Accelerating comparable growth in Gas & Services
sales
2017 objective confirmed
Regulatory News:
Air Liquide (Paris:AI)
Q3 2017 Key Figures
Group revenue:
€4,944M
-0.3%*
of which Gas & Services:
€4,787M
+0.1%*
Comparable growth**
Gas & Services revenue:
+4.0%
of which Industrial Merchant:
+4.3%
* Change as published. 2016 restated, Welding and Diving
activities reported as discontinued operations.** Excluding
currency and energy (natural gas and electricity) impacts.
Variation Q3 2017 vs. restated Q3 2016, adjusted as if on January
1, 2016 Airgas had been fully consolidated and the divestments
required by US competition regulators had been completed.
Q3 2017 Highlights
- External parameters: industrial
production index improving, negative currency impact, limited
impact of hurricanes in the United States.
- Airgas-related synergies ahead of
forecasts.
- Long-term contracts: hydrogen
for oil refining in Mexico, air gases for an energy and chemicals
customer in China.
- Business portfolio management:
closed divestment of Air Liquide Welding and of the Airgas’
refrigerant business, Healthcare acquisition in Japan.
- New markets: entry into the
Norwegian biogas market, launch of an e-health offer in Europe,
first hydrogen charging station in Dubai.
Commenting on the third quarter of 2017, Benoît Potier, Chairman
and CEO of Air Liquide, said:
“During this quarter, Gas & Services sales growth
accelerated on a comparable basis, supported by strong activity in
all business lines. The ramp-up in activity in Industrial Merchant
and the high growth in Electronics were confirmed over the period.
In terms of geography, growth was driven in particular by
developing economies and Asia-Pacific with very strong sales in
China. Activity in North America was slightly impacted by the
hurricanes which hit the United States, whereas Europe posted solid
growth. The third quarter was also marked by a negative currency
impact, which offset the positive impact of the first six months of
the year.
The Group continued to generate operational efficiency gains,
in addition to Airgas synergies which are ahead of our 2017
forecasts. Thanks to a good level of cash flow, debt now stands
below 15 billion euros.
The Group can also rely on its 2.1 billion euro investment
backlog, as well as on its innovations and new markets, to fuel
future growth, as highlighted by the solid performance of the
Global Markets & Technologies activity.
Assuming a comparable environment, Air Liquide is confident
in its ability to deliver net profit growth in 2017.”
Q3 2017 Group revenue reached 4,944 million euros,
an increase of +3.5% on a comparable basis as compared with
Q3 2016. Revenue was nearly flat at -0.3% as published, impacted by
a currency impact that turned negative this quarter (-4.0%). The
positive energy impact softened to +1.0% this quarter.
Gas & Services revenue, which totaled 4,787
million euros, was up +4.0% on a comparable basis versus
Q3 2016. This reflects an acceleration in sales growth compared
with the previous two quarters, despite the limited impact of the
hurricanes in the United States. Excluding this impact, comparable
growth reached +4.4%. Gas & Services revenue was stable at
+0.1% as published, affected by the negative currency impact.
The developing economies posted strong growth, with Gas
& Services revenue up +10.4% on a comparable basis.
Overall, all Gas & Services business lines grew this
quarter on a comparable basis:
- The ramp-up in activity continued in
Industrial Merchant with growth at +4.3%. Sales,
which were up in all regions, were particularly strong in
developing economies. In Europe, sales growth of +4.2% was
driven by increased bulk and cylinder volumes, as well as a
positive price impact. Business momentum was strong in Italy,
Iberia, France and Benelux. In North America, the recovery
was confirmed, notably with higher volumes. In the United States,
sales improved in almost all market segments, whereas in Canada
they were driven by the energy and metal fabrication sectors.
Asia-Pacific enjoyed strong sales in China, where growth
exceeded +15%, due to an increase in both prices and volumes. At
the global level, the price impact for the World Business Line was
positive at +1.3%.
- Large Industries revenue
increased by +2.0%. Excluding the impact of hurricanes in
the United States, sales were up +3.2%. The situation in North
America was contrasted. Activity in the United States was
impacted by customer unit shutdowns due to the hurricanes, in
particular refineries, whereas sales growth in Canada was driven by
greater demand for oxygen from steel producers. In Europe,
hydrogen demand increased at the end of the quarter, however
revenue for the region remained impacted by the cessation of
operations in Ukraine. Sales in Asia-Pacific grew markedly
(+8.1%) due to production unit start-ups in China and strong
customer demand in both China and South Korea. Finally, in
theMiddle-East, growth continued to be driven by the
hydrogen production units in Yanbu, Saudi Arabia.
- Electronics sales, which were up
+7.2%, saw a strong growth level, thanks in particular to
high demand in China and Taiwan. All regions contributed to growth.
Carrier gases sales remained robust while equipment and
installation sales were up slightly this quarter. Demand for
Advanced Materials continued to be sound with revenue growth in
this product category of almost +30%.
- Healthcare continued its steady
growth, up +4.5%. It benefited from sustained demand in home
healthcare services and robust specialty ingredients and medical
equipment sales. Activity was particularly strong in developing
economies, in particular in South America, which posted
double-digit revenue growth. Acquisitions also contributed to
growth in countries such as in Canada or Japan.
Engineering & Construction revenue totaled
75 million euros this quarter, down -25.1% on a
comparable basis, as a result of the low level of order intake in
2016. Order intake since the beginning of 2017 has improved
significantly compared with last year.
Global Markets & Technologies revenue amounted to
82 million euros this quarter. This represented an increase
of +13.2% on a comparable basis, in line with the two previous
quarters. Sales were particularly strong in the maritime and biogas
sectors. Moreover, the Group made an acquisition in the biogas
sector in Norway this quarter.
________
The Group continues to strengthen its competitiveness. Cumulated
operational efficiency gains since the beginning of the year
reached 229 million euros, in line with the annual
target of more than 300 million euros. Airgas acquisition
synergies are a few months ahead of annual forecasts thanks to
quicker project execution. The Group has therefore revised its
synergies target upward for 2017 and now forecasts by year end
2017 a cumulated delivery of 195 million US dollars in
synergies since the acquisition, versus the 175 million US
dollars previously announced.
Cash flow from operating activities before changes in
Working Capital Requirements increased and amounted to 2.9
billion euros at September 30, 2017, allowing the net
debt level to be brought back below 15 billion euros.
________
The slideshow that accompanies this press
release will be available starting at 9 am (Paris time) on the Air
Liquide corporate website: airliquide.com.
Follow the announcement of third quarter
revenue live on Twitter @AirLiquideGroup.
UPCOMING EVENTS
Actionaria trade show, Paris, FranceNovember 23-24,
2017
2017 Annual resultsFebruary 15, 2018
The world leader in gases, technologies and services for
Industry and Health, Air Liquide is present in 80 countries with
approximately 65,000 employees and serves more than 3 million
customers and patients. Oxygen, nitrogen and hydrogen are essential
small molecules for life, matter and energy. They embody Air
Liquide’s scientific territory and have been at the core of the
company’s activities since its creation in 1902.
Air Liquide’s ambition is to lead its industry, deliver long
term performance and contribute to sustainability. The company’s
customer-centric transformation strategy aims at profitable growth
over the long term. It relies on operational excellence, selective
investments, open innovation and a network organization implemented
by the Group worldwide. Through the commitment and inventiveness of
its people, Air Liquide leverages energy and environment
transition, changes in healthcare and digitization, and delivers
greater value to all its stakeholders.
Air Liquide’s revenue amounted to €18.1 billion in 2016 and its
solutions that protect life and the environment represented more
than 40% of sales. Air Liquide is listed on the Euronext Paris
stock exchange (compartment A) and belongs to the CAC 40,
EURO STOXX 50 and FTSE4Good indexes.
www.airliquide.comFollow us on Twitter
@airliquidegroup
3rd quarter 2017 revenue
The 3rd quarter 2017 saw an acceleration in Gas &
Services revenue growth on a comparable basis, at +4.0%.
Sales were up in all business lines, with a marked increase in
growth in Industrial Merchant and Electronics.
Group revenue for the 3rd quarter 2017 reached 4,944
million euros, up +3.5% on a comparable basis. It
benefited from positive momentum in Gas & Services sales and
the development of the Global Markets & Technology business,
whereas the activity level in Engineering & Construction
remained weak. The change in revenue was almost flat at -0.3% as
published, affected by a negative currency impact this quarter
(-4.0%) and a weaker contribution of the energy impact (+1.0%). On
a comparable basis, Gas & Services revenue was up
+4.0% at 4,787 million euros, a marked acceleration
compared with growth of +2.7% in the 2nd quarter. The ramp-up in
activity continued in Industrial Merchant (+4.3%), with higher
liquid gas and cylinder volumes and pricing up slightly, at +1.3%.
Electronics was also a very solid growth driver this quarter
(+7.2%), benefiting from the start-up of new units and double-digit
growth in Advanced Materials. Healthcare continued its steady
development (+4.5%) and Large Industries revenue was in line with
2nd quarter growth (+2.0%). Revenue was up in all regions, with
marked growth in developing economies and in Asia, in particular
China. In North America, revenue was slightly impacted this quarter
by the hurricanes.
Ongoing efforts to improve productivity continued throughout the
Group, leading to 81 million euros in efficiencies
this quarter, or 229 million euros at the end of September, in line
with the NEOS objective. Airgas synergies are delivering
more quickly than anticipated and have reached 177 million US
dollars in total since 2016. The cumulated target at the end of
2017, which was exceeded at the end of September, has been revised
upwards to 195 million US dollars. The total amount of synergies
expected at the end of 2019 remains unchanged at 300 million US
dollars.
Cash flow from operating activities before changes in working
capital requirements amounted to 2,856 million euros at
the end of September, up +12.4%. The net debt was brought back
under 15 billion euros benefitting from a favorable currency
impact.
The 12-month portfolio of investment opportunities remained
stable at 2.1 billion euros at the end of September 2017.
Investment decisions totaled 610 million euros for the
quarter and 1.7 billion euros since the beginning of the
year. Net capital expenditures represented 10.7% of sales, in line
with the mid-term strategic plan.
Terms « published » and « comparable » used
in this document refer to the definitions below:
- Published
growth vs 2016 data is calculated in accordance with
IFRS 5. Other Activities (Aqua Lung and
Air Liquide Welding) are reported under “Net income from
discontinued operations” in the 2016 and 2017 income
statement.
- Adjusted 2016
revenue is computed as if, on January 1st 2016,
Airgas had been fully consolidated and the divestitures requested
by the U.S. Federal Trade Commission completed, and Aqua Lung
and Air Liquide Welding had been deconsolidated.
- Comparable
growth: in 2017, Air Liquide communicates a
comparable sales growth based on 2016 adjusted sales, excluding
currency and energy (natural gas and electricity)
impacts.
- Reference to
Airgas now corresponds to the Group’s Industrial
Merchant and Healthcare activities in the United States within
the new scope, after the merger of Airgas and
Air Liquide U.S. operations.
Unless otherwise stated, all variations in revenue outlined
below are on a comparable basis.
Q3 2017 Highlights
DEVELOPMENTS IN LARGE INDUSTRIES
- In early September, Air Liquide
announced the signature of a new long-term agreement with Pemex
Transformación Industrial, a subsidiary of Petróleos Mexicanos
(PEMEX), the state-owned oil & gas company, to supply
hydrogen to PEMEX’s refinery located at Tula de Allende, in the
state of Hidalgo in the central region of Mexico. Through a €50
million investment for the takeover and optimization of
PEMEX’s existing hydrogen production unit, this agreement will
allow Air Liquide to supply 90,000 Nm3 per hour of hydrogen to
PEMEX refinery and to strengthen its presence in central
Mexico.
- In mid-October, Air Liquide entered
into a new joint venture with Sinopec in Beijing, for the
takeover and optimization of three existing ASUs and the
building of a new nitrogen unit, for a total investment of
40 million euros. In the third quarter 2017, Air
Liquide also commissioned a new state-of-the art ASU for the supply
of oxygen and nitrogen to Sinopec in South China.
DEVELOPMENTS IN HEALTHCARE
- In early September, Air Liquide
announced the deployment of “Chronic Care Connect™”, an
e-health solution in order to support remotely patients with
chronic conditions at home using digital. Thanks to this
technology, patients are monitored on a daily basis remotely with
individualized support provided by Air Liquide nurses via a
certified nursing center. This solution helps to improve patients’
quality of life. As for their physicians, they have access to an
operational solution that allows for preventive management of
patient condition evolution. By avoiding hospitalization, the Air
Liquide connected solution for the remote monitoring of
patients also meets the challenges facing health authorities.
- At the end of September, Air Liquide
announced a major Healthcare acquisition in Japan. Air Liquide is
expanding its healthcare business in Japan with the
acquisition of Sogo Sangyo Kabushiki Kaisha (“SSKK”),
a major Japanese player with a strong presence in the home
healthcare and medical gases markets especially in the Tokyo
region. Present in the Japanese market for 60 years, SSKK is
specialized in the medical gases field serving more than 2,000
hospitals and clinics and home treatment for patients suffering
from respiratory diseases including: sleep apnea, Chronic
Obstructive Pulmonary Disease and chronic respiratory failure. This
acquisition increases the number of patients served at home
by Air Liquide in Japan to reach 20,000.
PORTFOLIO MANAGEMENT
- At the end of July 2017, Air Liquide
announced that it had completed the sale of Air Liquide
Welding, its subsidiary specialized in the manufacture of
welding and cutting technologies, to Lincoln Electric France SAS,
subsidiary of Lincoln Electric Holdings, Inc. (“Lincoln
Electric”). Lincoln Electric is the world leader in design,
development and manufacture of arc welding products, robotic arc
welding systems, plasma and oxy-fuel cutting equipment. This sale
follows the signed agreement announced on April 27th 2017 with
Lincoln Electric, and the related usual regulatory approvals,
including competition authorities’ approval.
- On October 10th, Airgas, completed
the sale of Airgas-Refrigerants, Inc., its subsidiary
specializing in the distribution, packaging and reclamation of
refrigerant gases, to Hudson Technologies, Inc. The
sale of this Airgas subsidiary is reflective of Airgas’ focus on
its core business.
Analysis of 3rd quarter revenue
REVENUE
Revenue
(in millions of euros)
Q3 2016 Q3
2017
2017/2016publishedchange
2017/2016comparablechange
Gas & Services
4,783 4,787
+0.1% +4.0% Engineering &
Construction 105 75
-28.1% -25.1%
Global Markets & Technologies 73
82 +11.5%
+13.2%
TOTAL REVENUE
4,961 4,944
-0.3% +3.5%
Group
Group revenue for the third quarter of 2017 totaled 4,944
million euros, up +3.5% on a comparable basis. The
quarter benefited from a significant acceleration in Gas &
Services sales growth and activities in development in Global
Markets & Technologies, whereas activity level remained weak in
Engineering & Construction. The currency impact turned negative
this quarter, at -4.0%, due to the appreciation of the euro against
the US dollar, Japanese yen and Chinese yuan. The energy impact
softened and only accounted for +1.0%. Thus, revenue as published
was almost flat at -0.3%.
Gas & Services
Gas & Services revenue totaled 4,787 million
euros. Comparable growth at +4.0%, and +4.4% excluding
the limited impact of hurricanes in North America, was stronger
than in the 1st half (+2.8%). Sales improved in all business lines,
in particular in Industrial Merchant (+4.3%) and Electronics
(+7.2%). The contribution from the base business was strong,
exceeding +2.5%, to which is being added sales from the start-up
and ramp-up of new units. Sales as published were stable at +0.1%,
impacted by a negative currency effect of -4.1% and by a weaker
energy contribution (+1.0%).
(in millions of euros)
Q3 2016 Q3
2017
2017/2016publishedchange
2017/2016comparablechange
Americas 2,042
1,968 -3.6% +2.8%
Europe 1,601
1,657 +3.5% +2.5%
Asia-Pacific 997
1,010 +1.3% +7.6%
Middle East & Africa 143
152 +6.8%
+10.9%
GAS & SERVICES REVENUE
4,783 4,787
+0.1% +4.0%
Large Industries 1,261
1,286 +2.0%
+2.0% Industrial Merchant 2,308
2,265 -1.9%
+4.3% Healthcare 814
833 +2.3%
+4.5% Electronics 400
403 +0.8%
+7.2%
Americas
Gas & Services revenue in the Americas zone stood at
1,968 million euros, up +2.8% on a comparable
basis and up +3.9% excluding the impact of the hurricanes which hit
North America. They affected Large Industries sales and, to a
lesser extent, those of Industrial Merchant. Excluding the impact
of hurricane Harvey, Large Industries volumes remained sustained.
The recovery continued in Industrial Merchant, with revenue growth
of +3.8%, despite the unfavorable impact of one less working day.
In South America, sales continued to climb strongly in all
activities.
Americas Gas & Services 3rd quarter
2017 revenue
- Large Industries posted sales
that were down -3.0% but up +1.4% excluding the
impact of the hurricanes in the United States. In Canada, air gases
sales benefitted from stronger demand from steel makers. In South
America, high hydrogen volumes drove growth in this activity.
- The recovery in Industrial
Merchant continued, with sales growth of +3.8%,
+4.2% excluding the impact of hurricanes, despite one less
working day than in the 3rd quarter 2016. Liquid gas and cylinder
volumes were up in the United States and Canada. In the United
States, sales improved in almost all market segments. In Canada,
sales increased markedly in the energy and metal fabrication
sectors. Growth in South America remained dynamic and improved
notably in Brazil. The price effect in the zone was +1.2%.
- Healthcare revenue was up
+4.8%, driven by solid growth in Canada, which benefited
from the contribution from bolt-on acquisitions, and in South
America where Home Healthcare continued to grow.
- Electronics revenue was up
+6.0%, driven by double-digit growth in Advanced
Materials.
Europe
Revenue in Europe zone totaled 1,657 million euros,
up +2.5% over the quarter. In Large Industries, volumes were
strong even though sales remained slightly down by -0.9%, in
particular due to the termination of activity in Ukraine. The
ramp-up in activity continued in Industrial Merchant with growth of
+4.2%, despite an unfavorable working day impact. Healthcare
continued to improve regularly (+3.7%), with the contribution to
growth of bolt-on acquisitions remaining limited.
Europe Gas & Services 3rd quarter 2017
revenue
- Down slightly by -0.9%, Large
Industries remained penalized in particular by the termination
of activity in Ukraine. Sales improved on a sequential basis in
particular with hydrogen volumes experiencing a marked improvement
during the quarter due to the positive activity level of
refineries. Demand in Eastern Europe remained sustained.
- Industrial Merchant revenue was
up +4.2%. The recovery continued in almost all countries,
and was more pronounced in Southern Europe (Iberia, Italy), Benelux
and France. Both liquid gas and cylinder volumes were growing.
Sales continued their sustained increase in developing economies.
At +0.6%, pricing continued to improve and was positive for the
second quarter in a row.
- Healthcare continued to improve
regularly posting sales growth of +3.7%, with new
acquisitions having a limited contribution. The number of patients
continued to increase in Home Healthcare. Sales in Specialty
Ingredients grew significantly, driven by a small acquisition.
Asia-Pacific
Revenue in Asia-Pacific zone totaled 1,010 million
euros in the 3rd quarter, up +7.6%. Strong growth was
achieved across all business lines. In Large Industries, sales were
very dynamic (+8.1%), driven by the start-up of new units and
strong volumes. Industrial Merchant was up markedly (+5.4%) with
very high growth in China. Electronics sales (+7.8%) enjoyed
increased production capacities and the momentum of Advanced
Materials.
Asia Pacific Gas & Services
3rd quarter 2017 revenue
- Large Industries sales were up
+8.1%, driven by the start-up of three air separation units
in China including one takeover, the ramp-up of a unit in Australia
and strong customer demand, in particular in China and South
Korea.
- Industrial Merchant reported a
growth of +5.4% over the quarter. In China, growth exceeded
+15% for the second quarter in a row, driven by increases in
pricing and in liquid gas and cylinder volumes. Sales in Japan were
down due to weak demand. Business in Australia enjoyed positive
growth despite a sluggish environment. Pricing strengthened to
+1.8% and was particularly strong in China.
- Electronics revenue was up by an
impressive +7.8% over the quarter, driven in particular by
double-digit sales growth in China and Taiwan. Advanced Materials
and carrier gases were the growth engines in Asia. This quarter saw
the end of the unfavorable comparison basis, in particular in
Equipment & Installation sales.
Middle East and Africa
Revenue of Middle East and Africa zone amounted to 152
million euros, a comparable increase of +10.9%. In the
3rd quarter, sales benefited from the operation at full
capacity of the two large hydrogen production units in Yanbu, Saudi
Arabia. In Egypt, the start-up of production units supported Large
Industries and Industrial Merchant sales growth. South Africa
continued its sustained growth in Healthcare.
Engineering & Construction
Engineering & Construction revenue totaled
75 million euros in the 3rd quarter of 2017, down
-25.1%, due to the low level of order intake in 2016.
Order intake reached 175 million euros in the 3rd quarter of
2017 and 504 million euros at the end of September, twice
that of the first nine months of 2016. Around 80% of orders
concerned air separation units (ASU). These included Group projects
as well as orders for third party customers, in particular in the
Energy and Chemicals sectors. The number of calls for tender
continued to increase.
Global Markets & Technologies
Global Markets & Technologies revenue was up +13.2%
at 82 million euros. Sales were particularly strong in
biogas, which benefited from the contribution of an acquisition in
Norway, and in the maritime sectors. Helium sales increased in the
3rd quarter despite logistical challenges relating to the
geopolitical context in Qatar.
Order intake totaled 45 million euros over the quarter.
Investment cycle
The Group’s steady long-term growth is largely due to its
ability to invest in new projects every year. Investment projects
in the industrial gas business are spread throughout the world,
highly capital intensive and supported by long-term contracts, in
particular for Large Industries.
INVESTMENT OPPORTUNITIES
The 12-month portfolio of opportunities totaled
2.1 billion euros at the end of September 2017 and
remained stable compared to the end of June 2017. New projects
entering the portfolio offset those signed by the Group, awarded to
the competition or delayed.
Developing economies represented a little under half of the
investment opportunities in the 12-month portfolio, down slightly
compared with the breakdown at June 30, 2017. The share of projects
in the Americas remained the highest, followed by Europe and then
Asia. This breakdown of the portfolio of opportunities is similar
to the new breakdown of Group sales.
More than 40% of the amount of the portfolio of opportunities
corresponds to projects with investments less than 50 million
euros; a few projects have investments greater than
100 million euros. The more modest size of projects
contributes to a better distribution of risk.
INVESTMENT DECISIONS AND INVESTMENT BACKLOG
Industrial and financial investment decisions totaled
610 million euros for the quarter, and
1.7 billion euros since the beginning of the year.
Industrial decisions accounted for more than 90% of that amount.
They include, in particular, the takeover of a hydrogen unit for a
major customer in Large Industries in Mexico and four ultra-pure
nitrogen supply contracts for Electronics in China and Singapore.
Financial decisions included a strategic Healthcare acquisition in
Japan, a majority equity investment in a Norwegian biogas company
and three bolt-on acquisitions carried out by Airgas.
The total investment backlog amounted to 2.1 billion
euros, an increase as compared with 2.0 billion euros at
the end of June 2017. The investment backlog should lead to a
future contribution to annual sales of approximately
0.8 billion euros per year after the full ramp-up of the
units.
START-UPS
Seven new production units started up during the 3rd
quarter of 2017, some of which in September. These included five
units in China of which three Air Separation Units for Large
Industries and two ultra-pure nitrogen production units for
Electronics, one unit for Large Industries in Egypt and a CO2 unit
for Industrial Merchant in Canada.
The contribution of these unit start-ups and ramp-ups to sales
totaled 51 million euros over the quarter and approximately
120 million euros since the beginning of the year.
Thus, for 2017 as a whole, the contribution to sales of unit
ramp-ups and start-ups should reach approximately
170 million euros. This contribution is expected to be
significantly higher in 2018, exceeding 370 million euros,
as several major unit start-ups are scheduled for the end of 2017
and the 1st half of 2018.
Operating Performance
Group efficiency gains reached 81 million
euros in the 3rd quarter and 229 million euros at the
end of September, in line with the annual target of more than 300
million euros. This performance is part of an ongoing effort and
includes numerous projects throughout the Group. More than 40% of
these efficiencies related to industrial projects (optimization of
production units in China and Benelux in particular, logistics, and
maintenance), more than one third to purchasing gains (energy in
Large Industries, molecules in Electronics), and the balance mainly
to administrative efficiencies and restructuring. The Large
Industries and Industrial Merchant were the business lines
generating most of the efficiencies and accounted for almost two
thirds of total efficiencies.
Thanks to projects delivering a few months ahead of plan, Airgas
synergies have been achieved more rapidly than anticipated, in
particular cost synergies. 3rd quarter synergies thus stood at
39 million US dollars and total synergies since January 2017
at 132 million US dollars, which exceeded the target for the year.
This target has been revised upwards and now stands at 150 million
US dollars. Since the acquisition of Airgas, total synergies of 177
million US dollars have been generated and the total target for the
end of 2017 now stands at 195 million US dollars. The total
amount of synergies expected at the end of 2019 remains
unchanged at 300 million US dollars.
Cash flow from operating activities before changes in working
capital requirements for the first nine months of the year
corresponded to 18.7% of sales. It allows in particular the
financing of net capital expenditure that reached
1,625 million euros at the end of September, including 1,609
million euros for industrial capital expenditure. Net capital
expenditure represented 10.7% of sales, in line with the
mid-term strategic plan. The net debt amounted to
14.9 billion euros and benefitted from a favorable
currency impact.
Outlook
During this quarter, Gas & Services sales growth accelerated
on a comparable basis, supported by strong activity in all business
lines. The ramp-up in activity in Industrial Merchant and the high
growth in Electronics were confirmed over the period. In terms of
geography, growth was driven in particular by developing economies
and Asia-Pacific with very strong sales in China. Activity in North
America was slightly impacted by the hurricanes which hit the
United States, whereas Europe posted solid growth. The third
quarter was also marked by a negative currency impact, which offset
the positive impact of the first six months of the year.
The Group continued to generate operational efficiency gains, in
addition to Airgas synergies which are ahead of our 2017 forecasts.
Thanks to a good level of cash flow, debt now stands below 15
billion euros.
The Group can also rely on its 2.1-billion-euro investment
backlog, as well as on its innovations and new markets, to fuel
future growth, as highlighted by the solid performance of the
Global Markets & Technologies activity.
Assuming a comparable environment, Air Liquide is confident in
its ability to deliver net profit growth in 2017.
APPENDICES
Significant scope, currency and energy impact
(Quarter)
Applied method
In addition to the comparison of published figures, financial
information is given excluding significant scope, currency, and
natural gas and electricity price fluctuation impact.
- The significant scope effect
corresponds to the impact on sales of all acquisitions or disposals
of a significant size for the Group. These changes in scope of
consolidation are determined:
- for acquisitions during the period, by
deducting from the aggregates for the period the contribution of
the acquisition,
- for acquisitions during the previous
period, by deducting from the aggregates for the period the
contribution of the acquisition between January 1 of the current
period and the anniversary date of the acquisition,
- for disposals during the period, by
deducting from the aggregates for the previous period the
contribution of the disposed entity as of the anniversary date of
the disposal,
- for disposals during the previous
period, by deducting from the aggregates for the previous period
the contribution of the disposed entity.
- 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. The currency effect is calculated based on the
aggregates for the period converted at the exchange rate for the
previous period.
- In addition, the Group passes on
variations in the cost of energy (electricity and natural gas) to
its customers via indexed invoicing integrated into their medium
and long-term contracts. This indexing can lead to significant
variations in sales (mainly in the Large Industries Business Line)
from one period to another depending on fluctuations in prices on
the energy market.An energy impact is calculated based on the sales
of each of the main subsidiaries in Large Industries. Their
consolidation allows the determination of the energy impact for the
Group as a whole. The foreign exchange rate used is the average
annual exchange rate for the year N-1.Thus, at the subsidiary
level, the following formula provides the energy impact, calculated
for natural gas and electricity respectively:Energy impact = Share
of sales indexed to energy year (N-1) x (Average energy price over
the year (N) - Average energy price over the year
(N-1))Neutralizing the impact of variations in energy prices
against sales allows analysis of evolution in revenue on a
comparable basis.
Consolidated Q3 2017 revenue includes the following impact:
(in millions of euros)
Revenue Q32017
Q3 2017/2016Change
Currency
Natural gas Electricity
Q3
2017/2016Comparablechange
Group 4,944
-0.3% (199) 41
9 +3.5% Gas and
Services 4,787 +0.1%
(194) 41
9 +4.0%
(a) Comparable change based on 2016 adjusted sales excluding
currency and energy impacts.
For the Group,
- The currency impact was -4.0%.
- The impact of natural gas price
fluctuations was +0.8%.
- The impact of electricity price
fluctuations was +0.2%.
For Gas & Services,
- The currency impact was -4.1%.
- The impact of natural gas price
fluctuations was +0.8%.
- The impact of electricity price
fluctuations was +0.2%.
Consolidated Revenue Year-to-Date 2016
Impact of currency, energy (natural gas and electricity) on
year-to-date 2016 revenue:
(in millions of euros)
Revenue YTD2017
YTD2017/2016Change
Currency
Natural gas Electricity
YTD2017/2016Comparablechange
(a)
Group 15,237
+17.4% (32) 220
52 +2.3%
Gas & Services 14,765
+19.1% (29) 220
52 +3.2%
(a) Comparable change based on 2016 adjusted sales excluding
currency and energy impacts.
BY GEOGRAPHY
Revenue
(in millions of euros)
YTD 2016 YTD
2017
Publishedchange
Comparablechange
(a)
Americas 4,227
6,219 +47.1% +3.1%
Europe 4,826
5,028 +4.2% +2.2%
Asia-Pacific 2,917
3,042 +4.3% +4.5%
Middle-East & Africa 431
476 +10.5%
+6.0%
Gas & Services Revenue
12,401 14,765
+19.1%
+3.2% Engineering & Construction
359 221
-38.4% -38.0% Global Markets
& Technologies 219
251 +14.3% +15.3%
GROUP REVENUE 12,979
15,237
+17.4% +2.3%
BY WORLD BUSINESS LINE
Revenue
(in millions of euros)
YTD 2016 YTD
2017
Publishedchange
Comparablechange
(a)
Large industries 3,649
3,980 +9.1%
+2.2% Industrial Merchant 5,272
7,022 +33.2%
+3.3% Healthcare
2,265 2,523 +11.4%
+4.5% Electronics
1,215 1,240 +2.1%
+2.6%
GAS & SERVICES REVENUE
12,401
14,765 +19.1%
+3.2%
(a) Comparable change based on 2016 adjusted sales excluding
currency and energy impacts.
This activity report is also available on our
website:https://www.airliquide.com/investors/documents-presentations
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171024006605/en/
Corporate CommunicationsAnnie Fournier+33 (0)1 40 62 51
31Caroline Philips+33 (0)1 40 62 50 84orInvestor
RelationsParis - France+33 (0)1 40 62 50 87Philadelphia - USA+1
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