2014 objective maintained
Regulatory News:
Air Liquide (Paris:AI):
Q3 2014 key figures
Q3 2014 highlights
• Group revenue:
+4.3%*
• New contracts in growing markets:
Air gases for Brazil’s top pulp and paper producer and ultra-high
purity nitrogen for China’s number one manufacturer of flat panel
displays.
• Additional new unit start-ups: a
total of 16 year to date, including 11 in developing economies.
• Innovation and technologies:
Investment in a new research and technologies center in China, new
developments in hydrogen energy for mobility in the Netherlands and
Japan.
3,801 million euros
• of which Gas & Services:
+3.6%*
3,446 million euros
* Q3 2014/Q3 2013 change on a comparable basis: excluding
currency, natural gas and significant M&A impacts
Commenting on the 3rd quarter 2014, Benoît Potier, Chairman
and CEO of the Air Liquide Group, stated:
“In a more contrasted economic environment, the
3rd quarter was marked by good momentum in the
Americas and Asia-Pacific, by vigorous revenue growth in developing
economies of more than +15% on a comparable basis, and by another
slowdown in Western European manufacturing. Overall, the Group grew
faster than its market, assessed on the basis of the weighted
industrial production index.
The Group’s operating performance remains solid. Ahead of its
annual efficiency objective, the Group continues to adapt to market
conditions to strengthen its competitiveness. At the same time, it
continues to invest and take growth initiatives, particularly in
promising markets and in developing economies. Accordingly, the
proportion of Gas & Services revenue for industry that is
generated in developing economies today exceeds 30%.
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.”
Q3 2014 Group revenue reached
€ 3,801 million, up +4.3% on a comparable
basis compared with Q3 2013, and up +1.0% on a reported basis. The
unfavorable currency translation effect observed in the 1st half
slowed this quarter (-1.1% at the Group level). Gas &
Services sales, up +3.6% on a comparable basis, in line
with the 2nd quarter trend, were stable (+0.1%) as published.
On a comparable basis, all Gas & Services business lines
grew in Q3 2014:
- Large Industries, up +3.6%, benefited from
start-ups and ramp-ups of new units and sustained demand for air
gases and hydrogen in the developing economies of Asia-Pacific,
China in particular.
- For Industrial Merchant, up +1.8%, the
performance was contrasted depending on the region. Demand remains
robust in North America, with in particular sales to oil services
in Canada up this quarter. The Industrial Merchant business
continues to grow at a rapid pace in the developing economies of
Asia-Pacific. In Europe, sales showed improvement in Spain and in
the United Kingdom, while other Western European countries were
impacted by the slowdown in industrial production. In Eastern
Europe, sales continue to grow.
- Electronics growth was a robust +11.7%, driven
by higher sales of specialty gases in the United States and in
Asia, as well as by the success of the ALOHA™ advanced precursor
range in Taiwan, Japan, and the United States.
- Healthcare revenue, up +3.5%, progressed across
all regions, boosted by increased need for home healthcare
services, as well as by the development of the Group’s Healthcare
activities in developing economies and higher hygiene sales.
Engineering and Technology revenue rose by +18.0%
on a comparable basis, reflecting progress made on projects
underway for third-party customers.
Efficiency gains, which on September 30, 2014 stood at
€ 233 million, contributed to the Group’s
operating performance for the period.
UPCOMING EVENTS
Actionaria exhibition, Paris, FranceNovember 21 and 22,
2014
Full year 2014 resultsFebruary 17, 2015
1st quarter 2015 RevenueApril 24, 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.
www.airliquide.comFollow us on Twitter
@AirLiquideGroup
2014 third quarter revenue
- Continued growth in a more contrasted
environment
- Focusing on key markets while
continuously adapting to new dynamics
- Investing for the future
Q3 revenue growth reached +4.3% on a comparable basis. The
combined currency, natural gas and consolidation scope impact
remained negative resulting in published sales growth of +1%.
Gas and Services comparable growth was +3.6% in a more
contrasted environment. While Industrial Production is slowing down
in Western Europe, growth remained solid in the Americas and Asia,
and Electronics sales were at a high level, resulting in growth in
excess of worldwide industrial production of +2.8% (weighted by Air
Liquide Industrial Merchant footprint). Gas and Services for
Industry sales in Developing economies were up +15% in the quarter,
bringing its share to over 30%. Healthcare benefitted from ongoing
growth in demand, particularly in Home Healthcare; somewhat offset
by ongoing pressure on tariffs.
Operating margins are under control thanks to ongoing
efficiency, the results of the progressive execution of the
realignment programs and a reduced gap between cost inflation and
pricing. Operating cashflow was solid, up +6.5% excluding currency
impact, after financing of the realignment programs. Capital
expenditure was in line with the guidance of 2 billion euros for
the full year. The balance sheet remains solid.
Investment decisions at 589 million euros for the quarter were
slightly higher than in the past quarters but continue to reflect a
selective approach to investment.
Revenue
(in millions of euros)
Q3 2013
Q3 2014
Q3 2014/2013change
Q3 2014/2013Comparable*
YTD 2014/2013Comparable*
Gas and Services 3,444 3,446 +0.1 %
+3.6 % +4.3 % Engineering and Technology
184 213
+15.6
%
+18.0 % +15.1 % Other activities 137
142 +3.8 % +3.5 % -0.8 %
TOTAL
REVENUE 3,765 3,801
+1.0 % +4.3 % +4.7
%
* comparable growth excluding natural gas, currency and
significant M&A 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.
Revenue analysis
Unless otherwise stated, all the changes in revenue described
below are based on comparable data, excluding currency, natural gas
and M&A impacts.
Group
Group revenue was 3,801 million euros in Q3 2014,
up +1.0% as published. Adjusted for a currency impact of -1.1%, the
effect of declining natural gas prices for -1.1%, and the sale of
Anios in Q4 2013 -1.2%, Group revenue was up +4.3% on a
comparable basis.
Gas and Services
In Q3 2014, Gas and Services revenue totaled 3,446
million euros, up +0.1% as published. The translation impact of
currencies against the euro has subsided significantly with the
recent euro weakness to only -1.1%. Conversely, natural gas
pass-through has fallen more this quarter, with an impact of -1.2%.
The adjustment for the disposal of Anios amounted to -1.3%. On a
comparable basis, Gas and Services sales rose +3.6% compared to the
same period in 2013, in line with Q2. Sustained contribution of
start-ups since the beginning of the year and bolt-on acquisitions
of +3.0%, compensated for lower base business growth of +0.6%,
impacted by low electricity prices and a soft summer for Western
European industry.
Revenue
(In millions of euros)
Q3 2013 Q3 2014
Q3 2014/2013change
Q3 2014/2013Comparable*
Europe
1,745 1,601 -8.3%
-2.4% Americas
813 864
+6.3% +7.3% Asia-Pacific
796
890 +11.7% +12.5% Middle East and
Africa
90 91
+2.0%
+6.6%
Gas and Services 3,444
3,446 +0.1% +3.6% Large
Industries
1,218 1,217
-0.1% +3.6% Industrial Merchant
1,274
1,276 +0.2% +1.8% Healthcare
667 638 -4.3% +3.5%
Electronics
285 315
+10.6% +11.7%
* comparable growth excluding natural gas, currency and
significant M&A impacts
Europe
Q3 2014 European revenue totaled 1,601 million euros,
down -2.4% on a comparable basis. While Healthcare remained
positive during the period, Industrial Merchant and Large
Industries business lines saw a decline in activity, impacted by
weak summer demand in Western Europe. While UK and Spain are
better, most other countries in Western Europe were down slightly.
The conflict in Ukraine has temporarily interrupted production in
that country, but activity in Russia is still solid.
• Large Industries was down -5.2% impacted by the
disposal of some cogen activities in Spain and France and declining
electricity prices, particularly in Italy. Hydrogen demand for the
refining sector remained strong throughout the period, while oxygen
volumes were slightly down. Ramp-up of a unit in Turkey compensated
for the temporary interruption of a unit in Ukraine.
• Industrial Merchant sales were down -2.2%. While
pricing has stable due to much lower cost inflation, and falling
energy prices, demand was weak in Germany and Eastern Europe, but
was up in Spain for the first time since 2010. Focus on growing
segments continues with for example very strong growth in sales to
the offshore oil industry and in rare gases.
• Healthcare grew +1.0%. Home Healthcare was up
+1.7% thanks to continued growth in the number of Home Healthcare
patients and some contract renewals, particularly in France and
Spain. Medical gas volume growth has been affected by lower
hospital demand. Tariff pressure has stabilized in France and
softened in Spain. Hygiene activity continues to grow strongly at
+5.1% while Specialty Ingredients have been affected by weakness in
the cosmetics markets in Europe.
Americas
Gas and Services Q3 revenue in the Americas totaled 864
million euros, up +7.3%. This performance reflects solid
demand in all business segments in North America, despite some
hydrogen and cogeneration plant turnarounds in the US, as well as
continued growth in South America, particularly in Healthcare and
in Argentina.
• Large Industries reported +2.7% growth, slightly
below recent trends due to some temporary turnarounds on the US
Gulf Coast. However, demand from the petro-chemicals sector in the
region remained strong. Demand in South America was sustained in
all countries.
• Industrial Merchant growth remained solid at
+5.8%. Volume growth was good in both the North, boosted in
particular by oil well services in Canada, and the South, with a
ramp-up in Mexico and strong demand in Argentina. Brazil was quasi
flat. Pricing remained strong at +5.1% in the region.
• Healthcare revenue grew +12.8%, driven by high
double digit growth in Home Healthcare in Latin America, and in
particular in Brazil.
• Electronics revenue increased by +32.2%,
benefitting from the effect of the acquisition of Voltaix, but also
from strong momentum in specialty gases and advanced materials
sales, as well as strong equipment sales and higher fab loadings as
the sector approaches the top of the cycle.
Asia-Pacific
Asia-Pacific revenue was up +12.5%, at 890 million
euros. Growth in demand and Large Industries and ramp-ups in
China are contributing strongly. The high level of the Electronics
cycle is confirmed and the trend remains positive in Japan.
Healthcare is growing rapidly, from a low base across the
region.
- A +23.7% increase in Large
Industries sales reflects the impact of ramp-ups in China and
solid demand in the rest of the region.
- Industrial Merchant revenue was
up by +3.5% over the quarter. Activity in Japan was stable
with both cylinder and bulk growth offset by a decline in Equipment
sales. More generally in the region, demand remained strong,
particularly in China, except in Australia. Pricing was slightly
down.
- The recovery in Electronics
continued in the quarter, with revenue growth of +9.0%. This
dynamism is supported by the ramp-up of new carrier gas contracts
in China, strong advanced materials sales and further Equipment and
Installation sales in Japan, Singapore and Taiwan. ESG sales remain
solid throughout the region.
- Healthcare revenue grew by
+14.2%, boosted by strong development in Home Healthcare in
Japan, Hong Kong and Australia and by an acquisition. Growth in
medical gases was also sustained in Singapore and Japan.
Middle-East and Africa
Middle East and Africa revenue amounted to 91 million
euros, up +6.6%, showing a better trend than in the
first half. Demand improved in Egypt and Saudi Arabia. In South
Africa, sales were boosted by the Argon shortage being resolved and
the ramp-up of the new air separation unit for the metals sector.
The Yanbu hydrogen units and the customer plant are initiating
commissioning for start-up in the first half of 2015.
Engineering and Technologies
Engineering and Technologies revenue reached 213 million
euros, up +18.0% compared to the Q3 2013 bringing the
year to date increase to +15.1% reflecting solid sales
recognition.
Q3 order intake was 354 million euros resulting in a year to
date total of 895 million euros, below the 1,238 million euros for
the same period last year, reflecting a more selective approach to
both investment decisions and third-party contracts.
Other activities
Revenue
(in millions of euros)
Q3 2013 Q3 2014
Q3 2014/2013change
Q3 2014/2013 changeexcluding
currency
Welding
94 96 +1.9%
+1.6% Diving
43 47
+7.7% +7.4%
TOTAL 137
142 +3.8% +3.5%
Q3 revenue for Other activities increased by +3.5%
to reach 142 million euros.
The Welding activity has turned positive for the first
time in many years. While activity in Western Europe remains weak,
exports to China have been strong. Diving (Acqualung) has
maintained its high single digit rate of growth in Q3 reflecting
new product development and a bolt-on acquisition.
2014 Q3 Highlights
Industrial developments
New contracts were signed in Large Industries in both
developing and advanced economies in the Q3 2014.
- At the end of July 2014, Air Liquide
announced a €90 million (US$ 120 million) investment to supply
Natgasoline LLC (a wholly-owned subsidiary of OCI N.V.) with 2,400
tonnes of oxygen per day for its new world-scale methanol plant in
Beaumont, Texas under a new long-term agreement. Air Liquide also
signed with this customer a contract, via its Engineering and
Construction division, for the supply of the Lurgi MegaMethanol®
process technology.
- In the south of Brazil, Air Liquide
will be investing €40 million to build a new Air Separation Unit
that will supply more than 160 tonnes of oxygen per day to Klabin,
Brazil’s biggest pulp and paper manufacturer. The unit will also
allow Air Liquide to provide oxygen, nitrogen and argon to
customers in the industrial and healthcare sectors, and expand its
presence in the region.
In Electronics, Air Liquide signed a major contract with
BOE Technology Group to supply its new G8.5 Flat Panel Display
Device and System Project located in Chongqing, China. BOE has
become the largest supplier of flat panel display technologies,
products and solutions in mainland China and one of the world
leaders. Air Liquide will invest €30 million in a high
efficiency on-site gas supply system that will produce 30,000 Nm3/h
of ultra-high purity nitrogen and associated bulk gas
infrastructure. With this contract, Air Liquide will supply the
majority of BOE’s fabs in China with a total of 100,000 Nm3/h of
nitrogen for sites in Beijing, Chengdu, Hefei, Ordos and
Chongqing.
New investment in the Research field
In Q3 2014, Air Liquide started the construction of its 12,000
square-meter Shanghai Research & Technology Center
(SRTC). This center, which will be operational at the end of 2015,
represents a €25 million investment and will cover several
different research & development areas, such as energy
efficiency, technologies designed to reduce industrial emissions of
CO2, water treatment, and processes for preserving and freezing
food. It will ultimately house 200 highly skilled employees.
Hydrogen mobility
Several key developments have occurred during Q3 regarding the
commercial development of Fuel Cell Electric Vehicles:
- The participation of Air Liquide, as
the exclusive partner for hydrogen solutions, in the “2014
Innovation March”, a two-month long roadshow in China sponsored by
SAIC Motor Corp. featuring new energy vehicles.
- The installation of a hydrogen filling
station in Saint-Lô, France. This unit will refill the Fuel Cell
Electric Vehicles to be added to the fleet operated by the region’s
local authority by the end of 2014. This is the first step in the
process of rolling out an infrastructure for hydrogen distribution
in France.
- The construction of two hydrogen
filling stations for public use, in Nagoya and Fukada, Japan. These
stations are being built by the new joint venture company
established between Toyota Tsusho Corporation and Air Liquide
Japan.
- The first hydrogen filling station for
the general public in the Netherlands was inaugurated in September.
It has the capacity to refill fifty cars per day and is part of
“HIT”, a European hydrogen infrastructure deployment project.
2014 Q3 Investment cycle
Investment opportunities
Investment opportunities remained stable at 3.4 billion
euros at the end of the quarter, with new projects, mostly on the
US Gulf Coast, compensating those that have been awarded or
cancelled.
As a result the opportunities are more evenly balanced, with
developing regions accounting for 64%, and Asia and Americas
accounting for one third each and Chemicals and Energy projects
contributing for more than 70% of the total.
Investment decisions and backlog
Investment decisions amounted to 589 million euros in Q3,
including one large over-the-fence oxygen contract for an energy
project in China, as well as some pipeline extension in Northern
Europe. This brings the year to date total to 1.3 billion euros,
reflecting a more selective approach to investments.
There were a further five start-ups in Q3 bringing the total to
16 since the beginning of the year, of which six in Asia, four in
Europe and 3 each in Americas and Middle-East Africa.
In terms of investment amounts since the beginning of the year,
decisions were just higher than start-ups, thus the backlog is up
in 2014 to 2.8 billion euros at the end of September. This
investment backlog will generate approximately 1.3 billion euros of
fully ramped-up sales.
Operating performance
Group efficiency gains reached 81 million euros in
Q3, cumulating to 233 million euros for the first nine
months of the year, well ahead of the annual target of
250 million euros. Efficiency includes the contribution from
the European and Japanese realignment plans which are now
implemented. The Group continues to adapt to its operating
environment.
The combination of ongoing tight cost management and the launch
of several pricing initiatives in a low inflation environment is
also helping to preserve the Group’s operating performance.
Cash from operations has risen by +6.5% excluding the
currency impact to 678 million euros, after the financing of the
realignment plans. Net industrial capital expenditures were 554
million euros over the same period. As a result, for the first nine
months of the year net industrial capex is at 1.3 billion euros, in
line with the guidance of 2 billion euros for the full year. The
Group’s financial structure remains solid.
Outlook
In a more contrasted economic environment, the 3rd quarter was
marked by good momentum in the Americas and Asia-Pacific, by
vigorous revenue growth in developing economies of more than +15%
on a comparable basis, and by another slowdown in Western European
manufacturing. Overall, the Group grew faster than its market,
assessed on the basis of the weighted industrial production
index.
The Group’s operating performance remains solid. Ahead of its
annual efficiency objective, the Group continues to adapt to market
conditions to strengthen its competitiveness. At the same time, it
continues to invest and take growth initiatives, particularly in
promising markets and in developing economies. Accordingly, the
proportion of Gas & Services revenue for industry that is
generated in developing economies today exceeds 30%.
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.
Appendices
Currency, natural gas and significant M&A impacts
In addition to the comparison of published figures, financial
information is given excluding currency, the impact of natural gas
price fluctuations and significant M&A effect.
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 our
customers through indexed pricing clauses.
Consolidated 2014 Q3 revenue includes the following:
In millions of euros
Q3 2014Revenue
Q3 2014/2013change
Currency Natural gas
SignificantM&A
Q3
2014/2013changecomparable (a)
Group
3,801 +1.0% (42)
(40) (44) +4.3% Gas & Services
3,446 +0.1% (38) (40) (44)
+3.6%
(a) excluding currency, natural gas and significant M&A
impacts.
For the Group,
- The currency impact was -1.1%.
- The impact of lower natural gas prices
was -1.1%.
- The significant M&A impact was
-1.2%.
For Gas and Services,
- The currency impact was -1.1%.
- The impact of lower natural gas prices
was -1.2%.
- The significant M&A impact was
-1.3%.
YTD 2014 revenue
Consolidated year-to-date 2014
revenue includes the following:
In millions of euros
YTD 2014Revenue
YTD2014/2013change
Currency Natural gas
SignificantM&A
YTD
2014/2013Changecomparable (a)
Group
11,307 -0.2% (366)
(45) (137) +4.7% Gas & Services
10,253 -0.7% (341) (45) (137)
+4.3%
(a) excluding currency, natural gas and significant M&A
impacts.
Revenue per business line
In millions of euros YTD
2013 YTD 2014 YTD 2014/2013 Change
published comparable(a)
Gas & Services 10,329
10,253 -0.7% +4.3%
Large Industries
3,680 3,710 +0.8%
+4.4% Industrial Merchant
3,812
3,755 -1.5% +3.0% Healthcare
2,010 1,901 -5.4% +3.8%
Electronics
827 886 +7.1%
+11.7%
Engineering & Technologies
556 618 +11.2%
+15.1% Other activities 442
436 -1.4% -0.8% Welding
301 289 -4.3%
-4.3% Diving
141 147
+4.9% +6.7%
Group revenue 11,327
11,307 -0.2% +4.7%
(a)comparable growth excl. currency, natural gas and significant
M&A
G&S revenue by geography
In millions of euros YTD
2013 YTD 2014 YTD 2014/2013 change
published comparable(a)
Europe
5,291 4,947 -6.5%
-1.5% Americas
2,404
2,512 +4.5% +9.1% Asia-Pacific
2,358 2,526 +7.1% +12.4%
Middle-East and Africa
276 268
-3.0% +4.9%
Gas & Services revenue
10,329 10,253 -0.7%
+4.3%
(a)comparable growth excl. currency, natural gas and significant
M&A
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