Compagnie de Saint-Gobain S.A. (SGO) Earnings Call Transcript & Summary

Hello, and good morning, everyone. I hope you are doing well. It's my pleasure today, together with Sreedhar, our Group CFO, to present our 2021 results. I will start with the highlights of the year, then Sreedhar will drive you through all the details of our financial performance of the group and by segment, and then I will come back with our key strategic priorities in 2021 and in 2022. And of course, we'll have our Q&A session. In 2021, we have defined very clearly our vision, what we stand for, the worldwide leader in light and sustainable construction, aligned with our purpose, making the world a better home. 2021 was also the very first year of our new strategic plan, Grow & Impact, that is delivering on this vision. Before I go into the figures, let me share with you some emblematic achievements in 2021 that do reflect the success of our plan Grow & Impact. First of all, I want to thank our teams and congratulate them. I'm extremely grateful and proud of the Saint-Gobain teams who made our plan, Grow & Impact come alive in all countries, in difficult times, 2021 was not a walk in the park, the commitment of all women and men of Saint-Gobain made our year success and Grow & Impact a success around the world. As a group, we are showcasing sustainable solutions. We built a unique knowledge and expertise on sustainable solutions that provide benefits both in terms of sustainability and performance to our customers. In 2021, we ensured our position as a key supplier of building materials for the Dubai World Expo by providing High Performance Solutions innovative, which measure the environmental benefits for our customers. We are also leading the way on renovation in Europe. You know this is our largest market, and we are more than ever best positioned to answer the need for renovation in Europe through our 3,500 distribution outlets and our best-in-class customer journey, we are in regular contact across all Europe with almost 2 million craftsmen. In 2021, we made 2 decisive acquisitions to strengthen our leading position worldwide in construction chemicals. The combined platform of Weber, Chryso and -- GCP offers a highly comprehensive portfolio of construction chemicals and also a fantastic geographic footprint. As you know, we are also accelerating on all fronts to drive sustainability. It is at the core of our business model. In 2021, as one example, we entered into our largest renewable energy deal in the U.S. with a 12-year power purchase agreement on wind mills. It is a key milestone in our target to reach net zero carbon by 2050. With this agreement and other projects around the world, we doubled our share of renewable electricity to nearly 40% in 2021. Sustainability is not just about CO2, we are also actively driving the circular economy. One example, real life of our teams. This is in Sweden, where Saint-Gobain took the lead in a major office renovation project for which we supplied all new glazing but also we recovered and recycled 100% of the old one. All those achievements on the ground, this is to show you a bit the real life of Saint-Gobain in terms of solutions, in terms of teams, in terms of ESG commitment. In all countries, they are, of course, translated into our financial results. 2021 is a key milestone and a step change for Saint-Gobain financial performance. It is as simple as that. We have delivered new records on all performance indicators. A record organic growth of 13.8% compared to 2019, 18.4% compared to 2020, but you will see that we'll mostly compare the group with 2019, the full year prior to COVID. So 13.8% organic growth versus '19, which is a 6.9% annual average organic growth over the last 2 years. Record operating income like-for-like up 39% versus 2019. But slightly more than EUR 4.5 billion. This is up 60% versus 2020. Also a record recurring net income, up 47% on 2019, above EUR 2.8 billion. And lastly, a strong value creation with a record return on capital employed above 15% -- 15.3% versus 11.1% in 2019. Beyond these figures, we have now built a new Saint-Gobain with a performance-driven organization, with a high consistency of execution for the third year in a row, and structurally a much stronger growth and profitability business profile. In 2021, we have made also very good progress on our environmental and social targets. The solutions sold by Saint-Gobain in one year allow our customers to avoid CO2 emissions equivalent to 40x our own total carbon footprint, whether it's on Scope 1, 2 or 3. And we'll continue, of course, to maximize our positive impact. At the same time, we work continuously to minimize our carbon footprint. We have achieved a 23% reduction of CO2 emissions versus 2017 despite our strong volume growth. We achieved such results because our teams are fully committed. We managed to increase last year, our employee engagement score, which is already very high by 4 points at 83%, which is well above industry average. Those achievements illustrate once more that ESG is at the core of the business model of Saint-Gobain being a solutions provider towards carbon neutrality. 2021 was also the first year of Grow & Impact with a very successful execution on this first year. It is in motion. I'll show you the teams around the world, it is in motion across all our countries with great energy. Our exemption is robust. We have delivered in this first year on all the financial targets that were presented during our Capital Market Day, above inorganic growth, above in ROCE, double-digit operating margin and a strong free cash flow ratio in line with our targets. 2021 has been a successful year, first year of Grow & Impact. Thanks also to our 4 main pillars, where we executed strongly on those 4 pillars. First, we roll out in each country, our solutions approach to meet our customer demand. Second, we are decisive, rigorous on capital allocation for growth. We opened 21 new plants last year and entered into 5 new countries. As you know, we are also very active on portfolio pruning and acquisitions to boost our growth and margin profile, we acquired nearly EUR 2 billion of turnover and divested EUR 2 billion last year. As you have seen continuously optimizing our portfolio has become part of our management routine. We'll continue to do so every year with notable and fast execution to make Saint-Gobain stronger. Since acquisitions and divestitures are being part of our management routine, this is why we have decided to make a slight change in the way we present our 2022 guidance, including now structural impact, and this is the total growth, which contributes to the important metric of EPS. Obviously, we remain confident that will continue to deliver like-for-like improvement. Finally, thanks to the success of our plan, and our record results, we were able to deliver a record return to shareholders last year at EUR 1.2 billion. So all in all, I'm confident to say that Saint-Gobain is on a new growth and profitability trajectory with very committed teams, with a clear strategy as a leader for light and sustainable construction. Sreedhar, the floor is yours now to drive us through all the financials.

Thank you, Benoit. Good morning, everyone. Let me give some more details about our 2021 results. Starting with organic growth. We have seen record organic growth in 2021 with 13.8% growth compared to 2019, which means an average annual growth of 6.9%. We saw negative structure and exchange rate impacts. The structure impact came from the continued divestments of underperforming businesses, partly offset by the acquisitions made to enhance our growth and profitability profile. The exchange rate impact became positive in H2 with the U.S. dollar and Brazilian real turning positive, a stronger positive impact from the British pound and continued positive impact from the Nordic krone. If you look at the organic growth, you will see here a sequential improvement in the quarterly organic growth in 2021 versus 2019. We saw a continuous -- continuation of a very strong underlying trends, driven by renovation in Europe, construction in Americas and in Asia Pacific. We had an acceleration in Q4, not only due to pricing, but also due to strong volume growth of 6%. Looking at the pricing, we have seen a strong acceleration quarter-after-quarter in all segments to plus 10.3% in Q4 for the whole group and 9.5% for our industrial businesses. Our pricing power and the decisive execution allowed us to achieve a positive price-cost spread for the full year of EUR 60 million in a continued inflationary environment. The total inflation of raw materials and energy for the year was EUR 1.6 billion as against the previous guidance we gave EUR 1.5 billion. For 2022, we expect a continued inflationary backdrop in the same order of magnitude as 2021. We will remain focused and proactive on pricing as we have demonstrated over the years to ensure we at least pass on the inflation. Note that for 2022, we are hedged at close to 75% of electricity and natural gas requirement. And for March and April, we have covered -- we have hedged close to 85%. As we are speaking about the price-cost spread, I also want to tell you all that we started the year well. The prices are further accelerating everywhere as compared to Q4, and we had a neutral price-cost spread in January. Now looking at the operating margin and income. You see here that we have a record operating income and margin. The operating margin increased to 10.2%, a 250 basis point increase as compared to the margin when we started the transformation of the group at the end of 2018. This is the result of the significant progress that we have made in making the organization simpler, leaner with a dedicated and empowered managers on the ground and also an optimized group profile. 2021 shows also the successful first year execution of Grow & Impact plan, as Benoit highlighted. If you just look at 2021, we continue to consistently outperform our underlying markets with a significant organic growth as well as the positive price-cost spread of EUR 60 million and an additional cost savings of EUR 150 million to lower the breakeven point of certain businesses, which were impacted by COVID. We have delivered our ambition of double-digit operating margin, which we articulated in Capital Markets Day. Let us now look at the other P&L lines. So here, you see we have recorded an increase of business income of over 50% compared to 2019, even better than 33% increase in operating income. Thanks to a significant reduction in nonoperating costs as planned. We achieved another new record of EBITDA and EBITDA margin up close to 300 basis points compared to 2018. And if you look at the net financial expenses was slightly lower compared to the last 2 years. Income tax was higher, mainly due to the sharp increase in the net income. However, the group tax rate on recurring net income was slightly down to 24%. Recurring net income reached a new record level at EUR 2.8 billion, and earnings per share is up more than 50% versus 2019. Now the cash flow. We achieved a free cash flow of EUR 2.9 billion and a conversion ratio of 53%, again, meeting our Investor's Day target of above 50%. This is a dramatic increase since 2018, driven by our new cash culture the positive impact of our divestments and acquisitions, the optimization of CapEx, the reduction of working capital, which is now 12 days' of sales since 2018. In 2021, the CapEx was 3.6% of sales. Nonoperating costs were EUR 239 million and an operating working capital was 17 days' sales, a record level for the second consecutive year. Despite the first steps being taken to rebuild inventory to serve our customers better, thanks to our focus on the receivables management that we continue to demonstrate our capability to keep the working capital at a very low level. All these 3 drivers: working capital, CapEx and the nonoperating costs are in line or better than the targets which we articulated in the Capital Markets Day. Now looking at the balance sheet. Clearly, you see the impact of all the generation of cash which has happened is reflecting in the balance sheet. The balance sheet is now reinforced with a strong cash generation over the last 3 years, leading to a net debt level coming down from EUR 8.2 billion to EUR 4.1 billion, literally half. In spite of making value-creative acquisitions like Continental Building Products and Chryso. So we have achieved a very strong improvement in the value creation ratio since 2018 with an ROI at 27.6%, which is 950 basis points improvement. And ROCE, return on capital employed, at 15.3% in which is 460 basis point better than what we had in 2018. So clearly, we are ahead of the target that we set at the Investor's Day. Now before I get into the segment detail, I just want to clarify because I've been referring the figures sometimes [ 2019, sometime 2018, ] it's important that I tell you why it is so because it's important that -- when we compare the organic growth, it makes sense to compare with 2019 because 2020 was impacted because of COVID. Now when it comes to the operating performance, the margins and operating income, I'm comparing with 2018 because that gives you the complete picture of that impact, which we have created because of the transformation, which we have done over the last 3 years. So starting with Northern Europe, we saw strong sales momentum on the renovation markets. Nordic countries continued to deliver good growth, particularly in the light construction and on a supportive renovation market. During the year, we launched our project in Norway to create the world's first carbon-neutral plasterboard plant. Germany saw accelerating sales in sustainable construction and should benefit from stimulus measures for energy-efficient renovation in 2022. However, the profitability was impacted by the downturn in the European automotive markets. Sales in the U.K. improved in Q4, driven by pricing and the improvement of the part of our business done through distribution despite some supply chain difficulties. The region achieved a record margin of 7.3% for the year. When we look at Southern Europe, we saw a strong sales growth in the region as our unique offer of a comprehensive solutions helped us to outperform a growing renovation market. France continued to grow strongly, thanks to a solid renovation market and our energy efficiency solutions. The full impact of the stimulus package, MaPrimeRénov, added to the positive dynamic, thanks to our unique presence throughout the value chain of craftsman from manufacturing and distribution to recycling giving advice to them, doing the intermediation services, we continue to gain market share in France. Italy also did a very good job of using their full set of solutions to make the most -- the benefit of the government initiatives to support efficient renovation via tax credit. Spain grew strongly in the light construction and construction chemical market. Once again, we've achieved a record annual operating margin in the region at 8.3%, almost double as compared to what you had in 2018. In the Americas, we continue to see a very strong underlying construction markets, enabling us to deliver organic growth of 28% versus 2019, with pricing up double-digit in an inflationary environment. In North America, sales of our solutions of our light construction continued to drive growth. Our local organization enabled us to deal decisively, effectively the supply chain challenges and reinforced also our customer relationship by doing an extraordinary work in serving the customers during a difficult period. The successful integration of Continental not only reinforced our positioning in plasterboard in the U.S. but has also allowed us to develop a combined offering of Saint-Gobain solutions in the U.S. market, improving our value propositions and allowing us to also differentiate ourselves as compared to the competition. Latin America continued to see a very strong growth both in volumes and in price to offset inflation. Like-for-like sales were up 43% compared to 2019. Brazil, among other Latin American countries benefited from its complete set of solutions for our customers to reinforce its market presence, and improve its efficiency and its service to the customers. We are seeing the benefit of our investments in the new plants and acquisitions in countries like Peru, Colombia, Argentina and Mexico, and we are clearly spreading our wings in this region. We achieved a record operating margin in the Americas region at 16.5%. This was mainly due to the strong volume, a good price-cost spread and an excellent organization setup and the effectiveness. If you look at the Asia Pacific region, we saw a strong sales growth driven by strong volume trends. India showed an excellent performance, thanks to market-driven -- market share gains, a leadership role in the promotion of sustainable buildings and innovated -- integrated offerings in the residential solutions and the introduction of the new ranges in chemical construction. China showed a very dynamic growth, benefiting from market share gains thanks to its positioning on value-added markets in a supportive underlying markets. Southeast Asia was impacted by pandemic-related restrictions, but improved towards the end of the year with continued market share gain in Vietnam. The region achieved a record operating margin of 11.8%, thanks to the good volume dynamic. So you have seen that almost all the regions have made very good progress. Now we have high-performance solutions. Like-for-like sales were slightly up versus 2019, but was good growth when you exclude mobility, particularly European automotive market. Our construction industry business outperformed the market with around 12% growth versus 2019, supported by capacity increases in textile solutions and many fast-growing applications in our technologies. The integration of Chryso is going very well, and they have delivered the results better than what we planned in our business plan and when we announced the acquisition in 2021. Our mobility sales remains slightly below 2019's level, mainly impacted by the European market and the shortage of semiconductors. Otherwise, the sales to Americas and China progressed well, especially in electrical cars. Overall, the sales to the electrical cars now represent around 20% of our automotive sales. Therefore, we continue to outperform the global automotive market. Industrial markets saw good trends in surface finishing solutions, decarbonization technologies like our glass refractories that save energy consumption, reducing the CO2 emissions. Activities related to our customers' investment cycles have rebounded significantly versus 2020, but are still slightly below 2019 levels. The operating margin for high-performance solution was 12.4%, impacted again mainly by mobility in Europe. So to conclude, you have seen what Benoit said. Again, I want to reiterate that we have transformed Saint-Gobain, its profitability and the growth profile. And it is visible in the last 3 years' performance. Clearly, it's a step change. Given that it is the third year of solid execution of our strategy, solid results, we have delivered exactly what we said or more than what we said, gives me a lot of confidence that Saint-Gobain is now set to deliver a strong performance as we progress in the years to come. Thank you, and I now pass on the floor to Benoit.

Thank you, Sreedhar. Now let me share with you some highlights of our strategic actions. You remember in October, we shared our plan which rest on 4 pillars: acceleration of our underlying markets. Second, expansion of our customer-centric solutions to outperform those markets. Third, sustainability at the core of our business model; and fourth, of course, further strengthen our value creation for our shareholders. Let's start with our main market. You know Saint-Gobain is at the core, at the heart of 3 world big challenges: climate change and the need to decarbonize construction, preservation of natural resources and fast decarbonization in emerging markets. These challenges, they call for an acceleration of growth on our 3 key markets: renovation, mostly in Europe; shift towards light frame construction, especially in North America and emerging markets; and a call for innovation towards sustainability on global, industrial and construction markets. Let's look at renovation of buildings in Europe. It is enjoying powerful tailwinds, and we at Saint-Gobain are ideally positioned. First, on energy efficiency, commitments are now becoming a reality with concrete regulations on minimum energy standards and green stimulus packages. Roughly 35 million buildings will need to be renovated by 2030 in line with the EU Fit for 55 package. Second, tailwind, COVID lockdowns have precipitated new building usage starting with working from home trends. This has triggered an impressive rally in terms of home renovation intentions powered also by excess household savings accounting for roughly 8% of GDP. As you can see on this slide, don't worry, I'm not going to comment that in all details, every country in Europe, all governments are taking action to increase their renovation rate. The EU commission estimate that in order to achieve carbon neutrality more than 70% of EU buildings, public, private, need to undergo significant renovation by 2050, which means doubling the renovation rate by 2030. Next, on light construction. The rationale for adoption of light construction is strong, articulated around sustainability and performance. Sustainability, because you save on the cost, the weight, sorry, the C02 of the materials by having less resource-intensive way of building to decarbonize construction at the time you built. Second, performance by gaining time, productivity. Addressing in the emerging markets, the need to build fast and the labor shortages in developed countries, and of course, delivering the well-being benefits thermal, acoustic, visual that everyone expects. Light construction, adoption is growing fast and it's becoming the new standard for many projects. On the right side of the chart, I take the example of the -- - we just finished the Winter Olympics. So let's go to the next Summer Olympics in Paris 2024. Sustainability and performance requirements were key for us to win on the 250,000 square meters project that needs to be built in a very short period of time for this village, which later on will be, of course, converted to permanent housing. So we are providing a full set of innovative solutions with also the green delivery from our distribution waterway on the San River benefiting from outlets on the river to reduce the road transport, a full solution of Saint-Gobain towards this Olympic Village. So we have a complete set of solutions on light construction, whether from manufacturing and also all our sales through distribution. So we are well positioned here also to benefit from this trend. If I switch to the big goal for sustainability imperative innovation. This is a fantastic opportunity for our High Performance Solutions to deliver impact. We tackle 3 big needs, sustainable construction Adfors, Chryso they grew double digits because we offer decarbonizations technologies for global construction players. Sustainable mobility, we have cutting-edge technology of glazing and above 40% market share on electrical vehicle worldwide. Sustainable industry, our specialty materials help large industrial customers, answer their own challenges towards carbon neutrality, both for their processes and also their products. As Sreedhar told you our backlog on those orders is increasing for new applications because there is a real goal and urgency to decarbonize industrial products and initial processes. So we see acceleration of growth on many of those global markets. How we perform on those markets truly by leveraging our customer-centric solutions. If I take single-family home renovation in France. We are the true one-stop shop for this very large market. We are present all along the value chain. Our solutions tackle all applications of the building. And thanks to our very strong distribution presence. We have regular contacts with more than 3/4 of all French craftsmen. We provide them with software for training, for digital codes, advice, of course, the counter for best energy efficiency solutions, logistics on the job site and waste recycling services. This full set of solution and best-in-class omnichannel customer journey allowed us to outperform the market consistently over the last years in 2021 versus [ 2019 ] we grew significantly above the French renovation market. On light frame construction, we have a full spectrum of solutions. I take one example, ETICS, External Thermal Insulation in Czech Republic, for instance, for timber framed walls. Again, the reality of Saint-Gobain on the ground. This is a certified system, which combines insulation, water barriers on Isover, reinforced gypsum board from Gyproc, our plasterboard brand, adhesive mortars and decorative coatings from Weber as well as glass fiber reinforcement mesh from Adfors. In Czech Republic, thanks to this system and thanks to a very structured targeted key account management, we have grown by 12% in '21 versus 2020, gaining 2 points of market share. Within High Performance Solutions, our solution bring global solutions of innovative materials and technology to support our customer needs for sustainability. SEFPRO, this is our high specialty refractory business, help energy consumption reduction for glass furnace, but not only in many, many industrial processes and therefore, lower the carbon content. Carbon content of a glazing of a window will be reduced, thanks to these materials during their production. Also, we recycle with Valoref, the refractories at the end of their lifecycle. Another example, of course, is Chryso, which brings low carbon solutions to concrete and cement manufacturers. Chryso has been the first player to propose a complete mixture offer for low CO2 concrete. All countries are driving customer-centric solutions. We have a powerful multi local organization, empowered local teams on the ground, full accountability for them and ownership on their P&L and their solutions, adapting to the market. They are driving a lot of initiatives. I'm not going to describe all that. You can see many examples, whether it's the complete offering we are delivering for do-it-yourself in the U.S., other solutions in India and Brazil and so on. Now as a leader on light and sustainable construction, ESG is at the core of our commitment. I will give you a few concrete examples of what we are doing. Innovation. Innovation is central to creating more sustainable model for buildings. For instance, Saint-Gobain is developing a new disruptive decarbonized wall system using row excavated earth. This system combines our know-how on ETICS, insulation, construction chemicals, plasterboard, it is a circular economy solutions with our local presence of Point.P all across France. It brings many advantages, of course, on the well-being at the end of the day, but also on circular, local economy, you just excavate the ores almost from your garden and you build your house wall with zero carbon thanks to that. So it's a new innovative solution with a complete overall system of Saint-Gobain. And we have several ongoing projects as we speak. We invest also in technologies to decarbonize our processes. If I take glass, in glass manufacturing, we are implementing different technologies across our plants. With these technologies, we can reduce already by almost 30% the content of CO2 in glass manufacturing, and we have active R&D projects to go even further towards low carbon glass. You know that part of our net zero carbon journey is to spend around EUR 100 million of CapEx and R&D per year to reduce our CO2 emissions, which is what we have done in 2021. We also drive circularity on all our markets. It's not just again sustainability, but CO2 emissions. It's also preserving natural resources. We are at the core with our solutions of circular economy. Indeed, a lot, many of our products, if not all, gypsum, glass, mineral wool can easily be recycled endlessly. I take a deeper example of glass wool. We act at every stage of glass wool lifecycle from the manufacturing to distribution, to demolition, collecting the waste and reprocessing. In France, for instance, we have 54% of recycled materials in our glass wool production. And we have also developed, this is what you see on the left part of the slide, new furnace technology to remelt any kind of mineral wool scrap and feed it back into our manufacturing process. In 2021, we continue to make strong environmental and social progress in line with our ambition of maximizing our positive impact. We have 72% of our sales that provide a benefit in terms of sustainability and well-being for end users. We are on our way towards 75% of sustainable sales by 2025. We also continuously minimize our footprint. In 2021, we -- despite with almost 12% volume growth, we lowered our total CO2 emissions. And to some extent, it's interesting to see that we have almost decoupled growth from carbon emissions. If I look at the euro of EBITDA generated by Saint-Gobain, euro of EBITDA, we have 50% less CO2 by euro of EBITDA versus 2017. Overall, we have achieved a 23% CO2 reduction versus 2017, in line with our 2030 target, which has been, as you know, validated by the SBTi science-based target initiative. Finally, among our this year highlights, of course, are our teams. I want to mention our progress on gender diversity in 2020, we have reached last year 2020, our target of 25% women managers. And now we continue to make progress. We are 26.3%, and we have hired last year 35% of women among new managers. With these actions on diversity and inclusion, they are recognized both externally, for instance, through the Bloomberg Gender Equality Index and also internally with 85% of our employees recommending Saint-Gobain to their friends, families, colleagues in other groups and industries. Of course, all those actions are tied to value creation for our shareholders. First, we have a strong commitment for a very disciplined capital allocation. If I take growth CapEx, we selectively deploy our firepower on greenfields and capacity expansion to serve growing markets with an emphasis on investment outside of Europe. Managing very tightly our maintenance CapEx in 2021 has allowed us to increase our growth CapEx by 40% versus 2020, and we plan in 2022 to do more than a 50% increase on growth CapEx versus 2021 because we have good trends on volumes mid-to-long term, and we need capacity to service our customers. We continue also to be very active on M&A with value-creating acquisitions and targeted disposals of underperforming assets. In this respect, over the last 3 years, we have acquired around EUR 3 billion of revenues with an EBITDA margin average of over 20%, and we disposed EUR 5.6 million billion of revenues with an average profitability below 5%. In 2021 alone, to show you the dynamic, which is ongoing, we had 37 acquisitions, which were signed or finalized and nearly EUR 2 billion of acquired revenues. While on the other hand, we made 20 divestitures which were signed or finalized for also approximately EUR 2 billion of revenues. I will, together with all the teams of Saint-Gobain, continue to ensure the regular perimeter review with a simple criteria of performance and strategic alignment. We have made significant acquisitions in recent years. And I think we have turned the corner and demonstrated our capability to successfully integrate them and create strong value. First is the acquisition of Continental Building Products in U.S. plasterboard. We are 1 year ahead of plan with value creation in year 2 remaining upside on top of that on commercial synergies and more than 30% EBITDA. Second is the acquisition of Chryso finalized at the end of December, closed in -- September, sorry, closed on October 1. We announced it in May. The results of Chryso, I'm extremely happy and successful team led by Thierry Bernard, the results are those targets, 26% sales growth versus 2019. And I can tell you that the road map to achieve a successful integration is very clear and synergies are already underway. I think it's interesting to note that in both cases, the CEOs of Continental and Chryso, Jay Bachmann, Thierry Bernard, both very experienced and seasoned CEOs stayed on to lead their business within Saint-Gobain. I'm extremely happy and proud to have them on board. This shows also how much Saint-Gobain has changed culturally being able to retain and engage CEOs coming from outside from a U.S. listed company and a private equity type of environment. On Chryso and of course, with Chryso now our teams in North America, we are actively preparing now the integration of GCP, which we expect by the end of 2022. I finish with our shareholder return. We have created strong shareholder value in 2021. We have returned EUR 1.2 billion to our shareholders, which is a record and we have delivered a total shareholder return of plus 69%. Turning into 2022, we want to set another record above EUR 1.2 billion by combining the strong increase in the dividend that will be proposed -- that the Board has decided to propose to the AGM at EUR 1.63 per share, up 23% versus last year and at least EUR 400 million that will be returned to shareholders through share buybacks. This shows our commitment to deliver consistently on the target of EUR 2 billion of share buyback that we outlined during our Capital Market Day in October. To continue to make all this a success, you can count on our mobilized and renewed management team, which now counts more than 40% women, 50% of international members. I'm also very pleased with the constructive and challenging dialogue with the Board that I have who fully supports our strategy and this plan. We are all also very enthusiastic to welcome the Board of Directors, Lina Ghotmeh with a famous French-Lebanese architect with many forward-looking projects and, of course, fully aligned with our sustainable construction target. So I want to leave you with the assurance that the executive committee is determined to deliver on everything we said at the Capital Market Day with a clear mindset and winning spirit to outperform. Let's now turn to the outlook. In Europe, we expect supportive renovation market that does require comprehensive solutions to increase efficiency and save time for our customers, who are very busy. In Americas, upbeat market trends, particularly in residential construction in North America and in Latin America overall, despite a slightly less dynamic environment in Brazil. Asia Pacific market growth with continued good momentum in China and India, and a gradual recovery in Southeast Asia with fewer pandemic-related restrictions. For High Performance Solutions, growth in digital markets, supported by upbeat trends in sustainable construction, a demand for innovation and new materials for industry decarbonization and green mobility, despite uncertainties as to the recovery of the automotive market in Europe. So in a structurally supportive market environment, Saint-Gobain is targeting a further increase in operating income in 2022 compared to 2021 at constant exchange rates. You have understood, I'm confident in our ability to deliver another strong year of performance in our financial and nonfinancial parameters. Thank you, and we now turn to your questions.

We'll take the question in the room. I think Jean-Christophe was first.

Three questions for me. The first one, could we have the order of magnitude of the flat glass price in December and maybe in January. Secondly, we have a strong improvement of the distribution margin above 6%, probably driven by the inflation. Can we have a flavor on the gross margin evolution? Was it stable or increased versus 2020 and 2019? And third, could we have a more flavor on the energy and raw materials bill in absolute term in 2021?

Okay. I will answer on the distribution. Sreedhar, you will take the flat glass and energy bill. Yes, we have done a very good performance in distribution. It's the result of many actions. Of course, as you know, we have divested the low-performing assets. So that's one. Second, we have constantly improved in all geographies, the performance of our presence through distribution. It's a combination of many, many parameters, leading market share, complete solution also across Saint-Gobain by country. So it's -- I showed you some example, renovation. It's a full set of Saint-Gobain solution, not only distribution by country, a lot of pricing actions. So I'm not give you all the details of what we get on the different line, but a lot of pricing actions. We have been using, for instance, in several countries, big data to optimize our pricing in the last year. So it's not only the inflation from the last 6 to 12 months, which has had the benefit. It's a lot of productivity gain, a better position, better offer, better overall solution of Saint-Gobain. A lot of digital, we have invested a lot in digital in the last years. We remember what was the impact on some of the CapEx in Saint-Gobain some years ago. We benefit from all that. So it's a combination of all factors and of course, also the commitment of all our teams who delivered fantastic results. So yes, we are above best-in-class in terms of margin in distribution, and I think that's the reflection of all the evolution of the business parameters. You take the glass.

Okay. So answering your question of 4 millimeter, I specifically prepared only for you. So you have a EUR 4.22 for the last quarter. It was our average. We have been increasing the prices in glass almost every alternate month. If you take the sequential price increase, what we had is 17%. And if you compare with last year's [ 2024 ] fourth quarter, you're talking about 40% increase. So glass, we have really pushed the prices. I mean, it's not glass. I mean the pricing, you will see everywhere, there is an absolute discipline, decisiveness in the way we have focused on price. So second question is on your energy bill. I mean, energy bill for 2021 was EUR 1.5 billion. As I said when I was presenting the results, we have hedged close to 75% for 2021 -- 2022. And March and April, we have hedged close to 85%, okay? So we are -- when it comes to hedging, I can tell you, now purchasing is part of my responsibility. I look at every single day, looking at how we take the best opportunity we have, any time there is a little bit of opportunity, we try and increase our hedge. So we are very well covered to manage this situation what we are seeing today.

Yves, I think was the first. So after you Arnaud, yes, sorry.

Sorry, Arnaud. Yves from BNP Paribas Exane. I'll have 3, if I may. The first one, I think, Benoit, in your previous update of Q3, you mentioned that your priority was to protect margins, with still the expectation and ambition to reach double-digit margin. Can you confirm that this is still a priority and you could achieve double-digit margin in 2022? My second question is on the current situation regarding the [indiscernible] certificate economic energy in France. We are seeing some news flow, which is quite negative from the association of the insulation industry. Can you comment on this? Is this a risk and a headwind for 2022? And my third question, inflation is a key topic, but we often hear yourself and maybe your competitors talking about the potential impact it can have on demand. For now, everyone is really bullish on demand. But in light of what happened yesterday in Ukraine and the gas prices and your need to increase prices further, what is your view in terms of how that can impact demand going forward?

First answer is simple. Yes. First question, sorry, answer is simple. Yes, this is our ambition to continue on double-digit margin, and this is the way we think and drive all our teams. Second, we are very busy on energy efficiency renovation across all Europe, including in France. We will announce in the next few weeks, some additional investment on insulation in France. So I'm not worried but the fact that the demand is very strong, and we need additional capacity. So you could have some product changes, one versus the other, if I take blowing wool versus the bulk of the offer on insulation, but we are in a need of additional capacity in France, and we are going to announce that. So I'm very confident about the trend of energy efficiency renovation. You have seen the success of MaPrimeRénov 800,000 projects filed in 2021. It will continue in 2022. And what we start to see is the public buildings picking up in 2022 in France. So that's what we expected, but we knew it would take more time because you need quotes. We need public bids, that it are when you talk about public buildings, but we are seeing that for 2022. On your third topic, let's keep in mind that as Sreedhar said, we are very well covered in terms of hedging. So yes, we need to continue to push up prices, and we have done that across many product lines. And across the world, if you take the last quarter, almost all regions were in the double-digit price increase versus Q4 of 2020. So we are entering into 2022 with a good position. Price-cost was neutral already in January. I was seeing on the ground last summer in some countries, some delay of projects. If I take timber in the Nordics, we built with a lot of timber in the Nordics, in the short period of the summer when the timber prices were through the roof, yes, there has been a bit of delay of the project. We don't see that now as we speak, again, all the projects are running at full speed. Housing starts in the U.S., the difficulty in January was to get the workforce on the job site because of the COVID Omicron wave, the workforce in our plants to service the customers. So we are not seeing any impact on volumes because of additional inflation. Everyone has understood that when you quote a job, you don't fix your price one year ahead, you have now floated type of quotes. What we have seen end of last year in some occasions is that job site could be delayed because you had insulation of plasterboard on the job, but not windows. So when you put your contractor, let's come back 2 weeks later when the windows is there, if the windows are late. So we are, again, with a strong demand, the backlog of the craftsman is strong. We are seeing a good momentum on the overall wool market. And also keep in mind, I'm not saying, it's easy or not, but our first priority is to service our customers. The first priority, we talked a lot about supply chain disruption. Last year, in the U.S. alone, we had 260 case of force majeure. In a normal year, it was 4. So our first priority is to service our customers. We have done that well last year, after that, of course, anticipate the price increase. In overall job site, the cost of material is 30%, 40%. It went up 6.7% for the full year within Saint-Gobain. The impact on the full job and project at the end of the day, is not as dramatic as you could think. So I'm not worried about the volume evolution. Arnaud now.

Yes. Perhaps 2 questions. The first one on your road map of portfolio optimization. I'm hearing you on the fact that it's going to be a regular exercise to review your portfolio. But you had a certain number of underperforming businesses. Some have been already divested. You still have a lot to do on that side or not? Secondly, obviously, what happened in Ukraine, it is dramatic. But could you just tell us what is your direct exposure to Russia and this part of the world? And do you see a risk for Saint-Gobain or hedging of energy is clear, your answer, but you're seeing a risk to see gas shortages if the conflict in Ukraine was deteriorating further. And what can you do if it's happening.

So I'll take them one by one. The perimeter thinking is a management routine. And we are doing it very selectively country by country to make sure that we invest in the growing areas and we divest when it's not aligned strategically or not performing as we expect. So we'll continue to do that. Some of our glass transformation activities have not been so great, so we divested in several countries, Denmark, Estonia, a bit of the U.K. We are working on some projects for that in France for instance. It's not a big deal, but it's important for us to continue to optimize. We have looked at some of our distribution assets. You have seen that we divested some of our specialty secondary brands in the U.K. So we continue with those strategic reviews. Jean-Christophe highlighted the very strong performance of our distribution business. Some are above the average, some are below, so we push the ones who are below to catch up on the average, there is no taboo either you catch up with the financial expectation in a reasonable period of time or we make some strategic decisions. So we continue to do that. Don't expect a big announcement, but we are very committed country by country to continue. And this is part of our management routine. Same is on acquisitions. We have Sreedhar showed you a strong balance sheet. So we continue to look at nice value creative with a very strong financial discipline on acquisitions. So it will continue. I'm not going to give you some specific names. And it's across all groups within the High Performance Solutions with [indiscernible] we look at some assets where we have a nice business, but -- is it big enough to be strategic and strong in the next 10 years. And we are very agile on all this with also a good speed of execution. Russia is 0.5% of our sales. Remember that the strength of the business model and the organization of Saint-Gobain, we have shown that on the COVID, we have shown that on the pricing actions, very fast on the ground. We have shown that on supply chain disruption. We are showing that on the workforce, making sure that all our positions are filled in our plants, in our outlets is due to our local organization related to be polish in Poland to hire Polish people because you know them, you can tell them the [indiscernible], this is the lady of Poland because I start up in Poland years ago. So the local organization is very powerful. In Russia, we buy locally from local suppliers, and we service with local plants, local customers. So we don't have any import, export issue, and we are local. So we service the housing market. I don't expect that to change dramatically in Russia, and it's 0.5% of our sales, total group. We are not in Ukraine in terms of physical assets. We have a very small commercial office. We made sure yesterday they are all safe. The 46 employees we have in Ukraine. So -- but that's the picture of Saint-Gobain for Russia, [ 2.5% ] of our sales and roughly in line in terms of profit. Gas, we are currently because Sreedhar and all the teams have been very proactive last year on hedging. It's interesting to see that first, some of our businesses are running with electricity. There was a question on insulation. We run with electricity in France, same in the Nordic countries. And now when you think of gas, we are part of the industries which are prioritized on gas. Because you know if you shut down the gas supply to flat line, [ you kill it. ] So country by country, we know we are prioritized on gas supply. You can cut gas for other industries, but you cannot cut gas for some of manufacturing processes, we are part of that. So I'm not worried that shortage physically, I would say that's the question of gas supply to our plants. And punctually, we have also the ability, it's not great for the CO2 to switch to heavy oil if need be, but it's not the long-term ESG green solution. So that's the picture, I would say, on gas. Another question in the room? Yes.

[indiscernible] some more questions on gas, please. Can you split please the energy bill between gas and electricity? The EUR 1.5 billion you gave us. Second one is, so what percentage of the gas bill is in Europe and what percentage is outside of Europe? And third, on gas, and I think you answered a little bit, but I want the precision. It's -- the gas is only used for the glass plants or also for other plants?

Yes. The split is -- gas is slightly above 50% of the energy bill, otherwise it's electricity and gas. And then coming to split between Europe and outside Europe. Europe is slightly above 50%.

And on your question, so gas is used for flat glass, not always for glass wool. I just mentioned that some of our plants in some countries run with electricity. And we also use it for our plasterboard, even though in some areas, we told you about this net zero carbon plasterboard plant, we are switching to electricity. You need some gas to dry evaporate water when you dry plasterboard. So you need some gas, but we are also switching some dryer to electricity in Norway. We have some projects also in North America to switch to hydropower electricity, to have green electricity. So it's mainly flat glass and plasterboard. And -- it's different also on plasterboard, you can switch on and off in a normal year. Right now, we are super busy. So our plants run 24x7, but you can switch off a plasterboard plant in the weekends. You cannot do that in a flat line. This is why we are prioritized in the industries where we will get supply of gas in any case. Another question? If not, then we can switch to the questions on the call. And we can always come back to the room if you have any question. So we start with Sven, I see then on the top of the list. Sven, your turn.

Yes. So I had 3. The first one, I understood part of the recovery plan in France is dedicated to pipe business. And it seems this has triggered one of your competitor, an Indian player to set up a business in France. So can you elaborate on the positive prospects here? What kind of growth on profitability one should expect? And does that mean you are no longer looking for a long-term solution for carbon emission? That's the first question. On the second -- sorry to come back on the energy on raw material bill for 2021. To my knowledge, it should be close to EUR 10 billion. It's EUR 8 billion you had in 2020, plus EUR 1.5 billion, plus a volume effect of EUR 500 million, is it a fair assessment? On the third one, I apologize if it has been answered. I -- can we have a price on the distribution, please?

Before I answer you, we all and you all become specialists on gas. Let's take a bit of a step back because we are delivering fantastic results. We managed with our pricing actions in a month, in a quarter to overcome that in 2021. We just simply to continue to do that in 2022, and we are very confident about the long-term trend. So I want to pause a bit and reflect on the long-term trends of Saint-Gobain and the agility of our teams to work on supply chain. You want to ask question about supply chain disruption, but we had hundreds of them last year. We overcame that. So the long-term trend that we outlined at the Capital Market Day, they are there. There is a new profile for Saint-Gobain, and we should keep that in mind and not overreact to some short term. In the short term, we have protected it with a very strong hedging. On your question, yes, there was, I think, a project to give a bit of subsidy to a local plant in the south of France. From my understanding that subsidy has been frozen because there is a renewed antidumping investigation from the EU on this Indian competitor. So I think it has been frozen. I can tell you the dynamic in terms of volumes on the pipe business is good, mostly in Europe, because there are some investment on infrastructure and water supply in France and in the rest of Europe. So that's progressing well. And yes, also, our long-term plan is still to find a solution, a good solution for the pipe business. It was not easy to do that last year because of the raw materials price spread, which was not so easy to cope with when you have a bit of delay on your long-term contracts and the short-term impact on pricing. But yes, we are still with that in mind for pipe long term. You take the third -- the second and the third question.

Sven, your assessment is correct. So you have to break up what you're trying to work out between the raw material energy is correct. And the other question was on the distribution price increase, right? It's 6.8% for the year 2021.

So in line with the group.

For the whole group, for the full year.

We have Elodie Rall from JPMorgan.

My first question is on your guidance for an increase in operating profit in 2022. First of all, can you confirm that you are looking for a like-for-like increase in operating profit. Second, what is the scope impact already secured in '22 in operating profit? And third, in terms of volume outlook. Clearly, you are positive. But are there any areas where you expect any weakness in '22? And if I can throw in a last one on Grenfell, lots of different news flows show, like mostly negative, obviously, over the last few months. What's your actual view on the potential liability of Saint-Gobain with regard to that tragedy?

So I'll take the first 2 and leave the third for Sreedhar. Yes, the -- as I said early on, we are confident that the like-for-like improvement on our operating income. That being said, we have been so dynamic 40 acquisitions last year, 20 divestitures. I don't want to take 2 years to put Chryso, which is a fantastic company into my guidance. So this is the reason why we want to take this management routine of acquisition, divestitures in the next year and make sure that we integrate them fast that we deal with antitrust when there is antitrust that fast because that's our commitment in terms of value creation. So this is the reason we have made a slight change. But yes, we are confident that the like-for-like OP improvement and the, I would say, embarked perimeter effect is the 1%, 1.5% on the EBIT performance for nature -- if it's matures. And therefore, in order to make progress we definitely need a like-for-like. But I think it's important to have the whole picture of Saint-Gobain, we want to deliver growth top line, when we run at 15% ROCE, the moto of Saint-Gobain is actually rate growth. We have strong underlying markets, renovation in Europe, new build in the U.S. and emerging markets, global innovation in our High Performance Solutions. So for me, running at 15% ROCE after that, you need growth, keeping our double-digit margin and targeting this dynamic of acquisitions and divestitures. In terms of -- I think the second question was any volume weakness we would expect? Well, I think we say that the automotive market's recovery in Europe, we don't bank on it. So we are very cautious. We don't expect anything significant before 2023, if I read the experts. So that's one area of weakness or uncertainty for us in 2022. Keeping in mind, of course, that we'll have a high comparison basis in 2022 first half because of the very strong first half of last year, but we are confident about volume growth for the full year. And again, we are confident of the long-term, midterm volume trend of Saint-Gobain. We have delivered a 3% yearly volume growth over the last 2, 3 years. And this is, again, the new trajectory of Saint-Gobain going forward. Sreedhar you?

Yes. So on Grenfell, you all know our position. You know the context. We have been extremely transparent, putting everything on the website to every single update what has happened, the developments. It's important to keep in mind that we are talking about [ GBP 5 million ] sales for this building, which we are referring above 18 meters and above and [ GBP 5 million ] sales is for the full lifetime of the product. So it's not -- we're not talking of any big sales which we have done. The second thing is the new dimension, which has come up, which was a discovery that now they are talking about 11 meters to 18 meters. Even if you take 11 meters to 18 meters, we're talking about around 50 million in the last 15 years that we have sold in this kind of buildings. Saint-Gobain is very supportive of this process. The government is trying to do -- look for solutions, trying to see how the construction of the building can be safe. Saint-Gobain is participating in all the conversations and discussions. It's important that Saint-Gobain has always been cooperating in every single inquiry process, and it's part of our values, and we really want to make sure that we cooperate with all the stakeholders in a very transparent and responsible manner. Now having said that, I'm only hopeful and I'm really sincerely hopeful that given the fact that we have such a limited exposure in such kind of buildings, we'll find some reasonable solutions, and we just closed this topic. And but it's a very complex situation.

And I think what is important to know is that our products are safe, products are safe. The question is the old cladding that has been put on the Grenfell Tower, and that's part of the inquiry. As of now, it's the government and the building regulations from the government, which is under the inquiry. But this is a question of the cladding, the products are safe. We have made all the test again and again. And on this desire for the government to increase and improve and retrofit some of the building from 11 to 18 meters and improve the overall thermal efficiency, whatever performance. It's an overall system between the developers, the architects, the cladding system, all the construction players, our products are safe. So if there are some new norms, new [indiscernible] we'll participate commercially with our products. Our products are safe, and we have a very strong product compliance policy within Saint-Gobain. So that's very important to keep in mind. Our products are safe. Now how they are being installed with different type of claddings with lack of building regulations is another matter. We'll take the question from Arnaud Lehmann from Bank of America.

I hope you can hear me.

Yes, very well.

Excellent. So 3 questions, if I may. And mostly follow-ups, I guess, to comment you've already made. Firstly, you sound very confident about further growth in let's say, European and U.S. housing and renovation activity. However, we are seeing rising interest rates. We are seeing household facing a rising cost of living, in particular, energy bills. Do you feel that there is -- that creates downside risk to renovation and new housing demand later in 2022? That's my first question. The second question is around European regulation and the slide that you've shown was very helpful showing all the incentive for each country. But clearly, we are moving progressively from incentives to renovate toward enforcement of renovation, if I'm reading that well and the weaker building with energy rating that G or F essentially might not be able to be rented or sold over time. And you mentioned the example of France on that particular point. Do you believe that all European countries are going to be moving in that direction? And lastly, if you could give us an update on the asbestos Chapter 11 process in the U.S. I understand there have been a few legal bumps on the road. So any color on that would be helpful.

Thank you. So I'll take the first 2, and Sreedhar the third. I'm not worried about the volume trend for 2022 and beyond. When you see the amount, if I take the U.S. of unbuilt, we have EUR 3.8 million of housing needs in the U.S. as we speak because for 10 years, we have built well below the necessary average, which is where we are today. We are at 1.6 million roughly housing starts. Above in building permits, we are still 10% or 15% above in building permits. And for instance, one indicator, which is interesting to follow is the amount, the number of homes which have been completed -- completion. This is the widest gap between starts and completion. It could be related to supply chain disruption. It could be related to lack of cost, but it bodes well. If I take a business like plasterboard, we know we are at the end of the process. You start with the envelope, the roofing, the siding and you end up with plasterboard. When you have structural gap, and this is the largest in the last 20 years, between starts and completion, that means you need to catch up because you need to complete and finish the home. So again, the underbuilt is there. Rising interest rates, when you look at the real interest rate with inflation, it's not big in the U.S. We have to think about that. Yes, there is rising interest rate, but there is rising inflation and wages. So in nominal terms, we have to keep that in mind. On your other question related to Europe energy bill and the lack of purchasing power for households. Unfortunately, what we call the [ passive thermic ], the 5 million homes, which are with a very, very bad grade of energy efficiency. And fortunately, it's not within the households, we have saved and we have excess savings and can spend and are spending on renovation. You have 36% of social housing in France with bad grade of energy performance. So it means the social housing owners have to do it in order to reduce the bill for the low-income class. So energy bill is not affecting all the households the same way and the households who have saved in the last 2 years with these excess savings representing 88% of the GDP. Now it's -- in France, it's EUR 100 billion. It's roughly 1 year of renovation market that has been with excess savings. It's going to be spent in durable goods. I'm totally convinced that after the COVID with -- everything with going on in the geopolitics will spend on durable goods, which makes sense for your children, which makes sense for the planet versus easy short-term consumer spending. And last comment, I would say, if there is anyone to convince that energy efficiency is good for not only the planet, but for new energy bill, the fact that the oil price is at 100 and the energy oil gas goes through the roof. It means we need to accelerate. The France government is just spending a lot to lower the energy bill of actually rented house for low-income class. But if we were -- if we had better insulated all those houses, you will not have to do that because you cannot do it indefinitely. So it's better to invest on acceleration the home and public buildings renovation versus those short-term measures have the firefighter. So I think the energy spent on the cost side and also geopolitically, the fact that we are in a difficult geopolitical environment will accelerate the need in Europe to think differently about buildings, energy. On EU regulation, it varies by country. I think if we look at culturally, in Italy, we have still this 110% cash bonus. So it's an incentive. It's not enforcement, but it's an incentive on the cash side. But you are right, Arnaud, to say that in many countries, including coming from Europe. Europe asked every single country to renovate at least 3% of their public square meters every year on very low CO2 emissions for public buildings. So it's a bit more enforcement than nice to have. So it's moving progressively in the U.K., in France. It was already there in Germany and the Nordic countries. But yes, we are progressively moving towards more enforcement versus a nice incentive.

Yes. So Arnaud, on the asbestos what you're referring is basically the ruling -- procedural ruling. So you just have to keep in mind. Our assessment because of this ruling has not changed the financial assessment on the Chapter 11 process. The restructuring of the CertainTeed Corp, what we did is as per the Texas law. Again, we are doing exactly as per the law. The reason why we are trying to establish this trust under this bankruptcy law, bankruptcy code is all basically to find a fair solution to all the genuine people who have suffered to make sure that they get their claims settled in an easiest possible manner without going through all the stress of the tort system. We just have to keep in mind that this Chapter 11 process, it's a time, it takes time. We're talking about 3 to 8 years' time. So it's not something which will happen very quickly. The DBMP is the entity, which is going through this process of Chapter 11. DBMP will defend its position very strongly because it's normal in the U.S. to have that kind of allegations, which are baseless. Saint-Gobain -- you know Saint-Gobain, we basically, again, the DBMP will stick to the things which are defined as per law, and they will defend their position very strongly.

Arnaud, I have spent several years of my life in the U.S., you need to be patient with the lawyers in the U.S. It's always a bit lengthy that what you expect, but there is no worry. We stay the course. We know it will take several years. We stay the course. And yes, the road will be a bit bumpy it's not straightforward, but no particular worry. Just be patient. That's the U.S. legal system. Gregor from UBS, please. Gregor the floor is yours.

Can you hear me?

Yes, very good.

Excellent. Maybe 2 questions and also kind of follow-up. So just to summarize on the cost inflation and kind of the price that you need. So looking at the math, I think you're saying EUR 1.6 billion of inflation-ish again this year, I calculate on the EUR 25 billion or so of industrial sales, which are EUR 26 billion rather. So are you kind of saying you need another I don't know, 6%, 7%, say, call it, 6%, 7% price increase kind of average on average in the industrial business to be cost price neutral. Is that the right math? And then maybe a question on specifically the Americas, which I think has been sort of, in reality, the highlight of your year, which has obviously been a great year and margins there 16.5%. And I think you gave the numbers for Continental. It's extraordinarily strong, right? EBITDA margins of 31%. So I guess the question is how sustainable do you think that performance is in the Americas, please?

You take the...

Yes. So, your math is correct. You need to have that more than 6% to compensate this inflation. So it's 6% to 7%, whatever range you take. And you should apply on this 25-plus -- EUR 25 billion, EUR 26 billion in sales. This is what it is. And you just have to keep in mind that -- you know what is this. The last quarter was 9.5%, and we continue to push the prices up. So we are, again, we are very confident to pass on this inflation even in 2022.

On the Americas, we are running indeed with a healthy level of margin. I'm confident we are going to sustain that. If I take North America, we have very strong teams, very fast and extreme good quality of execution. You heard from our CEO, Mark Rayfield during the Capital Market Day. One example is indeed the excellent quality of integration from Conférence products. Notably, we have also a very strong presence in Canada, where we are gaining share, leveraging all the solutions. We are coast to coast with 6 plasterboard plants in Canada. The economy in Canada is doing quite well. We have doubled our market share in insulation in Canada just by levering the full scope of Saint-Gobain. So a very good team, a full set of solutions and leveraging all that I think I highlighted 1 or 2 years ago, everything we are doing on cross-selling with our different product lines in North America and the fact that we are the #1 building materials when you take the full scope of our offer in North America. Latin America is always a bit more bumpy. Argentina was high on inflation in the last years. Brazil could be, as we highlighted, a bit more difficult in 2022, but that -- was it Mexico, Northern Latin America is doing nicely. We are very strong in Mexico. We have made some recent moves, adding a third float line in Mexico. And I can tell you, our float operations, our glass operations are running exceptionally well in Mexico, it was not easy. And this is a tribute to our teams to start a third float line in the COVID in March and April last year, but it's already full and running very well. We added plasterboard in Mexico. We did a recent waterproofing and construction chemical acquisition in Mexico, which we expect to close in March. So Northern of Latin America is growing. We have added a lot of small positions in Peru, in Argentina, on all the -- basically, we are ramping up the full spectrum of Saint-Gobain in those geographies. And this margin is something we intend to sustain. Based also, of course, on strong volumes, I highlighted the strong dynamic of the U.S. housing market. And no surprise, you have seen it was also part of our long-term ambition during the Capital Market Day to increase the exposure of the group in North America, we are already at 24% of our EBIT in North America. We want to be there in sales and no surprise that in the last 2, 3 years, I've pushed acquisitions in North America whether it is Continental or GCP. And I can tell you that we have had a lot of integration presentation teams to teams between GCP and our teams, including in North America, including David Molho, who is chair, in Latin America some 2 weeks ago, and the excitement on both sides. We are competitors. So we make sure that on the legal side, we are safe, but the excitement on both sides to join forces is extremely high. So I'm confident about what we will bring to GCP in North America, but not only across the world. After that, we go to Nabil Ahmed from Barclays. This is for you.

Can you hear me?

Yes.

All right. I actually had 3. First one, maybe coming back on the mobility business within HPS. I believe you had several adaptation measures last year. So the question is how are you happy with what you have done? Should we expect more in 2022, maybe again balancing a little bit profitability? And if not, how much benefits you believe you're going to get on profitability side from the adaptation measures you've done in the last few years. The second question was on CapEx. So you're guiding on EUR 1.8 billion, which is more or less where we were in 2019. How should we think about it? Is that a new norm for the group? If I think over the coming 3, 4 years, do the EUR 1.8 billion enough for the sustainability investment and also the capacity investments you're making, especially when you consider the significant growth that may be coming from the renovation wave in Europe? And lastly, one final question maybe about Asia Pac, which, if I recall well, has been probably one of the most difficult reason in terms of passing on pricing and getting to natural price-cost. I was wondering if you could comment and maybe break down your comment between the 3 main areas. So what's the price-cost situation in China, India and maybe Southeast Asia as well?

So I take the first one on High Performance solutions. Yes, we did over the last 2 years some restructuring notably in the mobility market, but not only, we are happy about what we have done and the benefits, we see that very strongly on our share of High Performance Solutions to sustainable industry, improving nicely on profitability and delivering also on an increasing backlog. So within mobility, if I say just on that, we cannot go to the [ bone ], I would say, because we know at some point, the market will bounce back. So if I were to know that -- which I don't expect the current automotive market in Europe is going to remain as depressed as it is today. Yes, we will have additional restructuring measures. Everyone expected to rebound. And we know that when it will rebound, it will rebound strongly will be asked to deliver a 30%, 50% growth on a particular product line for XYZ in terms of model. So we are adapting our setup but also keeping the competencies and the ability to restart when the rebound will come, even though we don't think it will be big before 2023. And we are also investing, of course, on technology innovation for electrical vehicle, where we have a very good run in terms of double-digit growth. So HPS overall will increase in profitability in 2022 versus 2021, so we are confident about the further improvement of profitability of High Performance Solutions, all in all, in 2022. The CapEx, Sreedhar?

So coming to the CapEx, Nabil, as we guided in Capital Market Day, our range would be 3.5% to 4.5% of the sales. So I would not guide on absolute figure because it will depend on the growth. We will proactively invest, especially when we see a potential to grow in a country which is a growing market. So growth will be the focus. As Benoit said, it's important to invest and ensure that we are able to serve the customers and not miss any opportunity of gaining the market share. Having said that, you have seen, we have demonstrated in the last 3 years, there will be absolute discipline on CapEx. It will not be just spent without thinking through the criteria of having this -- financial criteria of having the IRR of 20% is something which will be stringently applied on every single project. And you have also seen Benoit talked about in his presentation that we are focusing on optimizing the maintenance CapEx. So the focus is all about growth, growth, growth. So that's about CapEx. So coming to the price-cost. I mean, again, you have seen the -- if you look at the Q4 is a good reflection of where we are. You have seen that, again, double digit almost in every single segment. other than the High Performance Solution. Again, we just have to keep in mind that High Performance Solution had a relatively lesser inflation than all other regions. So it's -- you just have to keep that in mind. The second thing is -- we do have challenge in High Performance Solutions, particularly, again, in mobility. I mean, the mobility has been, while it has outperformed, but it has also been a little disappointing because of the business model, the way it works, we have a challenge to pass on the price increase the way the inflation in a very short period of time. It happens, it happens with a lot of effort, and we are pushing.

I think the question was specifically on Asia Pacific, if I understood it well. Sorry you are upcoming to Asia Pacific, okay.

I'm giving the whole region. So then -- and then coming to the Asia Pacific...

India. Talk about India.

India has always managed to get the prices up. Just the fact that we have a brand, we have a brand recall, which is much more than anywhere in the world. So India is a success story. So we have been able to push the prices up. China, we have been able to push prices up in certain pockets, clearly, where we are growing in the light construction solutions, construction chemicals. Then in Southeast Asia historically has been challenging, but we have been able to push the prices up, not to the satisfaction of what I would have liked to have. But it's a market which it is like that. It is challenging. So -- but the teams are pushing the prices up.

And frankly speaking the challenge in Asia Pacific last year was more of the COVID situation because we suffered also whether it's Southeast Asia, India for several months on lockdown restrictions, which was more this parameter than anything else. And on energy in Asia, we have a lot of regulated markets. It's not the same situation than Europe.

If I could maybe, sorry, if I could squeeze -- yes. I mean just maybe if I could squeeze a follow-up on what you just said about Southeast Asia. Does it make you think about the footprint you have over there and whether this is, well for Saint-Gobain having a presence in Southeast Asia, given you had regularly good pricing discipline and some inability to fully reflect cost inflation on your pricing?

Yes, we agree. It's extremely well in Southeast Asia.

Exactly. And I think many times, you need to take a broader view. Sometimes you have to reason it out based on the return on capital employed in that region. So yes, it's a growing market. It's a growing market. We are -- so it's important that we participate. And then again, pricing is something to do with the local market dynamics, and you need to be just mindful of that. So just because you have certain challenging markets, you don't walk out of that. As long as you're able to get the return on capital employed, you need to continue to invest.

I'm very happy with our performance in Southeast Asia, India, of course, China as well. Southeast Asia, we are a leader in Vietnam, and we are adding product lines. We opened some construction chemicals plants. We entered thanks to Chryso in the Philippines. By the way, GCP is also in the Philippines, so that will strengthen our presence. We are strong in Thailand. Indonesia, we have 6 plants of construction chemical ready to host Chryso as additional product line. All those countries are profitable for us with a huge population. For me, if I think long term, Indonesia, Philippines could be in the next 20 years, the Brazil of Saint-Gobain in terms of momentum, we are profitable, strong teams, local managers. We have a lady from Singapore, managing Singapore and Malaysia. We have Indonesian women managing Indonesia, strong teams of Saint-Gobain. So we are happy and growing. And I can tell you whether it's also Hong Kong and both places, they are hotspots for us, not easy last year because of the COVID, but long-term trend on population is significant. We go to Cedar from Morgan Stanley.

Two questions from me. Under energy and raw material cost inflation guidance for 2022 of EUR 1.6 billion, could you give us the energy component of that number? And then there's obviously a lot of debates around volume growth potential in the industry in 2022, considering the really strong 2020 and 2021 growth that you and the industry have also delivered. Can you let us know if in the Q1 to date, you have achieved positive volumes in your Americas business, your Southern Europe business and your Northern Europe business.

You take them.

Yes. I mean I already answered energy bill for 2021 was EUR 1.5 billion.

No, I mean the inflation for 2022. So you guided to EUR 1.6 billion of cost inflation in 2022. And I wonder if you could give us what the energy component is of that number?

Okay, it will be around EUR 500 million.

So we have basically the same inflation in '22 versus '21, compared to what we had in '21 versus 2020. So we manage it, we continue to do it. We have managed it in January. We have been proactive 12 months ago to anticipate some of the hedging. So let's move on. What is the next question Sreedhar?

The next question was, did you see the trend of Q1, she is referring to Southeast -- Southern Europe and Americas.

We have -- it's premature, January, we have a good January, but January is low in our business. So we are confident on the volume growth for the full year, knowing indeed, in the first half, it's not a secret that we have a high comparison basis. But for the full year, we are confident about the volume growth. And beyond that, in the mid- to long term, this kind of 3% volume growth we have seen and delivered in the last 2 to 3 years. So that's a good dynamic on the ground and the teams are fully mobilized and we are ready to meet and deliver on our customer demand. Did we answer all your questions, Cedar?

You did.

I think there is a question, I guess, on the Internet from Patrick Millecam from Value Square. Why you don't copy the successful one-stop shop for energy efficiency renovation in France, other important countries in Europe? We are doing that. So next time, I should highlight what we are doing in the Nordics. What we are doing, I took some Czech example, I could take Poland, I could take Germany, I could take several what we are doing in the U.K. as well on offsite manufacturing. So it's not just energy efficiency. It's the complete renovation of buildings. So every country, every country is doing a lot in terms of solutions. The motto, and it happens to be exactly in France, the moto of our fantastic banner of platform Saint-Gobain, [Foreign Language], save time and money for the craftsman. This has been the brand signature of our platforms over the last 25 years. This is exactly what we are delivering in France and we inspire other countries. So yes, we are pushing that and there is a lot of best practice sharing on solutions across all Europe, but not only... There is 1 question from Glynis from Jefferies again on the call. So we'll take -- I think that after that back to Societe Generale on Internet. So Glynis, the floor is yours.

Exactly. I'll try and be short and sweet. Can you just give us a little bit of color just in terms of what you're seeing in terms of labor inflation within your own business?

Yes. Labor inflation has been -- again, it depends on the country to country. It will be in the range of 3% to 4%.

So it's basically 1 point above what we had in the past. The very good thing because for me, it's extremely important is to have everyone in good health. That was our priority for the last 2 years, everyone fully motivated, and I can tell you that the employee satisfaction survey, the commitment of our team is super high, and they are all proud of the results we have delivered. They are all proud of the purpose of Saint-Gobain, it makes sense. So we don't face at all what I see from other industries about this big resignation or whatever, our teams are mobilized on the ground in every country, including in the U.S. because they see that we have a purpose. We have a strategy. We have a plan, Grow & Impact, and we have the organization and powering our teams with full accountability. So for me, yes, there is a bit of inflation, but more importantly, the teams of Saint-Gobain are fully engaged everywhere on the ground, delivering on our targets and strategy. And that makes the difference. So I'll go back to the Internet question from Manish Beria from Societe Generale. Can you remind us, where you are very happy with price-cost and areas where you are not satisfied and areas where you are happy and very happy.

I already answered that question.

I can tell you, everyone is dedicated to that, everyone is focused. And to tell you also that things have radically changed structurally. In the U.S. for years, we were used to increase prices every second month when there is a need and where there is an opportunity we did that. Last year on plasterboard, on roofing in Europe, it was not so much the case in the past. It was more the once a year, plasterboard last year in France. In Europe was every quarter. Glass was every month. So we have structurally changed the dynamic of the markets. Of course, all the distributors are also moving up fast on this price realization. So it has changed structurally because everyone has adapted fast in this inflation environment, including Europe where we started a bit from behind versus the U.S. or Latin America, where, for instance, hyperinflation in Brazil, Argentina was also well entrenched into the culture of the teams. I think we have covered all your questions. So thank you very much for your time. And I want to leave you again with the confidence that we are riding strong underlying trends for all our markets that we have a clear strategy and a plan that we execute, and we are very committed to that, that we have a new Saint-Gobain in terms of business profile, in terms of financial performance, on growth and profitability, and that we have teams extremely dedicated with a clear mindset to outperform and to have a winning spirit. So with that, I'm confident for 2022, and thank you very much.