Continued sales growth, +3.5% for the quarter
Selective investment decisions in an environment rich in
opportunities
Regulatory News:
Air Liquide (Paris:AI):
Key Figures (in millions of
euros)
Q3 2019
2019/2018
as published
2019/2018 comparable
(a)
Group Revenue
5,454
+3.5%
+3.5%
of which Gas & Services
5,242
+3.5%
+3.5%
of which Engineering &
Construction
81
-22.9%
-24.6%
of which Global Markets &
Technologies
131
+31.4%
+29.7%
(a) Growth excluding the currency, energy (natural gas and
electricity), and significant scope impacts; see reconciliation in
appendix.
Commenting on the 3rd quarter of 2019, Benoît Potier,
Chairman and CEO of Air Liquide, stated:
“Sales growth continued this quarter, with Group revenue
amounting to 5.5 billion euros, up 3.5%. Growth was driven by all
Gas & Services activities, which represent 96% of the Group's
sales, as well as our Global Markets & Technologies business.
Positive currency and significant scope impacts offset lower energy
prices.
All Gas & Services activities grew on a comparable basis,
despite a more moderate global growth. Healthcare and Electronics
were particularly dynamic, and Industrial Merchant and Large
Industries remained solid. Geographically, our business continued
to grow in every region in the world, particularly across Asia and
Europe.
In addition, the Group continued to implement its operational
efficiency program, which reached 310 million euros over the first
nine months of 2019, in line with the annual target of more than
400 million euros. Operating cash flow growth was clearly higher
than sales growth. The investment cycle remained particularly well
oriented, with a large number of opportunities 12 months out.
Investment decisions, which ensure future growth, increased sharply
in the 3rd quarter and totaled 2.7 billion euros at the end of
September.
Assuming a comparable environment, Air Liquide is confident
in its ability to deliver net profit growth in 2019, at constant
exchange rates.”
Highlights of the 3rd quarter
- Large Industries: signature of three long-term
contracts, in the United States Gulf Coast, with Methanex; in
Canada, with Shell Chemicals; and in the Philippines, with
Pilipinas Shell. Completion of the sale to Fujian Shenyuan of the
production complex.
- Industrial Merchant: launch of Qlixbi, a disruptive
innovation that combines technical and digital innovation in
the field of welding.
- Environment: participation in two innovative projects
to fight climate change, the Northern Lights CO2 capture and
storage project in Norway, and with thyssenkrupp Steel to reduce
carbon emissions linked to steel production.
- Corporate: successful launch of a 500 million dollars
long-term bond issue to fund long-term growth at a historically low
interest rate.
Group revenue for the 3rd quarter of 2019 totaled
5,454 million euros, up +3.5% on a comparable
basis. Gas & Services posted robust comparable sales growth
(+3.5%), in spite of a softening economic environment. In
Engineering & Construction, sales to third-party customers were
stable compared with the 2nd quarter, with resources mainly
attributed to internal Large Industries and Electronics projects.
Global Markets & Technologies continued its strong development
with growth of +29.7%.
The currency impact remained positive at +2.1% this quarter,
whereas the energy impact, which was neutral during the 1st half,
was unfavorable during the 3rd quarter (-2.7%). The acquisition of
Tech Air in the United States at the end of the 1st quarter of 2019
generated a significant scope impact of +0.6%. Published 3rd
quarter Group revenue growth was also therefore
+3.5%.
Gas & Services revenue for the 3rd quarter of 2019
reached 5,242 million euros, up +3.5% on a comparable
basis. Published sales were also up +3.5%, with the
unfavorable energy impact (-2.9%) offset by the favorable currency
impact (+2.2%) and the consolidation of Tech Air acquired in the
United States at the end of the 1st quarter, accounted for as the
significant scope (+0.7%).
- Gas & Services revenue in the Americas amounted to
2,137 million euros, an increase of +2.0% during the
3rd quarter of 2019. Large Industries sales were up +0.6%, affected
by customer maintenance turnarounds in the United States.
Industrial Merchant revenue posted resilient growth of +1.1%,
mainly driven by higher pricing. Electronics growth stood at +1.5%
and Healthcare continued to improve markedly (+11.1%).
- Revenue in the Europe zone reached 1,742 million
euros over the quarter, up +3.3%, driven mainly by good
Healthcare sales momentum (+4.8%) and strong growth in Industrial
Merchant (+4.6%). Large Industries sales (+0.6%) benefited from
high hydrogen demand from refiners in the Benelux, but activity was
weaker in Germany and Southern Europe.
- Revenue in Asia Pacific totaled 1,207 million
euros in the 3rd quarter of 2019, up +7.2%. Sales growth
in Large Industries (+10.3%) benefited from several start-ups in
the 4th quarter of 2018 in China, including the last contributions
from Fujian Shenyuan. Industrial Merchant sales growth (+3.7%) was
in line with that of the 2nd quarter overall. Electronics continued
to enjoy strong revenue growth in the 3rd quarter (+7.3%) despite a
marked decrease in Equipment & Installation sales compared with
a particularly high level in the 3rd quarter of 2018.
- Revenue in Middle East and Africa amounted to 156
million euros, up +1.5% over the quarter. Large
Industries activity was up slightly. Industrial Merchant remained
very dynamic in the Middle East, Egypt and India, with strong
helium sales in particular.
In line with the 1st half of the year, all businesses
contributed to the growth of Gas & Services revenue, in
particular Healthcare and Electronics. Large Industries
(+3.3%) benefited notably from the contribution to sales of
several ramp-ups in Asia, including the last contributions from
Fujian Shenyuan, and to a lesser extend in Europe. In a softening
economic environment, growth in Industrial Merchant stood at
+2.4%, driven mainly by successful pricing management,
growth in consumer-related markets and a favorable number of
working days. Sales growth was high in Healthcare
(+5.9%), in particular in Home Healthcare in Europe and in
Latin America, and in Medical Gases in the United States.
Electronics maintained a significant increase in revenue
(+5.8%) despite a high basis of comparison, as Equipment
& Installation (E&I) sales were very strong during the 3rd
quarter of 2018 ; growth stood at +8.6% excluding E&I.
Consolidated Engineering & Construction revenue, at
81 million euros, was stable compared with the 2nd quarter,
with resources mainly attributed to internal Large Industries and
Electronics projects.
Global Markets & Technologies sales were up
+29.7% in the 3rd quarter at 131 million euros.
Biomethane remained the main contributor to growth, with the
ramp-up of several units in Europe. Equipment sales related to the
Turbo‑Brayton technology, which enables the cryogenic refrigeration
and reliquefaction of natural gas when transported by sea, also
posted strong growth.
Efficiency gains reached 310 million euros
since the beginning of the year, up more than +20% compared with
end‑September 2018 and slightly ahead of the annual objective,
reinforced and now fixed at more than 400 million euros.
Cash flows from operating activities before changes in
working capital requirements amounted to 3,458 million
euros for the first 9 months of the year, an increase of
+8.8% excluding IFRS16, which was largely higher than the
increase in sales as published (+6.3%). It stood at the high level
of 21.1% of sales and at 19.9% excluding IFRS16. Net
capital expenditure1 totaled 1,834 million euros, up +10.8%
compared with end-September 2018, and represented 11.2% of
sales, in line with the NEOS strategic plan.
Industrial and financial investment decisions totaled
2.7 billion euros since the beginning of the year, including
the acquisition of Tech Air in the United States completed at the
end of the 1st quarter. Industrial decisions were up markedly by
about +20%. The strong momentum of investment projects continued
with the 12-month portfolio of opportunities reaching 2.8
billion euros.
1 Including transactions with minority shareholders
3rd QUARTER 2019 REVENUE
Except where indicated, all revenue and operating income
recurring growth discussed below are made on a comparable
basis, excluding the currency, energy and significant scope
impacts. The reference to Airgas corresponds to the Group’s
Industrial Merchant and Healthcare activities in the United
States.
Analysis of 3rd quarter 2019 revenue
REVENUE
Revenue (in millions of euros)
Q3 2018
Q3 2019
2019/2018 published
change
2019/2018 comparable
change
Gas & Services
5,066
5,242
+3.5%
+3.5%
Engineering & Construction
105
81
-22.9%
-24.6%
Global Markets & Technologies
100
131
+31.4%
+29.7%
TOTAL REVENUE
5,271
5,454
+3.5%
+3.5%
Revenue by quarter (in millions of
euros)
Q1 2019
Q2 2019
Q3 2019
Gas & Services
5,237
5,299
5,242
Engineering & Construction
93
83
81
Global Markets & Technologies
111
129
131
TOTAL REVENUE
5,441
5,511
5,454
2019/2018 Group published
change
+8.6%
+7.0%
+3.5%
2019/2018 Group comparable
change
+5.0%
+4.7%
+3.5%
2019/2018 Gas & Services comparable
change
+4.8%
+5.0%
+3.5%
Group
Group revenue for the 3rd quarter of 2019 totaled 5,454
million euros, up +3.5% on a comparable basis. Gas &
Services posted robust comparable sales growth (+3.5%), in
spite of a softening economic environment. In Engineering &
Construction, sales to third-party customers were stable compared
with the 2nd quarter, with resources mainly attributed to internal
Large Industries and Electronics projects. Global Markets &
Technologies continued its strong development with growth of
+29.7%.
The currency impact remained positive at +2.1% this quarter,
whereas the energy impact, which was neutral during the 1st half,
was unfavorable during the 3rd quarter (-2.7%). The acquisition of
Tech Air in the United States at the end of the 1st quarter of 2019
generated a significant scope impact of +0.6%. Published 3rd
quarter Group revenue growth was also therefore
+3.5%.
Gas & Services
Gas & Services revenue for the 3rd quarter of 2019 reached
5,242 million euros, up +3.5% on a comparable basis.
All businesses contributed to growth and in particular Healthcare
and Electronics. Large Industries (+3.3%) benefited notably
from the contribution to sales of several ramp-ups in Asia,
including the last contributions from Fujian Shenyuan, and to a
lesser extend in Europe. In a softening economic environment,
growth in Industrial Merchant stood at +2.4%, driven mainly
by successful pricing management (+3.8%), growth in
consumer-related markets and a favorable number of working days.
Sales growth was high in Healthcare (+5.9%), in particular
in Home Healthcare in Europe and in Latin America, and in Medical
Gases in the United States. Electronics maintained a significant
increase in revenue (+5.8%) despite a high basis of
comparison, as Equipment & Installation (E&I) sales were
very strong during the 3rd quarter of 2018 ; growth stood at +8.6%
excluding E&I.
Published sales were also up +3.5%, with the
unfavorable energy impact (-2.9%) offset by the favorable currency
impact (+2.2%) and the consolidation of Tech Air acquired in the
United States at the end of the 1st quarter, accounted for as the
significant scope (+0.7%).
Revenue by geography and business
line (in millions of euros)
Q3 2018
Q3 2019
2019/2018 published
change
2019/2018 comparable
change
Americas
2,017
2,137
+5.9%
+2.0%
Europe
1,779
1,742
-2.0%
+3.3%
Asia-Pacific
1,099
1,207
+9.9%
+7.2%
Middle East & Africa
171
156
-9.1%
+1.5%
GAS & SERVICES REVENUE
5,066
5,242
+3.5%
+3.5%
Large Industries
1,454
1,374
-5.6%
+3.3%
Industrial Merchant
2,312
2,471
+6.9%
+2.4%
Healthcare
862
915
+6.1%
+5.9%
Electronics
438
482
+10.2%
+5.8%
Americas
Gas & Services revenue in the Americas amounted to 2,137
million euros over the quarter, an increase of +2.0%.
Large Industries sales were up +0.6%, affected by customer
maintenance turnarounds in the United States. Industrial Merchant
revenue posted resilient growth of +1.1%, mainly driven by higher
pricing. Electronics growth stood at +1.5% and Healthcare continued
to improve markedly (+11.1%).
- Large Industries revenue was up +0.6%. In the
United States, air gases and hydrogen volumes were down due to
several customer maintenance turnarounds and weaker demand for
oxygen. Nonetheless, sales benefited from the solid growth of the
cogeneration activity in the United States and strong momentum in
Latin America, in particular in Mexico, with the start-up of a
hydrogen-supply contract during the 2nd quarter, and in Brazil with
the commissioning of a nitrogen pipeline at the end of the 1st
quarter.
- Industrial Merchant sales posted resilient growth of
+1.1%, driven by higher pricing of +4.7% and a favorable
number of working days. In North America, gas sales were up in
Research and in consumer-related markets such as Food and
Pharmaceuticals while they were down in industrial sectors such as
Construction and Metal Fabrication. Hardgoods revenue declined
markedly in the United States, mainly due to the slowdown in
industrial sectors. Moreover, 3rd quarter sales included the impact
of the disposal during the 2nd quarter of an Airgas safety services
business. In South America, double-digit growth was driven in
particular by a strong volume increase of liquid gas in
Brazil.
- Healthcare revenue was up +11.1%. Medical Gases
sales growth was solid in the United States, in particular with
proximity care players where cylinders with a digital interface
have enjoyed significant success. Activity remained very strong in
Latin America, in particular in Colombia.
- Electronics sales were up +1.5% driven by high
Carrier Gases sales growth.
Americas
- Air Liquide and Shell Chemicals announced in late July
the renewal of contracts for the supply of oxygen,
nitrogen, steam and electricity to Shell’s Scotford facility in
Alberta, Canada. To support this renewed long‑term
commitment, Air Liquide will further enhance its Scotford site
operations, which will support future growth in this key industrial
basin and create additional operational efficiencies
Europe
Revenue in the Europe zone reached 1,742 million euros
over the quarter, up +3.3%, driven mainly by good Healthcare
sales momentum (+4.8%) and strong growth in Industrial Merchant
(+4.6%). Large Industries sales (+0.6%) benefited from high
hydrogen demand from refiners in the Benelux, but activity was
weaker in Germany and Southern Europe.
- Large Industries revenue was up +0.6%. Markedly
higher hydrogen sales in the Benelux were boosted by high demand
from refiners connected to the pipeline network. Activity was
weaker in Germany in Steel and Chemicals, as well as in Italy in
Steel. Business continued to grow in Eastern Europe.
- Industrial Merchant sales were up strongly
(+4.6%), with almost all countries contributing to growth.
This was mainly driven by high price impacts (+3.3%), the
development of the Pharmaceuticals and Food markets, and a positive
working day impact. Gas volumes per working day were stable.
Revenue in Eastern Europe continued to enjoy double-digit
growth.
- In Healthcare, sales growth was strong at +4.8%,
with scope impact (non-significant) being unfavorable this quarter
due to the disposal in Germany of a non-core business in Hygiene.
Home Healthcare momentum was strong with, in particular, a marked
increase in the number of diabetic patients treated in Scandinavia
and France, and sleep apnea patients treated in France. Medical
Gases sales for hospitals improved despite constant price
pressure.
Europe
- In July, Air Liquide and thyssenkrupp Steel announced to
join forces in a pioneering project to develop lower carbon
steel production. For the first time, hydrogen will be injected
to partially replace pulverized coal at a large scale in the blast
furnace during steel production reducing carbon emissions. Air
Liquide will ensure to its client a stable supply of hydrogen from
its 200 km network in the Rhine-Ruhr Area.
- Air Liquide announced in mid-October a partnership with
ArcelorMittal in a pilot project in Belgium to capture
CO2 emissions from the steelmaking process and recycle them into
bioethanol. Air Liquide Engineering & Construction will
provide a technology solution to purify the offgas coming from the
blast furnace. These gases will then be injected into a bioreactor
to produce bioethanol.
- In October, Air Liquide announced the signature of a
long-term contract in Kazakhstan. Air Liquide
Munay Tech Gases, a company jointly owned by Air Liquide (75%)
and the Kazakhstan national oil & gas company (25%), will
build, own and operate a new nitrogen unit in a growing chemical
basin, requiring a 15 million euros investment. This new
unit will supply up to 8,000 Nm3/h nitrogen and should be
operational in 2021.
Asia-Pacific
Revenue in Asia Pacific totaled 1,207 million euros in
the 3rd quarter of 2019, up +7.2%. Sales growth in Large
Industries (+10.3%) benefited from several start-ups in the 4th
quarter of 2018 in China, including the last contributions from
Fujian Shenyuan. Industrial Merchant sales growth (+3.7%) was in
line with that of the 2nd quarter overall. Electronics continued to
enjoy strong revenue growth in the 3rd quarter (+7.3%) despite a
marked decrease in Equipment & Installation sales compared with
a particularly high level in the 3rd quarter of 2018.
- Large Industries sales (+10.3%) benefited in
particular from three major start-ups in China during the 4th
quarter of 2018, including the last two months of contribution from
Fujian Shenyuan, the disposal of which was finalized at the
beginning of September. Moreover, hydrogen sales to refiners also
improved markedly in Singapore.
- In Industrial Merchant, revenue was up +3.7%, in
line with 2nd quarter growth. In China, cylinder gas volumes
continued to improve significantly. In South-East Asia, sales also
enjoyed sustained growth. Moreover, helium sales were high across
the region. The price impacts in the region made a positive
contribution (+0.4%) compared with the previous year, and was lower
than in the 2nd quarter. Indeed, liquid gases had enjoyed
exceptionally high price impacts in China during the 3rd quarter of
2018.
- Electronics revenue posted growth of +7.3%, and
above +10% excluding Equipment & Installations. Carrier Gases
sales benefited from the ramp-up of units in China, Japan, Taiwan
and Singapore. The success of the new enScribeTM offering for the
etching of electronic chips contributed to the strong development
of Advanced Materials, in particular in Korea.
Asia-Pacific
- In mid-September, Air Liquide announced the signature of a
long-term contract for the supply of hydrogen to Shell’s
Tabangao refinery in Batangas, Philippines. Air Liquide will invest
30 million euros in the construction of a state-of-the-art
Hydrogen Manufacturing Unit (HMU) that will be fitted with a CO2
recovery unit that mitigates direct carbon emission levels by
capturing and liquifying the CO 2 for other uses.
Middle East and Africa
Revenue in Middle East and Africa amounted to 156 million
euros, up +1.5% over the quarter. Large Industries
activity was up slightly. Industrial Merchant remained very dynamic
in the Middle East, Egypt and India, with strong helium sales in
particular. Development continued in Healthcare in Egypt and Saudi
Arabia.
Engineering & Construction
Consolidated Engineering & Construction revenue, at 81
million euros, was stable compared with the 2nd quarter, with
resources mainly attributed to internal Large Industries and
Electronics projects. Total sales including Group projects
continued to grow double digit.
Order intake for the Group and third-party customers reached
500 million euros since the beginning of the year. These
orders came from the Americas, followed by Asia and Europe. More
than half of this order intake related to Air Separation Units for
Large Industries and ultra-pure nitrogen production units for the
semi-conductor industry.
Global Markets & Technologies
Global Markets & Technologies sales were up +29.7% in
the 3rd quarter at 131 million euros. Biomethane remained
the main contributor to growth, with the ramp-up of several units
in Europe. Equipment sales related to the Turbo‑Brayton technology,
which enables the cryogenic refrigeration and reliquefaction of
natural gas when transported by sea, also posted strong growth.
Order intake for Group projects and third-party customers
totaled 362 million euros since the beginning of the year,
an increase of +9.2%.
Innovation
- In early September, Air Liquide signed a Memorandum of
Understanding with Equinor and its partners (Shell and Total) to
explore collaboration in a CO2 capture and storage project,
Northern Lights. The Northern Lights project is aimed to mature
the development of offshore carbon storage on the Norwegian
Continental Shelf and has the potential to be the first storage
project site in the world receiving CO2 from industrial sources in
several European countries.
- In mid-September, Air Liquide announced the launch of
Qlixbi, a breakthrough packaged gas offer including a new
generation of gas cylinder and a suite of digital solutions
designed to revolutionize the customer experience in welding.
Developed in collaboration with more than 700 welding customers,
this innovation will improve the way they use and manage gases in
their daily operations thanks to a revolutionary connector (“Click
& Weld”), a reserve indicator on the cylinder combined with an
IoT (“Internet of Things”) system and a digital application.
Investment cycle
The strong momentum of investment projects continued and was
reflected in the high level of the main indicators described
below.
INVESTMENT DECISIONS AND INVESTMENT BACKLOG
Industrial and financial investment decisions totaled 983
million euros for the 3rd quarter of 2019, i.e., a total of 2.7
billion euros since the beginning of the year. This amount
included the acquisition of Tech Air in the United States, which
was completed at the end of the 1st quarter. Industrial
investment decisions were up markedly by around +20% over the
first nine months and accounted for almost all decisions during the
3rd quarter. These included two major investments in the United
States in Large Industries: one new Air Separation Unit connected
to Air Liquide’s pipeline network on the Gulf Coast and a project
including one new Air Separation Unit, new syngas production
capacities and the replacement of existing assets by more efficient
units. Investments in Electronics in Asia continued, and those
contributing to efficiencies were up around +60% compared with the
first nine months of 2018, representing more than 10% of the amount
of industrial decisions.
The total investment backlog amounted to 2.5 billion
euros, an increase of more than 200 million euros compared with
the end of June 2019, with new investment decisions more than
offsetting the start-up of new units. These investments should lead
to a future contribution to annual sales of approximately 0.9
billion euros per year after a full ramp-up of the units.
Investment decisions
- In mid-September, Air Liquide announced an investment of
more than 270 million US dollars in the U.S. Gulf Coast to
support a new long-term agreement with Methanex Corporation
to supply oxygen, nitrogen and utilities. To serve Methanex
and its other customers in the industrial basin that encompases
Geismar and Baton Rouge, Air Liquide will build two new Air
Separation Units with a capacity of 2,500 tons/day of oxygen
each and invest in connected infrastructure assets -
increasing the company’s Mississippi River Pipeline’s
supply capacity by more than 25%.
START-UPS
Five new units started up during the 3rd quarter of 2019.
These mainly included the start-up of several units for
Electronics in Asia producing air gases, ultra-pure
nitrogen, Advanced Materials and carbon dioxide. In Large
Industries, a new pipeline network in the Middle East and an
extension of the pipeline network in Northern Europe were
commissioned.
The contribution to sales of these unit start-ups and
ramp-ups totaled 98 million euros over the 3rd quarter of
2019 and 283 million euros since the beginning of the year. This
mainly included additional sales relating to Large Industries unit
start-ups in the 4th quarter of 2018 in China, including the last
contributions from Fujian Shenyuan following the finalization of
its disposal at the beginning of September, unit start-ups for
Electronics customers in Asia and unit ramp-ups for Large
Industries in Europe. Over 2019, contribution forecasts have been
upgraded and should approximate 320 million euros.
PORTFOLIO OF OPPORTUNITIES
The 12-month portfolio of opportunities totaled 2.8
billion euros, a slight increase compared with 2.7 billion
euros at the end of June 2019. New projects entering the portfolio
offset those signed by the Group, awarded to the competition or
delayed.
As the major investments decided in the United States during the
3rd quarter have been removed from the portfolio, Asia became the
leading region with one third of opportunities, followed by Europe,
the Americas and the Middle East. Almost two thirds of the
portfolio of opportunities came from Large Industries, in
particular from Chemicals. The Integrated Circuit industry for
Electronics was the second largest contributor.
For more than half of the projects, the amount of investment was
below 50 million euros. It was between 100 and 200 million euros
for five projects. Almost one quarter of the portfolio of
opportunities contributed to the Climate Objectives.
Operating Performance
The Group’s efficiency gains reached 113 million euros in the
3rd quarter and 310 million euros since the beginning of the
year, up more than +20% compared with end-September 2018. They are
slightly ahead of the annual objective now fixed at more than 400
million euros, following the reinforcement of the program since the
beginning of the year.
The increase in efficiencies was driven by four main factors.
The roll-out of a continuous improvement approach carried on
across the various entities, in particular at Airgas where the
contribution to efficiencies is gathering pace. The Group has also
continued its transformation with the commissioning of
shared platforms, notably the launch of the European business
support center in Lisbon, and the continued roll-out of digital
tools such as the remote operation and optimization centers for
Large Industries production units (Smart Innovative Operations,
SIO). Contributions to efficiencies from digital tools increased.
The streamlining of oxygen supply network in Home Healthcare and
the renewal of the bulk logistics chain in Asia showcased the
constant efforts in place to optimize the supply chain.
Purchasing gains accounted for more than 25% of
efficiencies.
Cash flows from operating activities before changes in
working capital requirements amounted to 3,458 million
euros for the first nine months of the year, an increase of
+8.8% excluding IFRS16, which was largely higher than the
increase in sales as published (+6.3%). It stood at the high level
of 21.1% of sales and at 19.9% excluding IFRS16. Net
capital expenditure2 totaled 1,834 million euros, up +10.8%
compared with end-September 2018, and represented 11.2% of
sales, in line with the NEOS strategic plan. Net debt
excluding the liabilities linked to leases (IFRS16) reached
13,249 million euros at September 30, 2019. The net
debt to equity ratio, adjusted for the seasonal effect of
the dividend, stood at 66.9%.
2 Including transactions with minority shareholders
Bonds
- In early September, Air Liquide issued bonds on the American
bond market for an amount of 500 million U.S dollars with a
10-year maturity at a yield of 2.362%. With this transaction,
the Group confirms its willingness to foster long-term
relationships with American credit investors.
Outlook
Sales growth continued this quarter, with Group revenue
amounting to 5.5 billion euros, up +3.5%. Growth was driven by all
Gas & Services activities, which represent 96% of the Group's
sales, as well as the Global Markets & Technologies business.
Positive currency and significant scope impacts offset lower energy
prices.
All Gas & Services activities grew on a comparable basis,
despite a more moderate global growth. Healthcare and Electronics
were particularly dynamic, and Industrial Merchant and Large
Industries remained solid. Geographically, business continued to
grow in every region in the world, particularly across Asia and
Europe.
In addition, the Group continued to implement its operational
efficiency program, which reached 310 million euros over the first
nine months of 2019, in line with the annual target of more than
400 million euros. Operating cash flow growth was clearly higher
than sales growth. The investment cycle remained particularly well
oriented, with a large number of opportunities 12 months out.
Investment decisions, which ensure future growth, increased sharply
in the 3rd quarter and totaled 2.7 billion euros at the end of
September.
Assuming a comparable environment, Air Liquide is confident in
its ability to deliver net profit growth in 2019, at constant
exchange rates.
APPENDICES
Performance indicators
Performance indicators used by the Group that are not directly
defined in the financial statements have been prepared in
accordance with the AMF position 2015-12 about alternative
performance measures.
The performance indicators on revenue are the following:
- Currency impact
- Energy impact
- Significant scope impact
- Comparable sales change
CURRENCY IMPACT
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 impact is calculated based on the
aggregates for the period converted at the exchange rate for the
previous period.
ENERGY IMPACT
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 index to energy year (N-1) x
(Average energy price over the year (N) - Average energy price over
the year (N-1))
This indexation effect of electricity and natural gas does not
impact the operating income recurring.
SIGNIFICANT SCOPE IMPACT
The significant scope impact 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.
COMPARABLE SALES CHANGE
Comparable sales change excludes the currency, energy and
significant scope impacts described above.
Comparable sales growth for the 3rd quarter 2019 was calculated
as follow:
(in millions of euros)
Q3 2019
Q3 2019/2018 Published
Change
Currency impact
Natural gas impact
Electricity impact
Significant scope
impact
Q3 2019/2018 Comparable
Change
Revenue
Group
5,454
+3.5%
111
(134)
(12)
35
+3.5%
Impacts in %
+2.1%
-2.5%
-0.2%
+0.6%
Gas & Services
5,242
+3.5%
107
(134)
(12)
35
+3.5%
Impacts in %
+2.2%
-2.7%
-0.2%
+0.7%
Year to date comparable sales growth was calculated as
follow:
(in millions of euros)
YTD 2019
YTD 2019/2018 Published
Change
Currency impact
Natural gas impact
Electricity impact
Significant scope
impact
YTD 2019/2018 Comparable
Change
Revenue
Group
16,406
+6.3%
362
(165)
22
76
+4.4%
Impacts in %
+2.3%
-1.0%
+0.1%
+0.5%
Gas & Services
15,778
+6.3%
352
(165)
22
76
+4.4%
Impacts in %
+2.3%
-1.1%
+0.2%
+0.5%
Year to date revenue
BY GEOGRAPHY
Revenue (in millions of euros)
YTD 2018
YTD 2019
Published change
Comparable change
Americas
5,891
6,354
+7.8%
+2.2%
Europe
5,243
5,353
+2.1%
+3.9%
Asia-Pacific
3,206
3,612
+12.7%
+9.8%
Middle East & Africa
495
459
-7.4%
+1.8%
Gas & Services Revenue
14,835
15,778
+6.3%
+4.4%
Engineering & Construction
285
257
-9.8%
-11.5%
Global Markets & Technologies
313
371
+18.6%
+16.8%
GROUP REVENUE
15,433
16,406
+6.3%
+4.4%
BY WORLD BUSINESS LINE
Revenue (in millions of euros)
YTD 2018
YTD 2019
Published change
Comparable change
Large industries
4,172
4,278
+2.5%
+4.7%
Industrial Merchant
6,813
7,298
+7.1%
+2.5%
Healthcare
2,576
2,736
+6.2%
+6.0%
Electronics
1,274
1,466
+15.1%
+10.8%
GAS & SERVICES REVENUE
14,835
15,778
+6.3%
+4.4%
The slideshow that accompanies this release
is available as of 8:45 am (Paris time) at www.airliquide.com
Throughout the year, follow Air Liquide on Twitter:
@AirLiquideGroup
UPCOMING EVENT 2019 Annual results: February 11,
2020
A world leader in gases, technologies and services for Industry
and Health, Air Liquide is present in 80 countries with
approximately 66,000 employees and serves more than 3.6 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 be a leader in 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 21 billion euros in 2018 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.
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