Revenue up by +7%
Solid operational performance
Regulatory News:
Air Liquide (Paris:AI):
Key figures, Q1
2015
- Group revenue: +7.0%3,993 million euros
- of which Gas & Services: +6.3%3,632 million
euros
Q1 2015 highlights
- Major contract signed to build and operate the largest
oxygen production unit in the world, for Sasol in South Africa.
Total investment of around 200 million euros.
- Further acquisitions in Healthcare: Optimal Medical
Therapies, a home healthcare provider in Germany, and the hygiene
division of Bochemie, a major player in the Czech Republic.
- New developments in hydrogen energy for mobility: retail
hydrogen charging stations opened (Japan, Denmark) and a charging
station for a local authority (France); new contract for the
conversion of a fleet of forklifts to hydrogen (France).
Commenting on the first quarter 2015, Benoît Potier, Chairman
and CEO of Air Liquide, said:
“Growth this quarter was driven by the dynamism of Healthcare
and Electronics, and by developing economies, especially China
where sales rose by nearly +20% on a comparable basis.
Industrial demand was moderate at the start of the year. In
North America, the slowdown in the oil services industry, combined
with temporary plant turnarounds of several customers, had a
short-term impact on our Large Industries activities, while in
Western Europe, the manufacturing sector continues to improve in
several countries. Globally, the Group’s revenue growth outpaced
that of its market, against a backdrop of falling energy prices and
favorable exchange rates.
Operational performance remains solid; the Group continues to
generate efficiency gains and is also reinforcing its growth
initiatives.
Growth in the next few years will be supported by the recent
major new contract signings, the investment backlog of € 2.6
billion, and the innovations and technologies currently under
development.
Assuming a comparable economic environment, Air Liquide is
confident in its ability to deliver another year of net profit
growth in 2015.”
Q1 2015 Group revenue reached € 3,993 million, up
+7.0% on a reported basis and up +3.0% on a comparable
basis1 versus the 1st quarter of 2014. Sales in Gas &
Services, which amounted to € 3,632 million, rose by
+6.3% on a reported basis and by +2.6% on a comparable
basis. The positive currency effect (+7.3%) was partly offset by a
negative energy impact (-3.6%), which was particularly evident in
Large Industries.
On a comparable basis, Gas & Services revenue in
developing economies progressed by +9.4% while all
Gas & Services business lines reported revenue growth in
the 1st quarter 2015:
- Healthcare revenue, up significantly at +6.8%,
benefited from increased demand for home healthcare services and
from higher hygiene and specialty ingredient sales. Growth was also
supported by several acquisitions in Europe and in Canada. The
Healthcare business progressed in advanced and developing economies
alike.
- Revenue growth in Electronics was a robust
+14.4%, a progression in line with 2014 that attests to the
sector’s positive momentum. Sales grew in all of our product lines.
In advanced materials, which includes the ALOHA™ range and the
Voltaix offer, revenue grew by +49.0%. Sales were
particularly vigorous in China, in Taiwan, in Japan, and in the
United States.
In industry, the results were more contrasted.
- In Large Industries, revenue was virtually unchanged
(+0.2%) due to temporary plant turnarounds of several
customers in North America and Western Europe. However, a gradual
recovery in volumes began in late March in North America. This
quarter also saw the ramp-up of new production units in both China
and South America, while demand for air gases remained sustained in
Asia.
- In Industrial Merchant, where revenue was up a slight
+0.3%, the situation remains one of contrast with volumes
still low, especially in cylinders, but with positive pricing of
+1.1%. Improvement is visible in bulk sales in Europe, while in
North America oil services volumes are down. In Asia-Pacific, the
Australian market is still difficult, whereas volume growth remains
strong in Southeast Asia and in China.
Engineering and Technology revenue rose by +16.4%
on a comparable basis, reflecting the progress made on projects
underway for third-party customers.
Efficiency gains reached € 62 million, in line
with the annual target of more than € 250 million. The initiatives,
mainly in the area of procurement, logistics, and energy
efficiency, combined with ongoing efforts to align Group
structures, contributed to the good operational performance.
_____________________
1 adjusted for currency, energy (natural gas and electricity)
and significant M&A impacts
UPCOMING EVENTS
Annual General MeetingMay 6, 2015
Dividend ex-dateMay 18, 2015
Dividend payment dateMay 20, 2015
2015 1st half resultsJuly 30, 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 revenue amounted to € 15.4 billion in 2014, and
its solutions that protect life and the environment represented
more than 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.
2015 1st quarter revenue
In the first quarter 2015, sales were up +7.0% in a contrasted
global market environment. Growth benefited from a positive +7.3%
currency impact, partly offset by a negative -3.3% energy impact.
Comparable growth was up +3.0%.
The strong growth momentum seen in the past few quarters
continued in China (+19.9%(a)) and in Electronics (+14.4%(a)).
Sales in developing economies grew by +9.4%(a). Healthcare revenue
growth returned to historic levels (+6.8%(a)), partly due to
acquisitions completed in recent months. Growth in other business
lines saw a more moderate start to the year. Gas & Services
revenue grew by +2.6%(a), outperforming the +1.7% growth of global
industrial production (weighted for the Group’s industrial sales).
The sales are compared to a high level of activity in the 1st
quarter 2014.
Operating performance benefited from continuing efficiency
gains, the progressive results of the realignment plan, and the
narrowing of the gap between cost inflation and price rises. Cash
flows from operating activities before changes in working capital
remain solid, at 18.6% of sales, up +6.4% excluding currency
effects.
Investment decisions amounted to 733 million euros, a high level
comparable to that of the fourth quarter 2014. The investment
backlog was 2.6 billion euros while 12-month investment
opportunities amounted to 3 billion euros. The strong levels of
both the investment commitments and opportunities pave the way for
future growth.
Revenue
(in millions of euros)
Q1 2014 Q1 2015
Q1 2015/2014
reported
change
Q1 2015/2014
comparable
change(a)
Gas & Services 3,416 3,632 +6.3%
+2.6% Engineering & Technology 175 217
+24.0% +16.4% Other activities 143 144
+1.0% -3.6%
TOTAL REVENUE 3,734
3,993 +7.0% +3.0%
(a) comparable change: excluding the impact of currency, energy
and significant scope
Revenue analysis
Group
Group revenue for the 1st quarter 2015 reached 3,993
million euros, up +7.0% on a reported basis. Adjusted
for the positive currency and negative energy impacts, revenue grew
by +3.0% on a comparable basis. There was no significant
scope impact during the quarter.
Unless mentioned otherwise, all changes in revenue described
below are based on changes on a comparable basis, which excludes
currency, energy (natural gas and electricity) and significant
scope impacts. The energy impact may include other Large Industries
energy feedstocks in the future.
Gas & Services
In the 1st quarter 2015, Gas & Services revenue
amounted to 3,632 million euros, up +6.3% as
reported, benefiting from a positive +7.3% currency impact, partly
offset by a negative -3.6% energy impact. Comparable growth was up
+2.6%.
Revenue
(in millions of euros)
Q1 2014 Q1 2015
Q1 2015/2014
reported
change
Q1 2015/2014
comparable
change(a)
Europe
1,701 1,696 -0.3%
+1.3% Americas
814 895 +9.9%
+1.1% Asia-Pacific
816 946
+16.0% +6.9% Middle East and Africa
85
95 +12.1% +1.4%
Gas &
Services 3,416 3,632
+6.3% +2.6% Large Industries
1,285 1,264 -1.7% +0.2%
Industrial Merchant
1,229 1,327
+8.0% +0.3% Healthcare
626 685
+9.4% +6.8% Electronics
276
356 +29.0% +14.4%
(a) comparable: excluding the impact of currency, energy and
significant scope
Europe
At 1,696 million euros, revenue in Europe was up
+1.3%. The quarter benefited from a slight improvement in
liquid gas volumes, strong growth in sales in the Healthcare
segment, including the acquisitions signed at the end of 2014, and
activity momentum in developing economies.
Europe Gas & Services revenue
- Large Industries revenue was
down -3.5%, following temporary turnarounds for maintenance of
customer units, especially those that are consumers of hydrogen in
France and Belgium. Excluding these turnarounds and the remaining
impact of the disposal of the cogeneration plants end of 2013,
early 2014, sales were almost flat.
- In the Industrial Merchant
business line, sales were stable, as in the fourth quarter 2014,
following several quarters of decline. The situation in European
markets remains contrasted, but showed an improving trend. Liquid
volumes were slightly higher in Germany, France, Spain and Benelux,
while cylinder volumes remained weak in all markets except Spain
and the UK. Sales continued to grow steadily in developing
economies with liquid volumes up sharply. Regional price impact was
-0.4%.
- Healthcare recorded strong
growth, up +7.7%, partly due to acquisitions made in recent
months. Home Healthcare also continued to expand due to the steady
increase in the number of patients treated. In the medical gases
for hospitals segment, budgetary pressure continues to weigh on gas
volumes which remain slightly down. Hygiene and Specialty
Ingredients saw particularly strong growth, up +10% and +8%
respectively.
Americas
Gas & Services revenue in the Americas was
895 million euros, up +1.1%. Business was
relatively weak in the 1st quarter in Large Industries and
Industrial Merchant in North America, while sales continued to grow
in South America.
Americas Gas & Services Revenue
- Large Industries sales were down
-1.5%. Weaker volumes in North America were affected by
temporary turnarounds of about ten customer units and by a 15-day
turnaround for regulatory inspection of the hydrogen pipeline
network in the US. Volumes have increased progressively since the
end of March. Excluding these turnarounds, growth in the region
would have been +3.7%. Cogeneration sales were down in Canada.
Turnover was up +12.2% in South America, benefiting from the
ramp-up of a production unit in Brazil.
- Sales in the Industrial Merchant
business were up +1.0%. In North America, liquid volumes
(particularly nitrogen) were affected by the slowdown in the oil
well services. The cylinder business was slightly down in Canada.
Sales were up in South America, boosted by price increases, despite
a slowdown in activity in Brazil. Pricing was positive in all
countries, averaging +5.2% accross the region.
- Healthcare revenue was up
+3.9%. Excluding the impact of reclassification of a
business in the French West Indies as within the France perimeter,
growth would have been around +12%. Business was particularly
dynamic in Canada, benefiting from an acquisition, and in South
America, where medical gas volumes and the number of Home
Healthcare patients are increasing significantly.
- Electronics sales were up
+10.7%, helped by strong development (+41.4%) in Advanced
Materials which includes the ALOHATM range and products from
Voltaix, a company acquired in 2013. Equipment and Installation
sales, which are more cyclical, were relatively weak compared to
their record in the 1st quarter 2014. Carrier gases sales continued
to grow.
Asia-Pacific
Revenue in the Asia-Pacific region increased by
+6.9% to 946 million euros. Revenue was
up in Japan, due primarily to dynamic performance in Electronics,
although Industrial Merchant activity was stable. Developing
economies, notably China (up +19.9%), continued to grow steadily,
offsetting weaker activity in Australia due to pricing
pressure.
Asia-Pacific Gas & Services
Revenue
- Sustained by the ramp-up of new units
started up at the end of 2013 and beginning of 2014 in China,
Large Industries sales increased by +8.7%. Air gases
and hydrogen volumes expanded in the region. There were no unit
start-ups during the quarter.
- Industrial Merchant revenues
were stable, at +0.2% compared to the 1st quarter 2014.
Sales are continuing to increase in developing economies,
especially China, boosted by volume growth. Price pressure
intensified in the region (down -1.6%), mainly in Australia where
the competitive situation is challenging and in Singapore where
shipbuilders have been hit by the oil industry slowdown. Sales in
Japan were stable over the quarter.
- The Electronics business
continued to expand with sales up +15.7%. Revenue increased
in all countries in the region and particularly in Japan, China and
Taiwan, reflecting the ongoing momentum of the business. Carrier
gases benefited from the start-up and ramp-up of a number of plants
in China. Advanced Materials revenue rose significantly in the
region, notably in Japan and Korea.
- Healthcare sales rose by
+1.8%. Excluding the impact of reclassification in the
France perimeter of a business in French Overseas Territories,
growth would have been around +8%. Sales were particularly strong
in Australia, Hong Kong and Korea.
Middle East and Africa
Middle East and Africa revenue totaled 95 million
euros, up +1.4%. This contribution reflects ongoing
instability in the Middle East and a difficult economic environment
in North Africa, offset by a slight upturn in business in Egypt.
Sales grew rapidly in South Africa, driven mainly by the ramp-up of
a unit that started up in the 1st quarter 2014 and by robust
Industrial Merchant activity.
Engineering & Technology
Engineering & Technology revenue totaled
217 million euros, up +16.4% compared to
the 1st quarter 2014. This is the result of the steady progress of
projects under execution.
At 310 million euros, orders in the 1st quarter 2015
were higher than in the 1st quarter 2014 and mainly relate to Group
projects.
Other activities
Revenue
(in millions of euros)
Q1 2014 Q1 2015
Q1 2015/2014
reported
change
Q1 2015/2014
comparable
change (a)
Welding
96 93 - 3.6%
-4.5% Diving
47 51 +10.7%
-1.6%
TOTAL OTHERS 143 144
+1.0% -3.6% (a) comparable: excluding
currency impact
Other Activities revenue in the 1st quarter 2015 declined
by -3.6% to 144 million euros.
- Welding revenue decreased by
-4.5% in the 1st quarter, still impacted by the weakness of
the European economy.
- Diving (Aqua LungTM) saw a
decline in sales following the sale of a non-strategic business at
the end of 2014. Excluding this disposal, revenue increased
significantly.
Quarterly highlights
Industrial developments
New contracts were signed in Large Industries in both
developing and advanced economies in the 1st quarter 2015.
- In the United States, Air Liquide
entered into a new long-term agreement to supply Yuhang Chemical.
The Group will build a new Air Separation Unit (ASU), with total
capacity of 2,400 tonnes of oxygen per day, for the new large-scale
methanol production complex of the customer in St. James Parish,
Louisiana. The ASU will be connected to the Group’s extensive
pipeline system, providing enhanced reliability of supply. Air
Liquide will also license its leading MegaMethanol® Technology.
This agreement illustrates the value for the customer of a
complementary offer combining Group proprietary technologies with
long term oxygen supply.
- Air Liquide and Sasol, an international
integrated energy and chemicals company, signed a long-term
agreement for the supply of large quantities of industrial gases to
Sasol’s Secunda site in South Africa (around 140 km East of
Johannesburg). Air Liquide will invest around 200 million euros for
the construction of the largest Air Separation Unit (ASU) ever
built, with total capacity of 5,000 tonnes of oxygen per day
(equivalent to 5,800 tonnes per day at sea level), a milestone in
the history of industrial gas production. It is the first time
Sasol will outsource its oxygen needs to a specialist of industrial
gas production at its Secunda site.
- In Australia, Air Liquide announced a
new long-term agreement with Nyrstar, an integrated mining and
metals company. Air Liquide will invest 60 million euros in a 1,400
tonnes per day new Air Separation Unit (ASU), to help Nyrstar
reduce the environmental footprint of the site and to enhance both
efficiency and production capabilities.
New developments in Healthcare
In the 1st quarter 2015, Air Liquide pursued its external growth
strategy in Healthcare.
- In Germany, the Group strengthened its
Home Healthcare offering with the acquisition of Optimal Medical
Therapies (OMT). OMT provides services for around 5,000 patients
and is recognized for its expertise in home infusion services that
include immunotherapy, pain management, and the treatment of
pulmonary hypertension and Parkinson’s disease.
- Schülke, an Air Liquide Healthcare
entity specializing in hospital disinfection and hygiene, is
expanding its presence in Eastern Europe and widening its range of
complementary products through the acquisition of the Hygiene
division of Bochemie, a major player in the Czech Republic.
Hydrogen mobility
Air Liquide has pursued its developments in hydrogen
mobility.
- The Group has been chosen by FM
Logistic, an international logistics and supply chain group, to
provide support for its projected deployment of hydrogen-powered
forklift trucks on its sites. At its logistics platform located
near the city of Orléans (France), Air Liquide installed a hydrogen
charging station that will service FM Logistic’s forklifts equipped
with hydrogen fuel cells.
- Moreover, following the announcement of
such developments by the end of 2014, almost 40 million euros of
capital expenditures were initiated in the 1st quarter to hook up
new hydrogen filling stations in Germany, Denmark and the USA.
Bond issue
In January 2015, Air Liquide Finance innovated yet again with
the issue of its first Chinese renminbi-denominated bond on
the Taiwanese market (“Formosa Bond”) for a total of 500 million
Chinese renminbi, equivalent to 68 million euros. Air Liquide is
thus the first non-Taiwanese corporate to issue bonds in Chinese
renminbi on this market.
Investment cycle
Investment opportunities
12-month investment opportunities remained stable at
3.0 billion euros at the end of March 2015, with new projects
in the portfolio substantially offsetting those signed by the
Group, awarded to the competition or delayed. The large project
signed with SASOL at the start of the year was thus removed from
the opportunities portfolio.
Nearly two-thirds of the investment opportunity projects in the
12-month portfolio continue to be located in developing economies.
The North America weighting is stable. The portfolio also includes
nine takeovers representing approximately 12% of the total value of
investment opportunities.
Investment decisions and investment backlog
Industrial and financial investment decisions totaled
733 million euros during the quarter, which is a significant
level. Industrial decisions accounted for 80% of that amount.
The investment backlog totaled 2.6 billion euros, representing a
future contribution to revenue of approximately 1.1 billion euros
in the coming years.
Start-ups
Five new units were started up at the end of the 1st quarter
2015, the majority in North America, one Electronics unit in China
and one in Dormagen in Germany.
In 2015, start-ups and ramp-ups are expected to contribute
around 350 million euros to sales growth.
Operating performance
The Group’s efficiency gains in the quarter amounted to
62 million euros. The sustained effort of many projects
throughout the Group, principally in industrial operations
(production, logistics) this quarter, have contributed to this
performance. The adaptation plans initiated at the end of 2013 are
continuing to contribute to efficiencies this year and, with the
different reorganizations of our activities, account for some 20%
of the savings generated.
Cash flow from operating activities before changes in working
capital for the first three months of the year was solid, at 18.6%
of sales, up +6.4% excluding currency effects, more than covering
the 439 million euros of net industrial capital expenditure. The
Group’s financial structure remains solid.
Net capital expenditure, excluding transactions with minority
shareholders, was 532 million euros for the quarter.
Outlook
Growth this quarter was driven by the dynamism of Healthcare and
Electronics, and by developing economies, especially China where
sales rose by nearly +20% on a comparable basis.
Industrial demand was moderate at the start of the year. In
North America, the slowdown in the oil services industry, combined
with temporary plant turnarounds of several customers, had a
short-term impact on Large Industries activities, while in Western
Europe, the manufacturing sector continues to improve in several
countries. Globally, the Group’s revenue growth outpaced that of
its market, against a backdrop of falling energy prices and
favorable exchange rates.
Operational performance remains solid; the Group continues to
generate efficiency gains and is also reinforcing its growth
initiatives.
Growth in the next few years will be supported by the recent
major new contract signings, the investment backlog of € 2.6
billion, and the innovations and technologies currently under
development.
Assuming a comparable economic environment, Air Liquide is
confident in its ability to deliver another year of net profit
growth in 2015.
Appendix
Currency, energy (natural gas, electricity) and significant
M&A impacts
In addition to the comparison of published figures, financial
information for first quarter 2015 is provided before currency,
energy price fluctuations and significant M&A impacts. As of
January 1st, 2015, the energy impact includes impacts of natural
gas and electricity. In the future, it may also include other
energy Large Industries feedstocks.
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 and electricity prices are passed on to
customers through price indexation clauses.
Consolidated 2015 first quarter revenue includes the
following:
In millions of euros Revenue
Q1 2015
Q1
2015/2014
change
Currency Naturalgas
Electricity
Significant
scope
Q1 2015/2014
comparablechange
(a)
Group
3,993 +7.0% 271 (116)
(8) (0) +3.0% Gas & Services
3,632 +6.3% 251 (116) (8)
(0) +2.6%
(a) excluding currency, energy (natural gas and electricity) and
significant M&A impacts.
For the Group,
- The currency impact was +7.3%.
- The impact of natural gas price
fluctuations was -3.1%.
- The impact of electricity price
fluctuations was -0.2%.
- There was no significant M&A
impact.
For Gas & Services,
- The currency impact was +7.3%.
- The impact of natural gas price
fluctuations was -3.4%.
- The impact of electricity price
fluctuations was -0.2%.
- There was no significant M&A
impact.
This management report is also available on our website:
http://www.airliquide.com/en/investors/financial-presentations.html
Corporate CommunicationsAnnie Fournier, + 33 (0)1 40 62
51 31Caroline Philips, + 33 (0)1 40 62 50 84orInvestor
RelationsAude Rodriguez, +33 (0)1 40 62 57 08Virginia Jeanson,
+33 (0)1 40 62 57 37
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