terms of our purchasing and operational excellence in the plan, but also on applying new levels, new action plans. Clearly, in our manufacturing activities, I think the introduction of the new digital tools will create a new wave of savings. We are also going, also linked with digitalization of the organization to generate significant improvement in our supply chain and logistics. We are also revisiting that, and I think this will help us to deliver additional savings over the next three years. Second priority is to answer the major trends in our markets. If we look at what's going on in the construction markets, I would say three things. First, there is a change in the- respective role of the various players of the key decision-makers in the construction industry. This is boosted by the digital evolution. Globally, the final user is much more involved. The boundaries between the final users, what is called also B2C approach and the traditional approach are reshuffled to some extent with digital, with the user focusing more and more as growth and wealth develop on making sure it gets more comfort in many areas, whether it is acoustic, whether it is thermal. It is more thermal comfort than energy savings, whether it is visual. I think this is a very important trend. The second trend is that the user, and this is also boosted by what the digitalization of the chain shows, is more and more interested in productivity. I think that we need to answer those needs. These trends are very important. I think Saint-Gobain is uniquely positioned to answer those trends. We have major efforts in terms of our digitalization, but our solution are towards more comfort. We need to address more directly the end user. We need to revisit our channels for all our businesses in terms of how we address the needs. I think we see that as an opportunity much more than a threat for the Saint-Gobain businesses. Because of that, we have put in place progressively, a huge number of digital initiatives that we are trying. I think we are at the stage that after having a lot of initiatives, we know what are the best practices now, and we are going to generalize. That is a role that in his new position, Claude Imauven is going to organize. I just give you here a few examples of the things we are doing to address those needs. In distribution, two examples. One, we have created a completely new online sales format in France, which is showing a good growth and clearly is addressing this productivity need of our professional customer. We are also adding a number of new services through our, this example, Avantage Pro, is through our Pro Partner Network, taking advantage of digital to offer services to link the users and the builder and to speed up, give at the same time, express better our solutions and speed up the delivery chain. Another example, completely different, and that is coming from our, in fact, our R&D efforts. Those of you who have seen our DomoLab in Aubervilliers, we had built some example of virtual reality and the way you can figure out the appearance of the building. We have now put that as a tool for our architects, the customers, which is helping them to design, to realize the appearance of a facade, which is something very important, with very important savings for them because they will not need, in many instances, what they were calling a mock-up, which is a kind of real test, and they can, with virtual reality, accelerate and get a much better productivity and speeding up also their time. They are just examples, but I think we have a whole range of initiatives to boost our growth, addressing better the needs which are changing. In order to understand that in this new environment, the efforts that we have launched to move the group towards a bigger part of differentiating products make sense. With digital, our customers are going to be able and willing to get even more customized solutions. More and more, we need to deliver things which are fine-tuned to a need of specific customers, and we are progressing. We are set up to remember metrics to follow this differentiated effort, and we are on track. This is also through a speed up of the introduction of new products, and there we are a little bit ahead. In distribution, the digital roadmap is quite comprehensive, and there are many indicators. I have put one here, but I am not sure, in fact, that the one we set up three years ago. I want to be consistent, but I am not sure I want to measure only the progress of distribution with this indicator. Because in fact, the strategy of which is online sales, the strategy of distribution is an omni-channel strategy. But this is an indicator we are progressing on the relevant parameter, and we still have some way to go. Third point, which is accelerate the change in our portfolio. Of course, Verallia has been a big part. In this framework, we are still engaged in the acquisition of the controlling interest in Sika, which is a perfect strategic fit with what I have been explaining, and I think it is also a unique value creation opportunity for Sika. Sika brings to Saint-Gobain new technological skills, which are in construction chemical adhesive. In terms of this framework of productivity and complement with what we do is a very end-value-added customize is a perfect fit and address these issues of productivity and additional comfort. Sika is delivering very good growth. I think Sika to Saint-Gobain will increase our organic growth, thanks to its very good positioning, which is also complementary in terms of positioning. Many of the Sika solutions are addressing needs also at the stage of the development of the country, which is before Saint-Gobain, and at the upper end also, it is putting technological solutions. That is why we consider that there will be further sales by combining our operation and very significant synergies, EUR 180 million, a part of which will benefit to the minority shareholder of Sika. We are very determined to pursue this acquisition. As you know, it has not been as simple as we did not expect it to be simple, but it has been a bit more complicated than expected at the beginning. I think 2015, we have seen some good milestone. We have get all antitrust approvals. We have the family has won the judgments that were issued, but there is still one last obstacle, which is the limitation of the voting right of the holding company of this families, SWH. You understand that we are not going to proceed until the family got back their voting rights. We expect a first instance decision in the Zug court in the summer of this year. Clearly, the strategic interest of this transaction is confirmed. By the way, given the very good results of Sika compared to what we said initially, the value creation from this acquisition will be better. Clearly, compared to what we had in mind, we will be one year ahead in terms of value creation. We also reiterate our commitment to protect Sika's culture and staff when the acquisition is completed. This transaction makes sense, and we will continue to direct our first to complete this transaction. But on the other end, it does not affect the rollout of our overall strategy. In the meantime, we continue to develop our strategy. We leverage opportunities for value creations beyond Sika, as we have started to do in 2015, beyond Verallia. At the same time, that we accelerate the ongoing strategic review of all our existing business. The goal is to develop new technology, niche market to move the portfolio of Saint-Gobain towards this direction, consolidate our strong position in Building Distribution, and bolster our position on growing markets. In terms of now the last part, which is outlook for 2015-2016. First, I start by, I would say, the conclusion for our shareholders of this 2015 year, which is the dividend. From that standpoint, we are implementing the policies that we had designed. You remember there were three components. Not to move the dividend down, so it will stay at the same level, go progressively towards our targeted payout, 35%-40%. But if we reconcile these two objectives, in fact, the payout will be significantly higher again this year, 59%, which, and in line with what we said last year, and given our financial situation, we are able this year to propose to the shareholders a payment only in cash. The outlook for 2016, we expect a good momentum that we have seen in 2015 to continue in most Western European countries. Germany should be a bit better than 2015. We expect to continue to have good growth in the Nordic countries, in the U.K., and in Southern Europe. France, which has been really the major problem we had in 2015, I expect France to stabilize. In fact, we have seen in the last three months in our main construction and renovation activities, mainly in our distribution activities, we have seen on a daily sales basis, we have seen stable sales in the last three months. That is why I say stabilizing. The leading indicators are very positive. We have not seen that in our activities. So I remain, I would say, in France, given what we have seen in the last few years, I am a little bit Saint Thomas, and I wait for the growth to happen to tell you it is happening. We expect a slight growth to continue in North America with some uncertainties in some industrial market. I think, and we should not underestimate the importance of the energy sector in the U.S. I think the oil and gas issue is spilling over to a number of industrial sectors in the U.S. At the same time, there are others which are quite positive, but real activity in the U.S. We continue, on the other hand, to expect good growth in Asia and emerging countries. As Guillaume explained, I think there are some weak countries. For us, mostly Brazil. I would say Russia is quite small, but Brazil is more important, even though Brazil is, what, 4% of the sale of Saint-Gobain. At the other end, we have, even in Latin America, some very good growth, which is going to continue. So overall, I would say that we expect a good growth in Asia and emerging countries. What does it mean for our businesses? In terms of Innovative Materials, we expect further growth. We will have an improved, continuous trend to improve the profitability in Flat Glass. I would say in HPM, given what I said on the U.S., we are able to maintain our margins and we will continue to do that. Construction Products, we should have an improvement, I would say in all our areas, despite the fact that we will have a difficult first half especially in our pipe business in Brazil, but also in Europe. Building Distribution. In fact, in Building Distribution, the main change is that if we just change from a situation where we are declining France to a stable France or better, but for the time being, I say stabilizing France, I think that will make a significant difference to the picture and we should have good positive organic growth altogether. In this overall framework, our priorities stay constant. As you have heard me saying that for a number of years now, we will continue to give priority to pricing. In a deflationary environment, it is more difficult, but it is the number one priority of Saint-Gobain to focus on price. We will get the benefit, we will make sure we deliver the benefit of our new cost savings program, and I expect around EUR 250 million this year. Our CapEx program will move up slightly with a clear focus on, as I said, on growth CapEx outside of Western Europe, around EUR 1.4 billion. We will continue, and it is all the more important given the trend of the market I express our R&D effort. We continue to pursue the acquisition of the controlling interest in Sika, and we will, as always, give a very strong focus to cash generation in order to generate a high free cash flow. In terms of operating income, we expect to deliver further like-for-like improvement this year compared to 2015. This is basically what we had to say on 2015 and 2016, and now with Guillaume, I am at your disposal for any questions you may have. Hi. Can you hear me? It is Mike Betts at Jefferies. Yes, Mike. I had two questions, if I could just to start with. Firstly, on costs, the EUR 360 million savings last year, did that offset cost increases in other areas? I appreciate you say it was a deflationary environment, but I assume there were some cost increases. It is going to be a smaller cost saving this year. Is that because you expect less inflation more generally in 2016? Secondly, just on pipes. I guess I am really after a bit more quantification of how bad that is in terms of pipes, in terms of the magnitude of the decline in the order book. Maybe you could just remind me of some indication of the relative size of that kind of big long length pipe business, which I suspect is mainly to Middle East and Africa. Thank you. Okay. I will take the first one on cost savings. The EUR 360 million of savings, as you say on the other side too, there are some cost inflations, for example, the salary inflation. I remind you that our salary mass is approximately a little bit less than EUR 8 billion. So there was cost inflation there. On the other hand, there are also a few other costs linked to, for example, SG&A or to maintenance or to occupation costs, which are increasing also. But overall, for the year, the cost savings we have and the benefit of the reduction of raw materials and energy cost are offsetting those additional costs. I think the second part of the question was about the magnitude. Maybe I answer on the second one. On pipe, I would say that you are first an impact, which has to be taken out to some extent, which is a price impact, which is relatively similar to the impact in roofing. The raw materials, iron ore and all have all gone down significantly. Our pricing has had to come down as well. So that explain part of the drop in price. The second issue is that we have had bad news, I would say in most areas. First, Brazil, which is medium term and has always been quite volatile, but is at a very low at the moment given the paralysis that we see in all political life in Brazil. So that means that we have a very strong drop in our activity in Brazil. As far as Europe is concerned, a lot of that is in France. We have both bad markets in infrastructure in Europe and especially in France. We have an impact of both- Very good before last year, at the beginning of last year, and very bad now. Number of contracts mostly to the Middle East, which has been always an area where it's a good market, but there is oil and no water. You need oil to finance the water. So we are at a low, even though we see some orders for the end of the year, we are at a low at the moment. So it means to give you a magnitude, if I take the last quarter, our sales in that division all together were 20% down. So it has been quite significant. We expect that the first half will still be difficult. Yes. Yes. Josep Pujal from Kepler Cheuvreux. I have three questions, please. The first one on distribution. I don't know if the new head of the division is in the room. Sorry? Yeah. If Karim Alo is in the room. No, Karim Alo is with customers at the moment. I am sorry, he is not in the room. Well- I will make sure he is here in July. Okay. No, because it was the opportunity. Yes To ask about what can be his, you are probably aware. I think I can answer that question. Yes. The proactive- Go ahead. proactive actions. What is the plan? What are the midterm targets for the margin for that division, which is currently struggling? My second question is on France. There has been an increase all along the H2 in the number of transactions in old apartments, existing apartments in France. I guess that this will benefit your renovation markets. When do you think you will see that in your sales? My third question is about the delta price costs, in 2015. Your prices increased by 0.3%. I do not know what did the raw materials and energy, but at the end, what was the positive or negative delta for you? I will take the first two and Guillaume will answer the third one. Concerning the number of transactions, it is part of the very good indicators we have seen in the last few months. But I think I already answered your questions. This should be positive, but I do not want to speculate. We have had a number of disappointments in the evolution of the French market in the last few years. So I am careful. At the moment, I can tell you, the decline is stopped. We are stable. The leading indicators are good. If you look at also in the new, it is good. But you are right, generally in indicators of transaction is a good proxy of what is going to happen in the next few months. As I told you, I want to give this good news until they arrive, because there are other things in France. The confidence is an important impact, and I am not sure yet confidence is there. I think there are some positives and negatives. So I am cautious. There is an upside there, potentially, but I am cautious at this point. I would prefer, as I said in my presentation, I prefer to talk about it when it has happened. In terms of your first question, well, there is a continuity in the management of our distribution division. But, I would say that the medium term goals have not changed. You say we have had a decline in our margins in 2015. They are strongly linked with the situation in France, where we have had a cost reduction in place, but we have not been able to completely compensate, given the fact that a number of costs are not linked with the relatively deflationary environment that we have in our selling. Selling prices are basically flat. There are some internal costs which are not flat. So we need to offset that through savings, but it has had an impact on our margins. So we aim to go back to the level we had, and this is clearly the target of Karim Alo. But this has been the most important. To that extent, your two questions are linked. I hope we will have positive news later on during the year. In terms of the third question. Yeah, the third question was about the price cost spread, if I understand well. On the cost of raw materials and energy, we had this year, energy obviously went down overall, and some of our raw materials went down also, which was compensated by some other raw materials, which are still in an inflation mode. But overall, on the overall bill, we had savings linked to the price reductions of approximately EUR 100 million. As you said, on the other side, on the price side, we had a positive price effect of 0.3% overall. But if I look specifically at the industrial part, it would be slightly higher, something like 0.4%. We were able, obviously, to increase the spread, but take into account the fact that on the other side, as was mentioned several times before, a number of other costs, like cost of salary and other fixed costs, are still not impacted by the deflationary environment. Yes. Bonjour. I have two questions regarding first, follow-up in Building Distribution, and secondly, the specific situation in U.S. plasterboard and insulation pricing. Can you first have more flavor in the pricing and also market situation, competitive situation in the plasterboard and insulation in Northern America? Will you implement further price hikes? Secondly, in the Building Distribution, I think there were some difficulties in Lapeyre, specific activity across the Building Distribution in France. Where do we stand? Is Lapeyre still profitable? Lapeyre was very profitable in the past, but is now under pressure. Can we have more details on that? Thanks. On your question in the U.S., as Guillaume Texier said, we have had some pressure on pricing in the second half in the Interior Solutions, so pricing were slightly down. I think we hope to have a price increase in insulation. In plasterboard, it is a little bit early to say whether we will have a price increase at the beginning of the year or a little bit later during the year. But as I told you, our priority is always to try to get price increase when we can get those price increase. Concerning Building Distribution, Lapeyre has been suffering like our distribution activities in France. We have had to make some restructuring in the manufacturing part of Lapeyre, because as you know, Lapeyre manufacturing some part of what they sell. So it is more difficult than it was. Yes. Hello. Eric Lemarié from Bryan Garnier. Just to come back on Lapeyre. I understood that the last time we talk about Lapeyre, you said that Lapeyre was beneficiated from the energy renovation trends in France with people changing their windows. Is it still the case now? The second question regarding Sika. I understand that the Court of Zug should give an answer regarding the voting right during the summer. But the deal you got with the Burkard family will end at the end of June 2016. If you do not have any answer from the court before end of June, will you renew this deal with the Burkard family or not? Well, I'll start with the second one. The deal we have with the Burkard family is not exactly the one you mentioned. We'll adjust, but we are determined to complete that transaction. The Burkard family is also determined to complete that transaction. But it's too early to speculate on exactly the way our agreement will be organized. In terms of building, I forgot the question. About Lapeyre. Lapeyre and renovation. Renovation, yeah. Well, Lapeyre sells windows, but also kitchens, bathrooms, and joinery. We have had historically, strong volatility. It's true on windows, given the tax credits which have been changing. There are new tax credits which have been put in place, but as you know, they are more complicated than the one which existed before, and they are linked to. In order to get this tax credit, you don't need to change only your windows. You need to have complete renovation projects. So it's less efficient just on windows than the one which existed a few years ago, which has disappeared, and the new one which has been put in place is less. But it's a positive. Overall, I would say that I am still very hopeful that the renovation and the energy transition law will get some positive impact for Saint-Gobain. But the law has not yet been completely translated into decrees which are necessary. It's happening at the moment. It has been slower than expected. Okay. Are there questions on the phone? Oui. On the Internet? Okay. I take the- Of course. Internet. Internet also. It's a question from Paul Roger from Exane. We were surprised positively by the size of last year's share buyback. Given your relatively optimistic outlook and strong balance sheet, could we see an acceleration in your plan to return to the 2010 share count? We have not changed our objective on that, and we will do that opportunistically. I don't want to give a timeframe on this activity, but our strategy remains the same. Second question, how difficult will it be to find new contracts in Pipe given weakness in oil-dependent markets, especially in Middle East? In fact, when you look at history, it's not just black and white. The oil price in the Middle East is bad, and we don't have prices high, and we have contracts. I think we have good prospect, but not before a number of months. Because we had some very good contracts which expire, we have a very difficult comparison at the moment and the low activity. Also, there are other regions which are, well, there are quite important needs in Africa, for instance. There, the question mark is more linked on financing, and there could be some good opportunities. You comment on continued good margins in HPM, but given weak PMIs in Brazil, China, and U.S., will profit be down this year in absolute terms? No, that's not my expectations. By the way, Brazil in HPM is quite small. There is one thing which is always very difficult to forecast, is exchange rate. So if you look in absolute terms, I always give my guidance in constant exchange rate. In absolute terms, it also depends. As you know, a big part of our activity is in the U.S. Depending on where the EUR-USD rate is, it could have an impact on the absolute term. At least, it will change the picture with the picture in constant exchange rate. I have questions from John Messenger from Redburn. With respect to the EUR 933 million write-down, how much relates to goodwill, how much to fixed assets? That is for you. Yes, there is very little on goodwill, and the majority is on the fixed assets and brands. With this, how much does the group depreciation charge decline by? In 2015, the group depreciation was slightly up from EUR 1.1 billion to EUR 1.2 billion. Part of this impact was the exchange rate. And is the saving on depreciation already included in the EUR 250 million No of targeted cost savings in 2016? No. The answer is obviously no. On the Internet, that's all. Then we have a question on the phone from Elodie Rall. You have a question? I cannot hear. Exactly. We have a question from Elodie Rall from J.P. Morgan. Madame, please go ahead. Hi. Good morning, everyone. I have three questions, if I can. First of all, your guidance. You are looking for beginning for a further like-for-like improvement in operating income. Is there a way to get a bit more details and quantify this a bit more in light of consensus looking for 7% like-for-like improvement? How do you feel about that? Second, you have indicated better trend in France over the last three months, stabilization of sales. Can you give us the update on the U.K. and Germany? And final question, you gave us the volume and price split by division for the year, but do you mind actually going over that again and giving us the exact split price and volume for Q4 by division as well? Many thanks. I will answer the first two and you- Yeah. The first answer is that I never command the consensus, and I am not going to give you more details on this guidance. I will try, as I do generally, to be a bit more precise during the year. I don't want to be more precise at this time. In terms of the evolution of the sales lately in U.K. and Germany, I would say U.K., we have seen a slowdown of the growth of rate in the H2 versus H1, 2015. The beginning of year is starting in line. A little bit better, I would say that H2 at the moment. I hear people expressing fears about the referendum and the political situation. For the time being, I don't see an impact in our activity in the U.K. I think many people are cautious about the second half. For the time being, I don't see a change in the trend. It's still moderately positive in the U.K. Germany, we had a good fourth quarter. We had the slow start, I would say. In Germany, the months between November, December and February, March are one, relatively low months, and second, the weather makes a big impact. I wouldn't draw too much. I expect reasonable growth in Germany better than last year. I think your last question was about Q4 internal growth and the breakdown between price and volume. Going with Flat Glass, Flat Glass in Q4 had a growth of 3.3%, out of which 2.2% was coming from volume. HPM, minus 1% in alignment with the year, out of which minus 2% was volume and +1% was price. In Interior Solutions, the growth was 2.3%. 2.3%, knowing that 2.8% was in volume with a slightly negative price effect. Exterior Solutions, minus 3.5% impacted by pipe and the roofing price effect, and out of those minus 3.5%, minus 1.2 was due to volume and the rest to price. For distribution, 0.7% internal growth in the fourth quarter, so rebounding from the third quarter, and out of that, 0.6% are in volume. Next question. The next question is from Robert Gardiner from Davy. Sir, please go ahead. Good morning, gentlemen. Thanks very much. Two questions from my side. Could you give some additional color maybe on the cost takeout that you have announced this morning, the EUR 800 million and the EUR 250 million. If you could give us just some more color in terms of where that is going to come. I know you mentioned procurement, but also potentially by division, where that is going to come. You might just as well just give us some indication on the comps that you are lapping. You are flagging that in your pipes division, you have to lap difficult comps in H1. But have you now lapped four quarters in proppants, for example? Does that issue start to go away very quickly in H1? Thank you. I also understand the second question. It was the comps. Are there comps which are more difficult or more easy? Well, it's clear that on some of the oil and gas activity, and especially proppant, the comps is going to get much easier. It's already much easier, it will be much easier in Q1. Yes, all in all, this would mean, as Guillaume said, it was a 2% negative weight on HPM for 2015, which is going to nearly disappear this year. That's quite clear. Yes, the first question. I can take the first question. Okay. It was about more color on the EUR 250 million savings, and especially the breakdown by division. I think we have in the booklet the breakdown by division of the EUR 360 million of last year. I would assume that because a big part of the new cost-saving program is also the continuation of existing efforts, a good approximation would be to take approximately the same breakdown of savings. By division. By division, yes. Next question. We have another question from Gregor Kuglitsch from UBS. Sir, please go ahead. Good morning. Thank you for taking my questions. I have got four, I am afraid. I think some of them should be quite quick. Can you just briefly, because obviously you are guiding for like-for-like EBIT growth, but can you give us the known technical effects such as deconsolidation, because you obviously sold quite a few distribution businesses and equally acquired some, so maybe the scope effects in 2016 of those deals and perhaps also, if you can give us your best estimate, if you assume spot FX rates, what kind of headwind I presume that would imply at this point in time? The first question. The second question is, can you just give us the EBIT exposure for Brazil, Russia, China, roughly, so we understand what the risk is there? Yes. Third question is on glass margin. You did a very impressive 8.5% in the second half. Is that a number that you think you can improve on further? Then the final question is for perhaps the CFO. I think you mentioned, you have been redeeming some bonds. Can you give us your best estimate for the finance reduction in 2016 versus 2015 as you see it today? Thank you very much. Yes, the first one was on the scope effect on like-for-like EBIT growth and the exchange rate effect. There is no scope effect. No, I understand. I understand that what you wanted to know was, what was the scope effect in the difference between the 4.5% and the 2.2%? As I mentioned on the turnover part, the perimeter effect is slightly negative. On the EBIT part, it is slightly positive because we sold less performing assets than what we bought. So it is slightly positive. It should be, given what has been done already, you should have more the same kind of effect in 2016. So, slightly positive in operating income and negative in sales. Mm-hmm. As far as the exchange rate effect for next year, I think that was the second part of your question. You are right to assume that this exchange rate is going to be negative next year because there is a reversal in the trends in the currency. It's very volatile. It's very volatile, but if we were to stop the counters today, we would have probably an exchange rate effect on EBIT, something like EUR 50 million. Negative. Then there was a question of the margin of Flat Glass. What I expect is the margin of Flat Glass to be above the margin of 2015. I didn't specifically mention which half. There was a question on bond reimbursement and financing cost reduction. We have two bonds to reimburse in 2016 with a total amount of approximately a little bit more than EUR 1 billion. The total financing cost is made of the interest rate, but there are also many other things to be taken into account. Overall, I would assume that the financing cost is going to be approximately stable next year. Okay. Russia and China. Oh, can you repeat your question on China? Could be yourself. Can you repeat the question on China? Hello? Can you hear me? Yes. Yes. There's a question on China, could you repeat it, please? Could you repeat the question? They cannot hear me. Can you hear me? Yes. Go ahead. Sorry. The question was, what is the exposure at the EBIT or operating profit level to Brazil, Russia, and China? Oh, it is clearly less than 10%. What I said in the presentation is that the exposure on Brazil, Russia, China, and also the Middle East countries was less than 10% in turnover and also in EBIT. The next question is from Xavier Delfait from Natixis. Sir, please go ahead. From Natixis here. I have got three questions actually. Firstly is on France, on your guidance. Could you perhaps clarify your guidance of stabilization? What does that mean exactly? It means pipe is going down and then construction is going up. Secondly, on Sika, if I understand correctly, you expect the Zug court to rule mid-year. It means that if Sika management decide to appeal, it might last until 2017. So in this context, you will have another year of free cash flow and given your already healthy balance sheet, would you consider buying part of Wendel's stake? Obviously, if Wendel is seller, and in this context, you could clearly go quickly to the 2010 number of share. Then perhaps a third question on the pipe business. In this context, I know Saint-Gobain usually do not dispose businesses on trust, but given the huge potential for improvement on return on capital employed, is there a reflection in Saint-Gobain regarding a potential proposal on this business? Which business? Pipe. Pipe. I think on the first question on France, I already spoke a lot about it, so I don't have a lot more to add. I think I already said. At the moment, we have stable sales in our construction and renovation. They are going to be negative in Pipe. I expect that to stabilize, and overall, I think we are aiming to have something which is at least stable. That's the goal in France as I can see at the moment. But as I told you, there may be upsides in France. I hesitate to talk about it at this stage because we have had some bad surprise three or four times. That's why I am probably maybe more careful than I was. Once again, when I look at the leading indicators, they are all positive. It's just because I have not seen the materialization of that, and if you remember, we were expecting a stabilization in August last year. It's happening only at the end of this year. I am cautious to talk about a clear recovery in our sales at this point, and I will update you when I see it. On the buyback or share, I've already answered to Paul Roger on that question, and I have absolutely nothing to comment. I'm not aware of anything concerning our number one shareholder. Concerning Pipe, this is not on the cards, but as I always say, in Saint-Gobain, there is no taboo. So we are reviewing our asset portfolio regularly, but it's not an option at this moment. I think I've answered all. Yes. Next question. The next question is from Will Jones from Redburn. Sir, please go ahead. Thanks. The first one is just around energy and raw materials. If you could just update us on what you think the total bill might move by this year compared to, I think, the EUR 100 million or so downward you referred to last year. The second, just around Flat Glass. I think there is some pricing data we can see that suggests some resilience in pricing over the winter months in European Upstream. Is that true outside of just Germany? Or perhaps just an update there around Flat Glass pricing and, while we are on pricing in Europe, perhaps as well, you could just update us on how you see plasterboard and insulation pricing moving in the context of costs. The last one was just more general around, with energy prices falling, are you seeing any countries where either governments or consumers are less willing to undertake energy efficiency-related renovation as a result of the drop in energy costs? Well, I am not sure I have understood. The last one. Okay. I will answer the last one, which I have understood. Okay. The last one is a very difficult question to answer. Honestly, I do not see a clear slowdown in renovation, which would be based on this, but it is very difficult to measure. If there is one country where I think I see a bigger sensitivity than elsewhere, that is Germany. Maybe in Germany, this could be one explanation why the renovation market has been slower than what we were anticipating in 2015. But honestly, I am not sure about this explanation. The other question? The first one I understood. I think it was the price effect for next year on raw materials and energy, and on this one I can answer. There was last year a EUR 100 million positive on raw materials and energy. For next year, if things were to be frozen at today's prices, we would see an additional positive impact on our energy bill, as well as on some raw materials. On the other hand, there are a few raw materials which are still inflationary. All in all, I estimate if everything was to be frozen today, that the positive impact on our account would be a little bit more than EUR 50 million. Concerning pricing in Europe, we clearly see positive trends at the moment in Flat Glass. We don't see the same trends for the moment in insulation and plasterboard. Those were the two questions we had. We see a difference between insulation and plasterboard, where price increase are quite difficult at the moment, and Flat Glass, where the trend is much better. Okay. Next question. Next question is from Joe Fraser Andrew from HSBC. Sir, go ahead. Thank you. Good morning. First question is in current trading. Appreciate that it's quiet in Europe at the moment. But in emerging countries, can you tell us what you've seen since the year end, please? I'm talking the bigger countries, please. Second question. I just want to square up your cost savings with the operational gearing that you see going forward. Can you tell us where the EUR 800 million, how much of that you think will be structural in terms of cost savings? And can you update on the amount of volume that you expect in Europe to be able to deliver without increasing costs? You previously said that the operational gearing in your industrial and Construction Products businesses is between 45%-55%. Could you update on that and tell us how much volume there is to achieve that, please? Thank you. I will answer the first question. On the current trend, I would say the last few weeks in emerging countries, I don't see a significant change in the trend. I would say Asia is starting pretty well. We have a very good Southeast Asia. India is doing well. China, we have had, in some businesses, relatively good sales in the last 2, 3 months. So Asia is starting off reasonably well. Latin America is overall not too bad, but clearly Brazil is not starting well. So Brazil, the trends that we have seen in Q4 are continuing. But I would say the rest of Latin America is doing well. And I am optimistic about Argentina. Mexico is quite good. And then concerning Eastern Europe, which is the third significant block, we are seeing a relatively good start in Eastern Europe, even though there are low months in construction. But we are seeing a good trend in the two most important countries, which are Poland and Czech Republic. As I said, in the framework of Saint-Gobain, Russia, which is not doing well, is quite small. So I would say overall, reasonably well, except Brazil. So I think your other question was about the cost savings plan and how much of it is structural. I would say that the big one-off restructurations are in many businesses behind us. So you could assume safely that half of what we are delivering in terms of cost savings, approximately, is structural. In terms of what it means for the leverage of our businesses, the figure you mentioned, it depends very much on the businesses, on the particulars of each business. I would say that the figure that you mentioned is broadly right, maybe a little bit in the upper range of what we see. Thank you. How much volume can you do in Europe without increasing your costs, particularly after the further fall in French sales last year? I think there are two things which are different, which is existing internal cost base. If I take, for instance, Building Distribution, which is from that standpoint, a little bit simpler. The existing cost base in terms of number of people, we can do more, but there is overall still a salary inflation which is higher than our price increase. It is the same for, I would say, the other costs, occupational costs, and those type of costs. That means that in Europe, we need cost savings to offset this inflation of costs, whatever is the volume. The volume has a very good impact. But there are two different things there. The answer is we don't need to bring additional costs, but the existing cost base, if we do nothing, is growing. I would say in manufacturing in Europe, given the capacity situation that we have on most businesses, it is the same, except that the leverage is significantly higher of additional volume. So we don't need to add cost in most businesses. I would say the only exception is our Automotive Glass business where we are fully saturated. But all the other businesses, we could take the kind of volume, for instance, that we expect for this year and probably for the year after, without bringing back cost. But our existing cost base, the internal cost base in manufacturing is lower compared to the sales than it is in Building Distribution. I don't know whether this answers your question. I was really looking for a volume figure. Is it 5%, 10% of volume you can- Well, I- take on in Europe without- I am- increasing. I am afraid 10% volume growth in Europe this year is a little bit wishful thinking. I appreciate that. I would say even if we had a mid-single digit this year, it is going to be true in some countries, but overall in Europe, that is not what I am expecting. The answer is the one I gave you. Thank you. We have a question from John Messenger from Redburn Europe. Sir, please go ahead. Hi. It's really just one question, and sorry to come back to it, but it comes back to Sika. It's just to understand from the group's management and board point of view, how long are you prepared to have this situation continue in that there must be an opportunity cost in terms of either decisions on repurchasing shares, alternate acquisitions, that obviously have to be in some way either put on hold or at least deferred. With obviously the court case and the Zug decision potentially dragging out further, is there a time limit to which you say, "Look, enough is enough. We must move on." On what the rest of the group can do, as well as looking at alternatives like building a mortars business in the U.S., the Grace business. There are other things out there that might make it an alternate fit for the group. Obviously, we've seen Sika numbers today, but are there any metrics that you can give us around your own mortars business that would allow some comparison with Sika? Obviously, they've reported their sales growth, return on sales, return on capital. Is there anything there that you could provide that would support the strength of your business and therefore the complementarity between the two? Well, frankly, I have read briefly this morning the Sika numbers, and it's giving even more comfort to our project. To be very blunt, the price we have negotiated is fixed, and the results are improving day after day. I would say that it's a better and better acquisition for us. So in terms of opportunity, I think the opportunity cost, it's not an opportunity cost, it's an opportunity to do better. So I don't see why I would give a time limit. I think so far it's getting better by the day. In terms of mortars, I want to, once again, dismiss this idea that you hear in Switzerland that we are a competitor to Sika. You just need to, again, to read what was in The fact that the decision of the antitrust authorities was favorable without a condition, that could mean that we could be competitors. You need to read what was in that decision, if you want to. They say that we really, on most cases, don't compete. So the mortars of Saint-Gobain don't compete with Sika. Which by the way, until one year ago, I didn't see the word mortars in their documents. So suddenly it's a big thing. So probably they have another definition. It's not the same business, number one. On the other hand, there is a lot of complementarities, and I gave you last year some examples. When you have the-- We can, through the same channels and with the same brand, put the same two together. But it's not the same drivers, it's the same channels. So it's brand and channels, which means that there are significant synergies. Now, in terms of our mortars business, the geographical mix is quite different than the one of Sika. That is also why I am very interested in Sika. It will improve our geographical mix. Our mortars are very much based in Europe, and our biggest country is by far outside of Europe. And in fact, our number one country overall is Brazil. So our growth in our mortars is at the moment lower than the one of Sika. But we have a reasonably good performance given that in our mortars business. Okay. Thank you. The last question is from Muriel Fellous from Societe Generale. Madam, please go ahead. Yes, good morning, everyone. I have two questions. I wanted first to come back on the distributions, just to understand really on the margin. Also with the business that you have sold, you said the impact on a full year is EUR 700 million. I just wanted to know if those businesses on a full year will have an impact on the margin. Could that increase slightly the margin? Would those EUR 700 million having lower profit than the rest of the business? That will be my first question. My second question also on distribution, is that how much volume growth would you say you need in France to have a positive impact on the margin of the distribution business? A gross idea. If I can just add a very quick question, how much restructuring charge for the cost saving would you have in 2016, please? Thank you. I will answer the first one. The answer is obviously yes, will be a positive impact because these businesses were marginally profitable. I would say, if I take they all together, they were even at a slight loss. We have EUR 700 million at a slight loss, which disappear. That is a positive impact on our margin for 2016. The second question, I think I already answered, no? Yes, it was on the- The impact of volume on the margin. I think I answered that question extensively before. Just the French one. The answer on France is the same than the answer I gave for all the countries. Yes, there is a positive impact. What I would say is that the wage inflation in France is lower than it is in Germany at the moment. To that extent, the need to offset the cost base increase is less than it is in Germany. I think you had a question on the restructuring charges linked to the savings. I think this year we had restructuring charges which are lower than last year, EUR 179 million compared to EUR 246 million last year. I think the big restructuring are behind us. Nevertheless, we project roughly that the restructuring margin are going to be of the same order of magnitude next year. Okay. Well, thank you very much. There is a question on the Internet from Nabil Ahmed from Barclays. "We understand Saint-Gobain remains committed to the Sika acquisition, but in a worst-case scenario, for whatever reason, should you run away at any time from the acquisition agreement? According to the term of the contract, is there a specific timing where you would be allowed to do this? Any breakup fees?" No, there is no breakup fee. We will buy when the family has got back their voting rights. Until then, we are not committed to buy. Automotive Glass, what's the outlook for 2016 in a more challenging environment for automakers? I would say that our outlook is very positive on Automotive Glass. We have had a very good year in 2015. I would say well above the market rate. I expect to have another very good year this year. Our order pipeline is good. We are well positioned at the moment in most of our countries. I am quite optimistic about our Automotive Glass performance this year. North America, you seem to be modestly positive about construction and concerned about industrial market. Would you see the region able to produce earning growth in 2016? Yes. Then I have another question. Jean-Philippe Vacher, individual shareholder. "Could you update on the acquisition process of Sika?" I think I answered that either in the presentation or in the question. Yes, there is one more. Eric Lemarié again. Excuse me to insist on the Sika story. Yes. Do you have any- You can insist. I think I gave you my answers. Yes. Thank you. Is there any validity date on the deal between you and the Burkard family? I don't think this matters. Okay. Thank you.