2014 objective maintained
Regulatory News:
Air Liquide (Paris:AI):
H1 2014 key figures
- Group revenue:7,506 million euros
+4.8%*
- Operating margin on the rise at 16.7%
+10bps
- Net profit (Group share):755 million euros
+5.0%**
Highlights
- New contracts in growing
markets: air gases for OCI in the United States (methanol) and
for ThyssenKrupp Steel Europe in the Rhine-Ruhr area, ultra-pure
vector gases for CEC-Panda in China (flat panel displays).
- Continued acquisitions: in
Healthcare with SEPRODOM (France) and in Industrial Merchant with
Scientific and Technical Gases Ltd., United Kingdom supplier of
specialty and calibration gases.
- Innovation and technological
development: supply of cryogenic equipment for the ITER
scientific project, hydrogen filling stations for electric vehicles
in Denmark, investments in France to accelerate innovation.
*variation H1 2014/H1 2013 on a comparable basis :
excluding currency, natural gas and significant scope impacts
(Anios)**excluding currency and Anios disposal impacts
Commenting on the first six months of 2014, Benoît Potier,
Air Liquide Chairman and CEO, stated:
“The Group’s performance during the first half was solid and
in line with our outlook for the year. This performance benefited
from regional sources of growth – the Americas, Asia-Pacific and
more globally the developing economies –, as well as from the
pick-up in Electronics and the contribution from new unit
start-ups. While the pace of activity in Southern Europe remains
modest, it is stabilizing. Published results for the period were
impacted by an unfavorable currency translation effect.
The increase in profit reflects our ability to control our
costs and consistently generate substantial efficiencies, which
contribute to the regular improvement in our operating margin. The
Group thus continues to align itself to the market trends to
prepare for its growth over the medium term.
The investment decisions during the first half of the year
reflect the Group's greater selectivity in its projects. The
investment backlog amounts to € 2.6 billion. As with the Group-led
innovation and technologies initiatives, it will contribute to
growth in the next few years.
In this context, and barring a degradation of the
environment, Air Liquide is confident in its ability to
deliver another year of net profit growth in 2014.”
1st half 2014 Group revenue was € 7,506
million, an increase versus 1st half 2013 of +4.8% on a
comparable basis, and down slightly (-0.7%) on a reported basis.
Similarly, Gas & Services sales, which amounted to €
6,807 million, grew +4.7% in first half 2014 on a
comparable basis and fell slightly (-1.1%) as published. The
currency impact, which has no impact on the business, continues to
be unfavorable (-4.2% at the Group level for the semester).
On a comparable basis, Gas & Services sales in developing
economies rose by +13.9% for first half 2014 and all
Gas & Services activities posted growth. Large
Industries, up +4.8%, benefited from the start-up of new
production units, as well as from higher demand for hydrogen in the
United States for the refining sector, the development of the
chemical sector in the industrial basins of Antwerp and Rotterdam,
and from sustained demand for air gases in both China and the
United States. The resilience of Industrial Merchant, up
+3.5%, is illustrated in particular by the higher volumes in
developing economies, especially China, the pursuit of a
demand-side recovery in Japan (sales on a comparable basis up
+9.6%), and the rise in helium and specialty gases sales.
First half 2014 was also marked by robust growth in Electronics
(+11.7%), driven by higher equipment and installation sales in
the United States, the acquisition of Voltaix, and the success of
the ALOHA™ advanced precursor range in the United States and in
Asia. Healthcare was up +3.9%, benefiting from the
dynamic home healthcare market, in spite of persistent downward
pressure on tariffs in Europe, as well as from its expansion in
developing economies and the +12.8% increase in hygiene
sales posted by Schülke.
Engineering and Technology sales increased
+13.7% on a comparable basis, while the level of new
orders reflects the greater selectivity in both internal projects
and those involving third-party customers.
The Group’s operating margin improved slightly to
16.7% (+10 basis points) thanks in particular to substantial
efficiency gains totaling € 152 million. Despite an
increase in the tax rate, net profit (Group share) reached
€ 755 million, an increase of +5.0% excluding
currency and Anios disposal impacts, and of +0.4% on a
reported basis. The Group’s net debt of € 6,797
million, is down slightly compared with June 2013, thanks in
particular to greater control over the capital expenditure. The
return on capital employed (ROCE) at 11%, excluding
the currency impact, will increase as current growth projects ramp
up.
H1 2014 Performance
In millions of
euros Published Excluding currency, natural
gas and Anios impact
Group revenue
including Gas & Services
7,506 M€
6,807 M€
-0.7 %
-1.1 %
+4.8 %
+4.7 %
Operating income recurring 1,254 M€ -0.2 %
+5.2
% Net profit (Group share) 755 M€ +0.4 %
+5.0
% Net debt as of June 30, 2014 6,797 M€
________
The Air Liquide Board of Directors met on July 30, 2014.
The Board welcomed Mr. Philippe Dubrulle, appointed to serve on the
Board as the representative of employees by the Group Works Council
France. During this meeting, the Board of Directors reviewed the
consolidated financial statements for the six months ended June 30,
2014.
Limited review procedures have been completed in relation to the
consolidated interim financial statements, and an unqualified
review report is in the process of being issued by the statutory
auditors.
________
Follow the announcement of first half
results live on Twitter using the hashtag #ALresultsAll year
long, follow Air Liquide news on
https://twitter.com/airliquidegroup
UPCOMING EVENTS
3rd quarter revenueOctober 24, 2014
Actionaria exhibition, Paris, FranceNovember 21-22,
2014
2014 annual resultsFebruary 17, 2015
World leader in gases, technologies and services for Industry
and Health, Air Liquide is present in 80 countries with more than
50,000 employees and serves more than 2 million customers and
patients. Oxygen, nitrogen and hydrogen have been at the core of
the company’s activities since its creation in 1902. Air Liquide’s
ambition is to be the leader in its industry, delivering long-term
performance and acting responsibly.
Air Liquide ideas create value over the long term. At the core
of the company’s development are the commitment and constant
inventiveness of its people.
Air Liquide anticipates the challenges of its markets, invests
locally and globally, and delivers high-quality solutions to its
customers and patients, and the scientific community.
The company relies on competitiveness in its operations,
targeted investments in growing markets and innovation to deliver
profitable growth over the long-term.
Air Liquide’s revenues amounted to € 15.2 billion in 2013, and
its solutions that protect life and the environment represented
around 40% of sales. Air Liquide is listed on the Paris Euronext
stock exchange (compartment A) and is a member of the CAC 40 and
Dow Jones Euro Stoxx 50 indexes.
H1 2014 Performance
Management report
H1 2014 PERFORMANCE
2
H1 2014 Key figures
2
H1 2014 Highlights
3
H1 2014 Income statement
5
H1 2014 Change in indebtedness
12
INVESTMENT CYCLE
13
OUTLOOK
14
APPENDIX
15
Q2 2014 revenue
15
Currency, natural gas and significant
scope impacts
16
Segment information
17
Consolidated income statement
18
Consolidated balance sheet
19
Consolidated cash flow statement
20
H1 2014 PERFORMANCE
The confirmed improvement of the base business during first
half 2014, enabled the Group to generate further net profit growth.
Group revenue reached 7,506 million euros, up +4.8% compared to
first half2013 on a comparable basis. Reported growth was -0.7%
impacted by a significant foreign currency impact, which remains
for a large part reversible. Progress in Gas & Services
continued with sustained growth in the Americas and in the
developing economies, in particular in China, confirmed recovery in
Japan, which was up 6,4% excluding currency effect, as well as in
the Electronics sector. Developing economies continued to show
sustained momentum, up +14% on a comparable basis, while Advanced
economies showed a more modest rise of +2%.
Greater efforts on costs and efficiency plans, which reached
152 million euros, contributed to increasing the operating
margin by +10 basis points to 16.7% despite tariff weakness in
Healthcare in Europe and an unfavourable mix in Large Industries.
Net profit (Group share) rose to 755 million euros, a reported
increase of +0.4%, or +3.8% excluding currency effect. For
information, the Net profit (Group share) would have grown +5.0%
excluding the currency effect and the impact of Anios
divestiture.
Investment opportunities remained at a high level at 3.4
billion euros. Investment decisions reached 750 million euros,
reflecting greater selectivity in the Group’s investment
process. The investment backlog remained stable at 2.6
billion euros and should generate over time fully ramped-up annual
sales of 1.2 billion euros. Net cashflow from operating activities
after changes in working capital, was affected by the outflow on
the realignment plans, provisioned in 2013, and remained virtually
unchanged excluding the currency impact.
H1 2014 key figures
(in millions of euros)
H1 2013
H1 2014 2014/2013published change
2014/2013 change excl. currency
2014/2013comparablechange (a)
Total revenue 7,561 7,506 -0.7% +3.5%
+4.8% Of which Gas & Services 6,885 6,807 -1.1% +3.3% -
Operating income recurring 1,256 1,254 -0.2% +3.7% - Operating
income recurring as % of revenue 16.6% 16.7% +10bps - - Net profit
(Group share) 752 755 +0.4% +3.8% - Earnings per share (in euros)
2.20 (b) 2.20 = = - Net cash flows from operating activities (c)
1,194 1,147 -4.0% +0.1% - Net capital expenditure (d) 1,081 943 - -
Net debt 6,837 6,797 - - Debt-to-equity ratio(e) 60% 57% - - Return
On Capital Employed – ROCE after tax(f) 11.0%
10.8%(g) - - -
(a) Excluding natural gas, currency and significant scope
impacts. Natural gas is an essential raw material for the
production of hydrogen and the operation of cogeneration units. All
Large Industries hydrogen and cogeneration contracts have clauses
indexing sales to the price of natural gas. Hence, when the natural
gas price varies, the price of hydrogen or steam for the customer
is automatically adjusted proportionally, according to the
indexation.(b) Adjusted for free share attribution on June 2,
2014.(c) Cash flow from operating activities after change in
working capital and other elements.(d) Including transactions with
minority shareholders.(e) Adjusted to spread the dividend payment
in H1 out over the full year.(f) Return On Capital Employed after
tax: (net profit after tax before deduction of minority interests
- net cost of debt after taxes) / average of (shareholders’
equity + minority interests + net indebtedness) for the
periods June 30, 2013 to June 30, 2014.(g) Excluding the currency
impact, the ROCE is 11.0%.
H1 2014 highlights
During first half 2014, Air Liquide has pursued its development
initiatives in growing markets and major industrial basins, both in
Advanced and Developing economies. The Group has also reinforced
its innovation initiatives in high potential sectors.
INDUSTRIAL ACTIVITY DEVELOPMENT
In first half 2014, Air Liquide pursued its development
initiatives through selective industrial investments. Air Liquide
has strengthened its positions in the major industrial basins in
which it is present and reinforced its leadership in the growing
Electronics industry in China.
- In the Rhein-Ruhr area, Air Liquide
strengthened its positions by signing a major long-term supply
contract with ThyssenKrupp Steel Europe AG. The industrial gases
required, oxygen (4,600 tonnes per day), nitrogen and argon, will
be supplied via Air Liquide's 500 kilometer local pipeline network.
The pipeline is fed by Air Liquide air separation plants, including
Germany's largest oxygen production plant with a capacity of 2,400
tonnes per day, started-up in 2012.
- In December 2013 and January 2014, Air
Liquide strengthened its leadership position in growth markets with
the start-up of eight large-scale production units around the
world. Four of the units, based in China, are air separation units
(ASUs), whose combined capacity is 10,000 tons per day, and have
increased the Group's oxygen production capacity in that country by
almost 50%.
- In Electronics in China, Air Liquide
was awarded a major long-term contract with CEC Panda Flat Panel
Display Technology (a joint venture of CEC Panda and Sharp LCD) to
supply ultra-pure carrier gases to their first fab that will
manufacture Oxide-TFT screens in Nanjing Crystal Park (Jiangsu).
These new screens are used in mobile devices and TV sets on
generation 8.5 size glass substrates. Air Liquide will invest
around 25 million euros.
- In South Korea, Air Liquide sold its
40% interest in Daesung Industrial Gases in order to focus on the
strategic development of its wholly owned subsidiary Air Liquide
Korea.
- In Industrial Merchant, Air Liquide
continued to develop its nitrogen production capacity in the United
States to meet growing demand, particularly from the boom in oil
and gas exploration activity in the northern part of the country.
The new Tioga plant in North Dakota started up in the first quarter
and will supply nitrogen to the surrounding states. At the same
time, Air Liquide updated its bulk distribution fleet in the U.S.
(with 145 new trucks) to maintain driver safety and supply
reliability.
- The ITER project, through its European
organization Fusion for Energy (F4E), has signed a new contract
with Air Liquide for the supply of a second set of additional
cryogenic equipment for a total amount of around 65 million euros.
This follows a major contract, signed in 2012, for the supply of
three helium refrigerators with record combined cooling
capacity.
NEW INNOVATION INITIATIVES
- In first half 2014, Air Liquide
committed to new investments to strengthen the Group's innovation
capacities with:
- The modernization of its Research and
Development Center at Paris-Saclay, the Group's main global
research center;
- The creation of a center for the
development of gas cylinder for Industry and Healthcare at the
Paris-Saclay site;
- The launch of a technical center of
excellence for cryogenic production technologies in
Vitry-sur-Seine, near Paris.
These initiatives represent a total investment of nearly
100 million euros.
- Air Liquide is continuing to deploy
TAKEOTM, the first medical oxygen cylinder with a digital
interface, which facilitates the work of hospital staff and
ambulance attendants. Thanks to its electronic information system,
TAKEOTM allows the user to visualize the remaining consumption time
until oxygen runs out, emitting a warning sound when oxygen is low,
and thereby improving patient safety. TAKEOTM is already in use in
15 countries and will be rolled out over the next two years, with
around 100,000 cylinders being made available.
- Air Liquide pursued the initiatives
launched in 2013 to promote open innovation: i-Lab, Air Liquide's
new ideas laboratory, and ALIAD, the Group's capital investment
subsidiary that takes minority stakes in innovative technology
start-ups.
During first half 2014, ALIAD made equity investments in three
technology start-ups.
- The French company McPhy Energy designs
hydrogen generators based on water electrolysis and hydrogen
storage in solid magnesium hydride to address the problem of
storing renewable energy.
- The French innovative start-up Solumix
has developed a new insulating construction material, made from
natural raw materials.
- Based in Belgium, Xylowatt has
developed a technology for producing clean syngas from solid
biomass. Air Liquide will help develop this technology for use
in oxygen-based processes.
- The Group also reinforced its
investment in the field of hydrogen energy with the installation of
four new hydrogen filling stations in Denmark, as part of the
Copenhagen Hydrogen Network supported by the European Commission.
These four stations will join two stations already in service and
are a significant step towards the creation of a distribution
network at national level. These stations will be equipped with an
electrolyser, allowing them to produce Blue Hydrogen, a totally
decarbonated hydrogen.
REFINANCING AT ATTRACTIVE RATES
Air Liquide issued bonds in first half 2014 for a total amount
of 750 million euros, to refinance the bonds reaching maturity and
fund the development while benefiting from very attractive market
conditions. The three bond issues cover maturities between 10 and
15 years. The major issue was made under the EMTN program for an
amount of 500 million euros with a 10-year maturity and a coupon of
1.875% p.a.
H1 2014 Income Statement
REVENUE
Revenue
(in millions of euros)
H1 2013 H1 2014 2014/2013
change 2014/2013 change excl. FX & nat. gas
2014/2013 comparable change (a) Gas &
Services 6,885 6,807 -1.1% +3.3%
+4.7% Engineering & Technology 372 405 +9.0% +13.7% +13.7%
Other activities 304 294 -3.7% -2.7%
-2.7%
TOTAL REVENUE 7,561
7,506 -0.7% +3.6%
+4.8%
(a) Excluding currency, natural gas and significant scope
impacts (Anios divestiture).
Group
Group revenue for first half 2014 reached 7,506
million euros, down 0.7% compared with first half 2013, and was
penalized by a negative currency impact of -4.2%, and a natural gas
impact of -0.1%. Excluding the impact of currency and the price
of natural gas, revenue increased +3.6% compared with first
half 2013. On a comparable basis, excluding the impact of the
disposal of Anios, first half revenue increased +4.8%.
Following a first quarter that had benefited from favourable
previous-year period comparative base, comparable sales growth
continued during the second quarter.
Revenue by quarter (in
millions of euros)
Q1 2014 Q2 2014 Gas
& Services 3,416 3,391 Engineering &
Technology 175 230 Other activities 143 151
TOTAL
REVENUE 3,734 3,772 2014/2013
published change +1.0% -2.4%
2014/2013 change excl. currency & nat. gas +4.9%
+2.4% 2014/2013 comparable change (a)
+6.2% +3.6%
(a) Excluding currency, natural gas and significant scope
impacts (Anios)
Currency, natural gas and significant
scope impacts
In addition to the comparison of published
figures, financial information is given excluding currency, natural
gas price fluctuation and significant scope impacts.
Since industrial and medical gases are
rarely exported, the impact of currency fluctuations on activity
levels and results is limited to euro translation impacts with
respect to the financial statements of subsidiaries located outside
the euro zone. Fluctuations in natural gas prices are generally
passed on to customers through price indexation clauses.
(in millions of euros)
Group
Gas & Services H1 2014 revenue 7,506
6,807 2014/2013 published change (in %) -0.7% -1.1% Currency
impact -324 -303 Natural gas impact -5 -5 Significant scope impact
-94 -94
2014/2013 change excl. currency and natural. gas (in
%) +3.6% +3.3% 2014/2013 comparable change
(a) (in %) +4.8% +4.7%
(a) Excluding currency, natural gas and significant scope impacts.
Gas & Services
Unless otherwise stated, all the changes
in revenue outlined below are on a comparable basis (excluding
currency, natural gas and significant scope impacts).
Gas and Services revenue amounted to
6,807 million euros, or a comparable growth rate
of +4.7%, with growth in all the business lines and strong growth
in the Americas and Asia. The impact of the disposal of the Anios
businesses was -1.4%, while growth at constant exchange rates and
natural gas prices was +3.3%. The overall impact of lower natural
gas prices during the half-year was marginal and amounted to -0.1%.
On a reported basis, revenue was down slightly at -1.1% compared
with first half 2013, which was heavily penalized by a negative
currency impact of -4.4%.
Revenue
(in millions of euros)
H1 2013 H1 2014 2014/2013
change 2014/2013 change excl. currency & nat.
gas 2014/2013 comparable change (a) Europe
3,547 3,346 -5.6% -3.6% -1.0%
Americas 1,590 1,647 +3.6% +10.0% +10.0% Asia-Pacific 1,562 1,637
+4.8% +12.3% +12.3% Middle-East and Africa 186 177
-5.3% +4.0% +4.0%
GAS & SERVICES
6,885 6,807 -1.1%
+3.3% +4.7% Large Industries
2,461
2,493 +1.3% +4.8% +4.8% Industrial Merchant 2,538 2,480 -2.3% +3.5%
+3.5% Healthcare 1,344 1,263 -6.0% -3.0% +3.9% Electronics
542 571 +5.3% +11.7% +11.7%
(a) Excluding currency, natural gas, and significant scope
impacts.
Europe
Revenue in Europe amounted to 3,346 million euros, or a
decrease of -1.0%. Excluding the impact of the disposal of
cogeneration businesses in late 2013 and the decrease in the cost
of electricity, activity in the region was up slightly. Oxygen
volumes increased throughout the region, especially in Northern
Europe, while demand for hydrogen remained strong, mainly on the
Benelux pipeline network. The region is still benefiting from the
momentum of developing economies, which increased + 5% due to the
ramp-up of the units commissioned in 2013. The Healthcare business
line grew +2.6%.
- Large Industries revenue was
down -3.6%. Adjusted for the disposal of the cogeneration
plants and the reduction in electricity prices, sales increased
+1.0%. Hydrogen volumes were boosted by strong demand from the
refining sector, while the improvement in demand from the metals
sector continued, resulting in an increase in oxygen volumes. Large
Industries business remained stable in Eastern Europe, following
the ramp-up in 2013, and has been relatively immune to the events
in Ukraine and Russia to date.
- Industrial Merchant sales
registered a - 1.1% decline. Developing economies
continued their steady growth following the commissioning of new
capacity in 2013, including in Russia, where growth was over +15%,
and Poland. Conversely, activity in the advanced economies was
affected by an economic environment that remained difficult,
especially in Southern Europe, although Northern Europe showed a
slight improvement. Liquid volumes in the region were stable, while
cylinder volumes declined in Southern Europe. Helium volumes
increased sharply, and have almost doubled since first half 2013.
Pricing was negligible in the first half, while inflation has also
slowed.
- Healthcare continued its
expansion with growth of +2.6%. Home Healthcare was up
+3.6%, with no acquisition during first half2014, and helped by
continued growth in demand and the ever increasing portfolio of
therapies provided to patients. Pressure on tariffs continued,
especially in Spain and France. In medical gases for hospitals,
pressure on budgets affected gas volumes in France and Southern
Europe. In prevention and wellbeing, the Specialty Ingredients
business reported revenue growth of +4.3%, while the Schülke
Hygiene business registered an increase of +12.8%. Pricing was down
during the semester, slightly less than -2%.
- Electronics revenue was down
-4.6%, affected by a sharp downturn in Equipment and
Installation sales. Carrier gas sales were virtually stable, while
specialty gas sales decreased due to the weak volumes in Europe and
ongoing transfer of the business to Asia.
Americas
Gas & Services revenue in the Americas amounted to
1,647 million euros, an increase of
+10.0%. Industrial activity remained sustained in North
America, with strong demand for hydrogen from the refining industry
and for air gas from the chemicals industry. Growth in South
America, at more than +15%, remained solid during the half-year
with sustained industrial and health demand, boosted by
developments in Argentina and Mexico.
- Large Industries reported solid
sales growth of +8.7%. The segment benefited from strong
demand for air gas from the chemicals industry in the United States
and from the start-up of units in Latin America, compensating
falling volumes in the metals sector in Canada. Hydrogen volumes
also grew sharply in the United States. Electricity and steam
volumes registered a marked decrease due to some unit outages.
- Industrial Merchant activity was
up +6.1%, boosted by an increase in sales, and by small
bolt-on acquisitions in South America. Liquid volumes increased
overall in the region, more significantly in South America and
Canada. Cylinder volumes fell in South America and Canada, but were
up significantly in the United States. Pricing campaigns continued
throughout the period, resulting in average price increases of
+3.9%.
- Healthcare revenue rose
+9.1%, driven by the performance of Home Healthcare and
hospital gases in Latin America (Argentina, Brazil). The growth in
North America remained lower, and was primarily driven by Home
Healthcare business in Canada, despite strong pressure on rates,
and a fall in medical gas volumes in the United States.
- Electronics registered an
increase of +47.4%, benefiting from strong growth in demand
for molecules and advanced precursors, produced by Voltaix.
Equipment and Installation sales were also up sharply, proof of the
gradual recovery of the sector in the region. Carrier gases also
continued to increase.
Asia-Pacific
Revenue in the Asia-Pacific region increased +12.3% to
1,637 million euros. The sales growth continued
in all countries in the region, with Japan and China being the main
sources of this growth. Momentum was strong in all business lines,
helped by a recovery in Electronics in Japan and a steady
contribution from start-ups in China.
- Large Industries sales increased
+21.1%, driven by the ramp-up of the units in China that
started up at the end of last year and in early 2014. Air gas and
hydrogen volumes increased throughout the region.
- Industrial Merchant revenue
increased +8.9% during the period. Japan posted growth of
+9.6%, driven by an increase in bulk and cylinder volumes. The
increase in VAT on 1 April 2014 did not have a material effect on
growth. Developing economies activity was also up strongly, +13.5%,
primarily in China, where all market segments registered growth.
Pricing was down -0.1% during the period mainly due to a highly
competitive environment in Australia. All other countries in the
region achieved price increases.
- Electronics sales were up +5.2%.
Japan confirmed a return to growth with a +2.1% increase in the
first half, with sales rising +3.8% in the second quarter. In the
second quarter, carrier gases registered growth of +7.2% (+6.0% in
the first semester) in the region as a result of the start-up of
new contracts in China and Taiwan, while sales of the Aloha range
virtually doubled, boosted by the acquisition of Voltaix in
September 2013.
Middle-East and Africa
Middle East and Africa revenue amounted to 177 million
euros, or an increase of +4.0%. The Africa region grew
by +11%, while political unrest in the Middle East had a negative
impact on volumes. Large Industries posted strong growth in South
Africa due to the ramp-up of an Air Seperation Unit. Industrial
Merchant demand held up well, both in bulk and cylinders,
especially in Africa. The Healthcare business continued to
expand.
Engineering & Technology
Engineering & Technology revenue amounted to
405 million euros, an increase of +13.7%
compared with first half 2013, reflecting progress in third-party
projects.
Order intake amounted to 541 million euros in first half 2014,
reflecting the Group's tight control on its investments and greater
selectivity for third-party projects. The vast majority of projects
concerned units for air gas production and natural gas
transformation.
Total orders in hand remained stable at around 5 billion euros
at the end of June 2014.
Other activities
Revenue
(in millions of euros)
H1 2013 H1 2014 2014/2013
change 2014/2013 change excl. currency & nat.
gas Welding 208 193 -7.1% -7.0%
Diving 97 101 +3.6% +6.4%
TOTAL
304 294 -3.7%
-2.7%
The -2.7% fall in revenue of Other Activities over the
first six months of the year is attributable to the weakness of the
Welding business, especially in Western Europe, where it was down
by -7%.
Diving (Aqua Lung) was up +6.4% during the first half,
thanks to steady demand.
OPERATING INCOME RECURRING
Operating income recurring before depreciation and
amortization amounted to 1,872 million euros, a slight reported
fall of -0.2%, and was up +3.7% excluding the currency
impact, demonstrating the Group's tight cost control.
Amortization and depreciation amounted to 618 million euros, a
moderate decrease of -0.4% (+3.6% excluding the currency impact),
in line with the greater selectivity over the Group's investment
activity.
Group Operating Income Recurring (OIR) amounted to 1,254
million euros in first half 2014, a slight decrease of -0.2%
compared with first half 2013, and was up +5.2% excluding the
impact of currency and the disposal of Anios, demonstrating
positive leverage on sales. Accordingly, the operating margin (OIR
to revenue) was up +10 basis points to 16.7%, primarily due
to a significant level of efficiencies.
Efficiencies amounted to 152 million euros during the
first six months of the year, ahead of the annual target of over
250 million euros. These efficiencies represent cost saving of 2.7%
over the cost base, relative to 2.4% of the cost base in first half
2013. This efficiency stems from purchasing and also benefited from
the beginning of the savings coming from realignment plans
implemented in organizations where activity levels have been
impacted by demand weakness in 2013, especially in Japan, Western
Europe and Welding. The efficiencies generated by the realignment
plans are in line with the estimated 2-year pay-back. In the
industrial field, other projects designed to reduce energy
consumption and optimize the logistics chain were continued.
Gas & Services
Operating income recurring in the Gas & Services
segment amounted to 1,294 million euros, an increase of
+0.2%. The reported margin (OIR-to-revenue) reached 19.0%
compared with 18.7% in first half 2013. Excluding the impact of
natural gasa, the margin also improved by 30 basis points.
Cost inflation, excluding the impact of energy indexation, was
+2.3% in the first half. Prices continued to increase +0.5% largely
due to the continued efforts within Industrial Merchant (+1.3%), a
small improvement in Electronics (+0.3%) and despite continued
tariff pressure in Healthcare. Delivered efficiencies amounted to
143 million euros, some of which was absorbed in offsetting the
difference between cost inflation and pricing. The remainder helped
improve profit margins resulting in a retention rate of 41% during
the semester.
Gas & Services H1 2014 Operating income recurring
Gas & Services Operating
margin (b) H1 2013 H1 2014
Europe 18.9% 19.9% Americas 21.6% 19.9% Asia-Pacific
15.6% 16.8% Middle-East and Africa 18.4% 15.3%
TOTAL
18.7% 19.0%
(b) Operating income recurring/revenue.
Operating income recurring in Europe reached
665 million euros, or a decrease of
-0.7%. Excluding the impact of natural gas, the operating
margin increased significantly by +60 basis points, driven
by a high level of efficiencies. In Industrial Merchant, the margin
was maintained at the same level as in first half 2013, despite
continued low volumes in Southern Europe and negligible pricing in
a context of lower cost inflation. The Large Industries margin
improved sharply throughout the region notably due to the decline
in electricity prices and to a mix effect relating to the disposal
of cogeneration units. The Healthcare margin resisted well the
pressure on tariffs.
Operating income recurring in the Americas amounted to
327 million euros, down -4.7%, due to a significant
currency impact (+5.3% on a constant currency basis). Excluding the
impact of natural gas, the operating margin fell -110 basis
points due to increased transportation costs in the United
States, especially during the harsh winter weather, which were not
fully passed on to customers.
Operating income recurring in the Asia-Pacific region of
275 million euros, increased +12.7%. The operating
margin, excluding the impact of natural gas, increased +120
basis points as a result of the recovery in Electronics,
industrial efficiencies and the effects of the realignment plans
launched in 2013 in Japan.
Operating income recurring in the Middle East and Africa
region amounted to 27 million euros, down -21.2%, due
to lower volumes resulting from political unrest in the Middle East
and a strong currency impact. The operating margin decreased
-310 basis points, excluding the impact of natural gas.
Engineering & Technology
Operating income recurring for Engineering & Technology
amounted to 28 million euros. The operating margin was
6.9%, down from 8.9% in first half 2013, mainly due to startup
delays on certain third-party projects. The margin remained within
the target range of 5-10%.
Other activities
The Group’s Other Activities, affected by the difficulties in
Welding, reported operating income recurring of 16 million
euros, down -5.7%, while the operating margin was 5.6%,
quasi stable compared with first half 2013.
a The explanation of the natural gas impact on margins can be
found on page 37 of the 2013 Reference Document.
Research & Development and corporate costs
Research & Development and corporate costs including
consolidation adjustments amounted to 84 million euros,
reduced by -1.1%, reflecting tight control on corporate
costs.
NET PROFIT
Other operating income and expenses was a net expense
of 6 million euros compared with a net expense of 41 million
euros in first half 2013. These charges primarily include 13
million euros relating to the realignment programs, mostly in
Western Europe, which will continue during the second half.
Net financial costs, at 146 million euros, decreased
-6.8% compared with the 157 million euros reported in first half
2013. Cost of debt, which was down -2.2% (or +2.7% excluding
the currency impact), reflected a fall in the average cost of net
debt, from 4.3% in first half 2013 to 4.1%, primarily as a result
of new bonds issued in euros under favorable conditions, partially
compensated by the increase of the debt in developing economies.
Other financial income and expenses decreased -18.8%.
Taxes amounted to 323 million euros, increasing
significantly +13.5%. Accordingly, the effective tax rate
increased to 29.3%, compared with 26.9% in first half 2013.
This rate is explained by adverse effects relating to the
geographical mix, as well as a non-recurring income tax expense
following the disposal of the investment in Daesung Industrial
Gases Co., Ltd (South Korea).
The Group's share in the profit of associates amounted to
4 million euros, compared with 9 million euros in first half
2013. Minority interests decreased by -9% to 28
million euros.
Overall, first half 2014 net profit (Group share)
amounted to 755 million euros, a reported increase of +0.4%,
up +3.8% excluding the currency impact.
Earnings per share amounted to 2.20 euros, stable
compared to first half 2013 adjusted for the free share attribution
on June 2, 2014. The average number of outstanding shares used to
calculate net earnings per share at June 30, 2014 was
343,094,668.
Change in the number of shares
H1 2013
H1 2014 Average number of outstanding shares (a)
341,709,898 343,094,668
(a) Used to calculate earnings per share, H1 2013 adjusted for
free share attribution on June 2, 2014.
Change in net indebtedness
Cash flow from operations before changes in working capital
requirements amounted to 1,394 million euros, down -7.2% compared
with first half 2013 and -3.8% excluding the currency impact.
Net cash flow after changes in the working capital requirement
was 1,147 million euros, below first half 2013, strongly
impacted by the expenditure relating to the realignment plans for
which a provision was recorded in 2013. Excluding the currency
impact, Net cash flow after changes in the working capital
requirement increased slightly +0.1%.
The change in working capital requirement, which amounted
to - 232 million euros in first half 2014, was in line with the
seasonality. The working capital-to-sales ratio, excluding taxes,
was 8.4% compared with 8.7% in first half 2013, such improvement
being due to the Gas & Services activity.
Industrial capital expenditure, which amounted to 934 million
euros, decreased -4.8%. Including transactions with minority
shareholders and 58 million euros in acquisition, total net capital
expenditure amounted to 943 million euros, a decrease of -12.8%
compared with first half 2013, reflecting the Group's strict
control on capital expenditure and efforts made to optimise
existing capacities and improve loading of recently started-up
units.
Net indebtedness at 30 June 2014 amounted to 6,797
million euros, an increase of 735 million euros compared with
December 31, 2013, and reflected the usual seasonal effect of the
full payment of the 2013 dividend infirst half 2014. The level of
net indebtedness was slightly lower than the level at 30 June 2013.
Net debt-to-equity amounted to 57%, adjusted for the impact of the
seasonality of the dividend, compared with 56% at the end of 2013
and 60% at 30 June 2013. The Group's financial structure remains
sound, guaranteeing the flexibility to continue to seize investment
opportunities.
Return on capital employed after tax was 10.8% at 30 June
2014, compared with the reported ratio of 11.1% at the end of 2013.
This slight decrease reflects the continued importance of the
ongoing industrial investments, which will contribute to
medium-term growth. Excluding the currency impact, ROCE was
11.0%.
CAPITAL EXPENDITURE
Gross capital expenditure in first half 2014 amounted to 1,081
million euros. This amount included some small bolt-on acquisitions
and transactions with minority shareholders, for a total amount of
147 million euros, primarily in the Industrial Merchant and
Healthcare segments.
Disposals of fixed assets, which amounted to 139 million euros,
primarily related to the sale of an investment in South Korea.
Gross capital expenditure in the Gas & Services activity
represented 14.6% of sales, down slightly compared with first half
2013. Accordingly, net capital expenditure amounted to 943 million
euros.
INVESTMENT CYCLE
The Group’s steady long-term growth is largely based on its
ability to invest each and every year in new projects. Industrial
gas investment projects are spread throughout the world, highly
capital-intensive and supported by long-term contracts,
particularly for Large Industries.
Investments
Investment opportunities
The 12-month opportunity portfolio amounted to 3.4 billion
euros at the end of June 2014, a slight decline compared with
the end of 2013. This slight decrease was primarily due to the
adaptation of our development initiatives to the geopolitical
context. The number of unit takeovers also decreased moderately.
Developing economies account for 77% of the portfolio, with China
accounting for a significant portion of the opportunities. The
share in the Americas decreased slightly, due to project decisions
during the period in the region.
Investment decisions and investment backlog
Investment decisions continued throughout the half-year, and
amounted to 0.8 billion euros. Industrial decisions
accounted for the largest portion of these decisions, given the
small number of acquisitions during the semester.
The share of Developing economies was preponderant, including
projects in Latin America, China and Singapore. Financial
investments included small bolt-on acquisitions in the Industrial
Merchant segment in developing economies (China, Latin America and
Africa).
The total investment backlog amounted to 2.6 billion euros,
leading to a future contribution to revenue of approximately 1.2
billion euros after full ramp-up.
Start-ups
During the first half 11 units were started-up, seven of them in
developing economies. These new units will serve the steel,
chemicals and electronics markets. The Group is still planning on
around 50 start-ups in 2013 and 2014.
OUTLOOK
The Group’s performance during the first half was solid and in
line with the outlook for the year. This performance benefited from
regional sources of growth – the Americas, Asia-Pacific and more
globally the developing economies –, as well as from the pick-up in
Electronics and the contribution from new unit start-ups. While the
pace of activity in Southern Europe remains modest, it is
stabilizing. Published results for the period were impacted by an
unfavorable currency translation effect.
The increase in profit reflects Air Liquide’s ability to control
costs and consistently generate substantial efficiencies, which
contribute to the regular improvement in operating margin. The
Group thus continues to align itself to the market trends to
prepare for its growth over the medium term.
The investment decisions during the first half of the year
reflect the Group's greater selectivity in its projects. The
investment backlog amounts to € 2.6 billion. As with the Group-led
innovation and technologies initiatives, it will contribute to
growth in the next few years.
In this context, and barring a degradation of the environment,
Air Liquide is confident in its ability to deliver another
year of net profit growth in 2014.
Appendix
2nd quarter 2014 revenue
By geography
RevenuesIn millions of euros
Q2 2013 Q2 2014 Published
Change
Comparablechange
(a)
Europe 1,778 1,645 -7.4% -1.8% Americas
824 833 +1.1% +8.4% Asia-Pacific
782 821 +4.9% +11.2% Middle-East and Africa
95 92 -3.8% +5.0%
Gas and Services
Revenues 3,479 3,391
-2.5% +3.7% Engineering & Technology
225 230 +2.3% +7.2% Other Activities
159 151 -5.5% -4.6%
Group
revenue 3,863 3,772
-2.4% +3.6%
By World business line
RevenuesIn millions of euros
Q2 2013 Q2 2014 Published
Change
Comparablechange
(a)
Large industries 1,236 1,208 -2.3%
+3,4% Industrial Merchant 1,284 1,251 -2.6%
+2,7% Electronics 274 295 +7.4%
+13,0% Healthcare 685 637 -6.9% +2,6%
Gas and Services Revenues 3,479
3,391 -2.5% +3,7%
(a) Excluding currency, natural gas and significant scope
impacts.
Currency, natural gas and significant scope impacts
In addition to the comparison of published figures, financial
information for second quarter 2014 is provided before currency,
natural gas price fluctuations and significant scope impacts.
Since gases for industry and health are rarely exported, the
impact of currency fluctuations on activity levels and results is
limited to euro translation impacts with respect to the financial
statements of subsidiaries located outside the Euro zone.
Fluctuations in natural gas prices are generally passed on to
customers through price indexation clauses.
Consolidated 2014 second quarter revenue includes the
following:
In millions of euros Revenue
Q2 2014
Q2 2014/2013 change Currency
Natural gas
Significant scope
Q2 2014/2013 comparable change
(a)
Group
3,772 -2.4% (155) (29)
(47) +3.6% Gas &
Services
3,391 -2.5% (143) (29)
(47) +3.7%
(a) Excluding currency, natural gas and significant scope
impacts.
For the Group,
- The currency impact was -4.0%.
- The impact of lower natural gas prices
was -0.7%.
- The significant scope impact was
-1.2%.
For Gas & Services,
- The currency impact was -4.1%.
- The impact of lower natural gas prices
was -0.8%.
- The significant scope impact was
-1.3%.
Segment information
H1 2013 H1 2014
(in millions of euros and %)
Revenue Operatingincomerecurring OIRmargin
Revenue Operatingincomerecurring OIRmargin
Europe 3,547 669 18.9 % 3,346
665 19.9 % Americas 1,590 343 21.6 %
1,647 327 19.9 % Asia-Pacific 1,562
244 15.6 % 1,637 275 16.8 %
Middle-East and Africa 186 34 18.4 %
177 27 15.3 %
Gas and Services
6,885 1,291 18.7 %
6,807 1,294 19.0 % Engineering
& Technology 372 33 8.9 % 405
28 6.9 % Other activities 304 17
5.7 % 294 16 5.6 % Reconciliation -
(85) - - (84) -
Total
Group 7,561 1,256 16.6
% 7,506 1,254 16.7 %
Consolidated income statement
(in millions of euros)
H1 2013 H1
2014 Change 14/13 Change excl.
forex 14/13 Revenue 7,561.5
7,505.5 -0.7% +3.5% Other income 55.0
89.0 Purchases (2,960.1)
(2,920.0) Personnel expenses (1,373.8)
(1,369.8) -0.3% +3.3% Other expenses (1,406.2)
(1,432.9)
Operating income recurring before
depreciation and amortization 1,876.4
1,871.8 -0.2% +3.7% Depreciation and
amortization expense (620.2) (617.8) -0.4% +3.6%
Operating income recurring 1,256.2
1,254.0 -0.2% +3.7% Other non-recurring
operating income 12.2 2.2 Other
non-recurring operating expenses (52.9) (7.9)
Operating income 1,215.5
1,248.3 +2.7% +6.7% Net finance costs
(113.6) (111.1)
-2.2% +2.7% Other financial
income 3.5 5.4 Other financial expenses
(46.5) (40.3) Income taxes
(284.2) (322.6) Share of profit of associates
8.7 3.7
Profit for the period
783.4 783.4 0.0% +3.4% -
Minority interests 31.0 28.2 - Net
profit (Group share) 752.4 755.2 +0.4% +3.8%
Basic earnings per share (in
euros)
2.20
2.20
0.0%
+3.6%
Diluted earnings per share (in
euros)
2.19
2.19
0.0%
+3.7%
Consolidated balance sheet
ASSETS (in millions of euros)
December 31,
2013 June 30, 2014 Goodwill 5,089.8
5,139.9 Other intangible assets 713.2 709.4 Property,
plant and equipment 13,225.7 13,616.6
Non-current
assets 19,028.7 19,465.9
Non-current financial assets 435.5 438.0 Investments
in associates 201.7 100.8 Deferred tax assets
301.7 303.9 Fair value of non-current derivatives (assets)
122.4 102.4
Other non-current assets
1,061.3 945.1 TOTAL NON-CURRENT ASSETS
20,090.0 20,411.0 Inventories and
work-in-progress 792.3 859.6 Trade receivables
2,691.1 2,893.9 Other current assets 449.8
486.3 Current tax assets 90.7 52.6 Fair value of
current derivatives (assets) 40.6 19.9 Cash and cash
equivalents 940.1 567.0
TOTAL CURRENT ASSETS
5,004.6 4,879.3 TOTAL ASSETS
25,094.6 25,290.3
EQUITY AND LIABILITIES (in millions of euros)
December 31, 2013 June 30, 2014 Share capital
1,720.6 1,894.8 Additional paid-in capital
81.2 4.2 Retained earnings 7,271.2 7,879.3
Treasury shares (88.2) (104.0) Net profit (Group
share) 1,640.3 755.2
Shareholders' equity
10,625.1 10,429.5 Minority
interests 263.0 267.2 TOTAL
EQUITY 10,888.1 10,696.7
Provisions, pensions and other employee benefits 2,040.5
2,141.5 Deferred tax liabilities 1,196.3
1,200.6 Non-current borrowings 5,817.5 6,333.6 Other
non-current liabilities 191.0 239.9 Fair value of
non-current derivatives (liabilities) 29.4 19.8
TOTAL NON-CURRENT LIABILITIES 9,274.7
9,935.4 Provisions, pensions and other employee benefits
246.5 191.6 Trade payables 1,922.6
1,905.0 Other current liabilities 1,407.7 1,333.2
Current tax payables 156.8 169.6 Current borrowings
1,188.8 1,030.6 Fair value of current derivatives
(liabilities) 9.4 28.2
TOTAL CURRENT
LIABILITIES 4,931.8 4,658.2
TOTAL EQUITY AND LIABILITIES 25,094.6
25,290.3
Consolidated cash flows statement
(in millions of euros)
H1 2013 H1 2014
Operating activities Net
profit (Group share) 752.4 755.2
Minority interests 31.0 28.2
Adjustments: • Depreciation and
amortization 620.2 617.8 • Changes in deferred taxes
57.5 34.5 • Increase (decrease) in provisions
39.0 (59.2) • Share of profit of associates (less dividends
received) 14.6 3.4 • Profit/loss on disposal of
assets (13.7) 13.7
Cash flows from operating activities
before changes in working capital
1,501.0 1,393.6 Changes in working
capital (266.4) (232.4) Other (40.8)
(14.6)
Net cash flows from operating activities
1,193.8 1,146.6 Investing activities
Purchase of property. plant and equipment
and intangible assets
(981.5) (934.4) Acquisition of subsidiaries and
financial assets (109.1) (57.6) Proceeds from sale of
property. plant and equipment and intangible assets 8.9
138.7 Proceeds from sale of financial assets 0.7
Net cash flows used in investing activities
(1,081.0) (853.3) Financing
activities Dividends paid
• L'Air Liquide S.A. (819.4)
(837.9) • Minority interests (35.3) (27.6) Proceeds
from issues of share capital 39.0 35.9 Purchase of
treasury shares (116.8) (117.9) Increase (decrease)
in borrowings 668.9 426.5 Transactions with minority
shareholders (0.1) (89.2)
Net cash flows from
(used in) financing activities (263.7)
(610.2) Effect of exchange rate changes and change in scope
of consolidation 10.0 0.5
Net increase (decrease)
in net cash and cash equivalents (140.9)
(316.4) NET CASH AND CASH EQUIVALENTS AT THE BEGINNING OF
THE PERIOD 1,086.5 853.0 NET
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
945.6 536.6
The analysis of net cash and cash equivalents at the end of
period as follows:
(in millions of euros)
June 30, 2013 June
30, 2014 Cash and cash equivalents 1,024.7 567.0
Bank overdrafts (included in current borrowings) (79.1)
(30.4)
Net cash and cash equivalents
945.6 536.6
Net indebtedness calculation
(in millions of euros)
June 30, 2013 June
30, 2014 Non-current borrowings (long-term debt)
(6,533.8) (6,333.6) Current borrowings (short-term debt)
(1,336.1) (1,030.6)
TOTAL GROSS INDEBTEDNESS
(7,869.9) (7,364.2) Cash and cash
equivalents 1,024.7 567.0
Derivative instruments (assets) - fair value hedge of borrowings
8.2
TOTAL NET INDEBTEDNESS AT THE END OF
THE PERIOD (6,837.0) (6,797.2)
Statement of changes in net indebtedness
(in millions of euros)
June 30, 2013 June
30, 2014 Net indebtedness at the beginning of the period
(6,102.5) (6,061.9) Net cash flows from
operating activities 1,193.8 1,146.6 Net cash flows
used in investing activities (1,081.0) (853.3) Net
cash flows used in financing activities excluding increase
(decrease) in borrowings (932.6) (1,036.7)
Total
net cash flows (819.8) (743.4)
Effect of exchange rate changes, opening net indebtedness of newly
acquired companies and others 85.3 8.1
Change in
net indebtedness (734.5) (735.3)
NET INDEBTEDNESS AT THE END OF THE PERIOD
(6,837.0) (6,797.2)
www.airliquide.comFollow us on Twitter
@AirLiquideGroup
Air LiquideCorporate CommunicationsAnne Bardot, + 33 (0)1
40 62 53 34Garance Bertrand, + 33 (0)1 40 62 59 62orInvestor
RelationsVirginia Jeanson, +33 (0)1 40 62 57 37Annie Fournier,
+33 (0)1 40 62 57 18
C3 AI (NYSE:AI)
Historical Stock Chart
From Jun 2024 to Jul 2024
C3 AI (NYSE:AI)
Historical Stock Chart
From Jul 2023 to Jul 2024