Regulatory News:
Air Liquide (Paris:AI):
Key Figures (in millions of
euros)
H1 2019
2019/2018
as published
2019/2018 comparable
(a)
Group Revenue
10,952
+7.8%
+4.9%
of which Gas & Services
10,536
+7.8%
+4.9%
Operating Income Recurring
(OIR)
1,814
+12.2%
+9.4%
Group OIR Margin
16.6%
Variation excluding energy
+70 bps
Gas & Services OIR Margin
18.4%
Variation excluding energy
+60 bps
Net Profit (Group Share)
1,059
+1.8%
+12.1% (b)
Earnings per Share (in euros)
2.48
+1.6%
Cash Flow before change in working capital
requirements
2,297
+14.8%
Net Debt (c)
€13.7 bn
Return on Capital Employed after tax -
ROCE
8.1%
Recurring ROCE (d)
8.3%
+30 bps
(a) Growth excluding the currency, energy (natural gas and
electricity), and significant scope impacts; see reconciliation in
appendix. (b) Recurring net profit growth excluding the exceptional
loss provisioned following the disposal agreement of the Fujian
units in the 1st half of 2019 and the non-recurring gain on net
finance costs in the 1st half of 2018. (c) Excluding lease
liabilities (IFRS16). (d) Excluding exceptional items, see
reconciliation in appendix.
Commenting on activity during the 1st half of 2019, Benoît
Potier, Chairman and CEO of Air Liquide, stated:
“This first half of the year combined sustained sales growth
and a significant improvement in the operating margin.
The Group’s sales totaled nearly 11 billion euros, driven by
dynamic sales in Gas & Services as well as in Global
Markets & Technologies. Gas & Services revenue, which
accounts for 96% of the Group’s total revenue, grew by close to +8%
and by approximately +5% on a comparable basis (a). All Gas
& Services activities progressed, with very strong
performances in Electronics and Healthcare, in line with previous
quarters. In a more contrasted market environment, sales grew in
every region of the world, with a good dynamic in Europe and
growth that remains sustained in Asia‑Pacific, specifically in
China.
The Group’s operating margin improved significantly,
increasing by +70 bps. This good performance results from a
combination of three kinds of actions: a pricing policy reflective
of higher costs, dynamic portfolio management, and a substantial
reinforcement of efficiency programs. Stepping up sharply in the
2nd quarter, these programs have resulted in efficiencies
totaling 197 million euros for the six months just ended, in
line with our target of more than 400 million euros per year.
Recurring net profit (b) rose by +12 %, cash flow by +14.8%. The
balance sheet remains strong, with the net debt (c) to equity ratio
lower than on June 30, 2018. Recurring ROCE (d) increased to reach
8.3%.
The investment decisions of the first half, which include
the acquisition of Tech Air in the United States, came to 1.8
billion euros, an increase of +22% compared with the 1st half
of 2018. Industrial investment backlog reached 2.2 billion euros
and will contribute to the Group’s future growth.
Assuming a comparable environment, Air Liquide is confident
in its ability to deliver net profit growth in 2019, at constant
exchange rates.”
(a) (b) (c) (d) see definitions in the above table.
Highlights of the first half
- Strong sales, with the signing of several long-term
contracts: in the Gulf Coast, with Marathon Petroleum Company,
with Gulf Coast Growth Ventures (GCGV, a subsidiary of ExxonMobil
and SABIC) and LyondellBasel; and in Russia with Severstal.
- Agreement to sell a dedicated industrial gas complex to
Fujian Shenyuan.
- Reinforcement of Industrial Merchant activity in the United
States with the acquisition of Tech Air by Airgas
- Signature of more than twenty contracts based on the
Turbo-Brayton cryogenic refrigeration and liquefaction system, a
technology solution for the reduction of greenhouse gas emissions
during the maritime shipping of LNG
- 5 production unit start-ups in Electronics
- Further acquisitions in Home Healthcare: Dialibre in
Spain for diabetes care, Medidis in the Netherlands for the
treatment of respiratory illnesses, and Megamed AG in Switzerland
for sleep apnea support.
- E-health: Deployment of Chronic Care Connect offer, a remote
medical monitoring solution to more than 1,000 patients/100
clinics and hospitals in France.
- Inauguration of the new Tokyo Innovation Campus in
Japan, dedicated to Electronics as well as solutions for climate
and energy transition driven solutions. Inauguration of
Accelair, the deeptech startup accelerator for the Paris
Innovation Campus.
- Announcement of the three winners of the Air Liquide 2018
Scientific Challenge, focused on solutions for the energy
transition (132 proposals from 34 different countries)
- Launch of a pilot project to improve air quality in an
SNCF railways station in Paris (RER).
- Investments in carbon-free hydrogen production (equity
investment in Hydrogenics, construction of the world’s largest PEM
electrolyser in Canada)
- Development of hydrogen mobility: creation of the joint
venture Air Liquide Houpu Hydrogen Equipment co. (China); equity
investment in FirstElement Fuel, Inc. (United States); opening of 4
new hydrogen stations worldwide.
- Corporate: Announcement of the appointment of new
members to the Executive Committee effective September 1,
2019. Air Liquide won the CAC 40’s Grand Prix for its Annual
General Meeting.
Group revenue for the 1st half of 2019 totaled 10,952
million euros, up +4.9% on a comparable basis, which is
driven by high Gas & Services sales (+4.9%).
Consolidated sales for Engineering & Construction were
slightly down during the 1st half at ‑3.8% due to a larger
proportion of Group projects following the rise in investment
decisions. Global Markets & Technologies continued its
strong development with growth of +10.7%. The currency
impact was positive at +2.5% and the energy impact neutral over the
half-year. The acquisition of Tech Air in the United States at the
end of the 1st quarter of 2019 generated a significant scope impact
of +0.4%. The Group's published revenue growth for the 1st
half was therefore +7.8%.
Gas & Services revenue for the 1st half of 2019
reached 10,536 million euros and posted high comparable
growth of +4.9%. Published sales were up markedly
(+7.8%), benefiting from a favorable currency impact (+2.5%)
and the consolidation of Tech Air (+0.4%). The energy impact was
neutral over the half-year.
All businesses contributed to growth and in particular
Healthcare and Electronics. Healthcare (+6.0%)
benefited from strong sales growth in Home Healthcare in Europe and
in Medical Gases in the United States, with no material
contribution from bolt-on acquisitions. Following record growth in
the 4th quarter of 2018, Electronics maintained a
significant increase in revenue during the 1st half of 2019
(+13.5%). Growth remained solid in Industrial
Merchant, at +2.6%, despite an unfavorable working day
impact, driven by high price impacts. Large Industries
(+5.4%) benefited in particular from the contribution to
sales of several start-ups in Asia during the 4th quarter of 2018
and strong demand for hydrogen in Europe.
■ Gas & Services revenue in the Americas
stood at 4,217 million euros, up +2.4% during the 1st
half of 2019, driven in particular by Healthcare (+9.4%) and
Electronics (+8.2%). Despite solid growth in oxygen volumes in
North America, Large Industries revenue growth was limited to +1.4%
due to a high basis of comparison with the 1st half of 2018.
Industrial Merchant sales were up +1.3% driven by high pricing, as
volumes were weaker.
■ Revenue in Europe totaled 3,611 million
euros over the half-year, up +4.2%. Growth during the
2nd quarter (+5.7%) was higher in all business lines than in the
1st quarter. Large Industries sales were up +3.1%, benefiting from
strong hydrogen demand from refiners. Growth was very solid in
Industrial Merchant (+3.7%) with high price impacts. Activity
remained very strong in Healthcare (+5.7%) driven by high organic
sales growth in Home Healthcare.
■ Revenue in the Asia Pacific zone totaled
2,405 million euros in the 1st half of 2019, up
+11.1%. Sales growth in Large Industries (+13.2%) benefited
from several start-ups in the 4th quarter of 2018 in China.
Industrial Merchant was up markedly (+5.2%), in particular in
China. Following record growth in the 4th quarter of 2018,
Electronics maintained a significant increase in revenue during the
1st half of 2019 (+16.1%).
■ Revenue in the Middle East and Africa
amounted to 303 million euros, up +2.0% over the
half-year, penalized by a major maintenance stoppage in South
Africa during the 2nd quarter.
Engineering & Construction revenue totaled 176
million euros, down -3.8% compared with the 1st half of 2018
due to a larger proportion of Group projects following the rise in
investment decisions.
Global Markets & Technologies sales were up
+10.7% in the 1st half of the year at 240 million
euros. Biogas remained the main contributor to growth. Sales
related to the Turbo-Brayton technology, which enables the
refrigeration and liquefaction of natural gas when transported by
sea, also posted strong growth.
Group Operating Income Recurring (OIR) amounted to
1,814 million euros in the 1st half of 2019, an increase of
+12.2% as published. Comparable growth was +9.4%. The operating
margin (OIR to revenue) stood at 16.6%, an improvement
of +70 basis points compared with the 1st half of 2018,
including +10 basis points coming from the application of IFRS 16.
The energy impact was not material over the half-year.
Gas & Services operating margin stood at
18.4%, an improvement of +60 basis points compared
with the 1st half of 2018, including +10 basis points coming from
the application of IFRS 16. The energy impact on the margin was not
material over the half-year.
Efficiencies amounted to 197 million euros during
the first six months of the year, up by a strong +13.9% compared
with the 1st half of 2018 and in line with the annual objective now
fixed at more than 400 million euros, due to the reinforcement of
the program since the beginning of the year.
Net profit (Group share) amounted to 1,059 million
euros in the 1st half of 2019, an increase of +1.8% as
published. Excluding the exceptional loss provisioned following the
disposal agreement of the Fujian units in the 1st half of 2019 and
the non-recurring gain on net finance costs in the 1st half of
2018, recurring net profit was up +12.1%.
Cash flow from operating activities before changes in working
capital requirements amounted to 2,297 million euros in
the 1st half of 2019, an increase of +14.8% and of +8.6%
excluding IFRS 16, which was slightly higher than the increase
in sales as published. It stood at the high level of 21.0% of
sales. Gross industrial capital expenditure amounted to 1,201
million euros, up +9.6% compared with the 1st half of 2018 and
represented 11.0% of sales, in line with the NEOS strategic plan.
The net debt1 to equity ratio, adjusted for the
seasonal effect of the dividend payment, stood at 70.7%.
Industrial and financial investment decisions reached
1.8 billion euros in the 1st half of 2019, up more than 300
million euros compared with the 1st half of 2018 mainly due to the
acquisition of Tech Air in the United States. The strong momentum
of investment projects continued with the 12-month portfolio of
opportunities stabilizing at the high level of 2.7 billion
euros at the end of June 2019.
The recurring Return on Capital Employed (ROCE) stood at
8.3%2 at the end of the 1st half 2019, up +30 basis
points.
The Air Liquide Board of Directors met on July 29, 2019.
During this meeting, the Board reviewed the consolidated financial
statements for the first half ending June 30, 2019. Limited review
procedures were completed with respect to the consolidated interim
financial statements, and an unqualified review report is in the
process of being issued by the statutory auditors.
1Excluding lease liabilities (IFRS16). 2 Excluding the
exceptional loss provisioned following the disposal agreement of
the Fujian units in the 1 half of 2019, see reconciliation in
appendix.
Table of contents of the activity report
H1 2019 Performance 7
Key
Figures.............................................................................................................................................
7
Income
Statement...................................................................................................................................
8
Change in Net
Indebtedness...................................................................................................................
16
Investment cycle 17
Risk Factors 19
2019 Outlook 19
APPendices 20
Impact of IFRS16 on June 30,
2019.........................................................................................................
20
Currency, energy and significant scope
impacts
(Semester)......................................................................
20
Currency, energy and significant scope
impacts
(Quarter)..........................................................................
21
2nd quarter 2019
revenue..........................................................................................................................
22
Geographic and segment
information.......................................................................................................
22
Consolidated income
statement...............................................................................................................
23
Consolidated balance
sheet....................................................................................................................
24
Consolidated cash flow
statement...........................................................................................................
25
Return on Capital Employed –
ROCE.......................................................................................................
27
H1 2019 Performance
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.
Key Figures
(in millions of euros)
H1 2018
H1 2019
2019/2018 published
change
2019/2018 comparable change
(a)
Total Revenue
10,162
10,952
+7.8%
+4.9%
Of which Gas & Services
9,769
10,536
+7.8%
+4.9%
Operating Income Recurring
1,617
1,814
+12.2%
+9.4%
Operating Income Recurring (as % of
Revenue)
15.9%
16.6%
Variation excluding energy
+70bps
Other Non-Recurring Operating Income and
Expenses
(30)
(86)
Net Profit (Group Share)
1,040
1,059
+1.8%
+12.1% (b)
Adjusted Earnings per Share (in
euros)
2.44
2.48
+1.6%
Cash Flow before change in working capital
requirements
2,000
2,297
+14.8%
Net Capital Expenditure
1,136
1,537
Net Debt (c)
€14.2 bn
€13.7 bn
Net Debt (c) to Equity ratio (d)
78.6%
70.7%
Recurring ROCE (e)
8.0%
8.3%
+30 bps
(a) Change excluding the currency, energy (natural gas and
electricity) and significant scope impacts, see reconciliation in
appendix. (b) Recurring net profit growth excluding the exceptional
loss provisioned following the disposal agreement of the Fujian
units in the 1st half of 2019 and the non-recurring gain on net
finance costs in the 1st half of 2018. (c) Excluding lease
liabilities (IFRS16). (d) Adjusted to spread the dividend payment
in H1 out over the full year. (e) Excluding exceptional items, see
reconciliation in appendix.
Income Statement
REVENUE
Revenue
(in millions of euros)
H1 2018
H1 2019
2019/2018 published
change
2019/2018 comparable
change
Gas & Services
9,769
10,536
+7.8%
+4.9%
Engineering & Construction
180
176
-2.2%
-3.8%
Global Markets & Technologies
213
240
+12.6%
+10.7%
TOTAL REVENUE
10,162
10,952
+7.8%
+4.9%
Revenue by quarter
(in millions of euros)
Q1 2019
Q2 2019
Gas & Services
5,237
5,299
Engineering & Construction
93
83
Global Markets & Technologies
111
129
TOTAL REVENUE
5,441
5,511
2019/2018 Group published
change
+8.6%
+7.0%
2019/2018 Group comparable
change
+5.0%
+4.7%
2019/2018 Gas & Services comparable
change
+4.8%
+5.0%
Group
Group revenue for the 1st half of 2019 totaled 10,952 million
euros, up +4.9% on a comparable basis. Gas &
Services posted significant comparable sales growth (+4.9%),
which was slightly stronger during the 2nd quarter (+5.0%).
Consolidated sales for Engineering & Construction were slightly
down during the 1st half at ‑3.8% due to a larger proportion
of Group projects following the rise in investment decisions.
Global Markets & Technologies continued its strong development
with growth of +10.7%. The currency impact was positive at
+2.5% and the energy impact neutral over the half-year. The
acquisition of Tech Air in the United States at the end of the 1st
quarter of 2019 generated a significant scope impact of +0.4%.
The Group's published revenue growth for the 1st half was
therefore +7.8%.
Gas & Services
Gas & Services revenue for the 1st half of 2019 reached
10,536 million euros and posted high comparable growth of
+4.9%. All businesses contributed to growth and in
particular Healthcare and Electronics. Healthcare (+6.0%)
benefited from strong sales growth in Home Healthcare in Europe and
in Medical Gases in the United States, with no material
contribution from bolt-on acquisitions. Following record growth in
the 4th quarter of 2018, Electronics maintained a significant
increase in revenue during the 1st half of 2019 (+13.5%).
Growth remained solid in Industrial Merchant, at +2.6%,
despite an unfavorable working day impact, driven by high price
impacts. Large Industries (+5.4%) benefited in particular
from the contribution to sales of several start-ups in Asia during
the 4th quarter of 2018 and strong demand for hydrogen in
Europe.
Published sales were up markedly (+7.8%),
benefiting from a favorable currency impact (+2.5%) and the
consolidation of Tech Air (+0.4%), which was acquired in the United
States at the end of the 1st quarter and accounted for within the
significant scope. The energy impact was neutral over the
half-year.
Revenue by geography and business
line
(in millions of euros)
H1 2018
H1 2019
2019/2018 published
change
2019/2018 comparable
change
Americas
3,874
4,217
+8.9%
+2.4%
Europe
3,464
3,611
+4.2%
+4.2%
Asia-Pacific
2,107
2,405
+14.1%
+11.1%
Middle East & Africa
324
303
-6.6%
+2.0%
GAS & SERVICES REVENUE
9,769
10,536
+7.8%
+4.9%
Large Industries
2,718
2,904
+6.8%
+5.4%
Industrial Merchant
4,501
4,827
+7.3%
+2.6%
Healthcare
1,714
1,821
+6.2%
+6.0%
Electronics
836
984
+17.7%
+13.5%
Americas
Gas & Services revenue in the Americas stood at 4,217
million euros, up +2.4% during the 1st half of 2019,
driven in particular by Healthcare (+9.4%) and Electronics (+8.2%).
Despite solid growth in oxygen volumes in North America, Large
Industries revenue growth was limited to +1.4% due to a high basis
of comparison with the 1st half of 2018. Industrial Merchant sales
were up +1.3% driven by high pricing, as volumes were weaker.
■ Large Industries revenue was up
+1.4% over the half‑year. In North America, oxygen volumes
showed solid growth but they did not offset the exceptionally high
pricing seen during the 1st half of 2018 due to severe weather
conditions. Business in Latin America was particularly strong,
notably in Mexico with the start-up of a hydrogen-supply
contract.
■ Industrial Merchant sales were up
+1.3%. In the United States, they were driven by high price
impacts whereas gas volumes were down slightly, due to weaker
investments in the short-term in particular in the sectors of Metal
Fabrication and Construction. Hardgoods revenue was down.
Consumer-related sectors, in particular Pharmaceuticals and Food,
continued to enjoy sustained growth. Moreover a safety services
business from Airgas was divested during the 2nd quarter. In
Canada, growth in volumes of cylinder gas for welding and high
price impacts largely offset weaker liquid nitrogen volumes for oil
exploration in Alberta. In South America, double-digit growth was
driven in particular by markedly higher volumes of liquid gas and
cylinder gas in Brazil. Price impacts remained high in the region
at +4.3%.
■ Healthcare revenue was up markedly
(+9.4%). Medical Gases sales growth was high in the United
States, in particular with the development of proximity care.
Cylinders with a digital interface have enjoyed a large success
with more than 38,000 cylinders deployed to customers since the
acquisition of Airgas. Business remained very strong in Latin
America, in particular in Colombia where the Group expanded its
Home Healthcare offering to new regions.
■ Electronics sales were up +8.2%
with growth across all segments, notably in Equipment &
Installations which increased by more than +30%.
Europe
Revenue in Europe totaled 3,611 million euros over the
half-year, up +4.2%. Growth during the 2nd quarter (+5.7%)
was higher in all business lines than in the 1st quarter. Large
Industries sales were up +3.1%, benefiting from strong hydrogen
demand from refiners. Growth was very solid in Industrial Merchant
(+3.7%) with high price impacts. Activity remained very strong in
Healthcare (+5.7%) driven by high organic sales growth in Home
Healthcare.
■ Large Industries revenue rose +3.1%
during the 1st half: hydrogen was up markedly, benefiting from
strong demand from refiners in the Benelux and fewer customer
maintenance turnarounds than in the 1st half of 2018. Sales to
chemical companies and steel producers were stable. In the East,
business continued to grow, in particular with the start-up of a
new Air Separation Unit in Turkey during the 4th quarter of 2018
and the takeover of a hydrogen production unit from the national
oil producer of Kazakhstan during the 3rd quarter of 2018.
■ Industrial Merchant sales posted very
solid growth (+3.7%) despite an unfavorable working day
impact. They were driven by proactive price increase measures,
which reflected higher costs. Liquid gas revenue improved at a
faster pace than that of cylinder gases. Pharmaceuticals and Food
markets were driving the growth and demand from our craftsmen
customers remained solid while production for basic industries was
slowing down. The vast majority of countries contributed to growth,
with Eastern Europe continuing its rapid development, in particular
in Poland and Russia. Price impacts continued to strengthen in the
region, reaching +3.8% in the 2nd quarter of 2019 and
+3.5% on average over the half-year.
■ Healthcare, which was up +5.7%,
benefited from strong organic sales growth with no material
contribution from bolt-on acquisitions. The acquisition of Medidis
in the Netherlands will contribute to growth as of the 3rd quarter.
Home Healthcare momentum remained very strong with, in particular,
high sleep apnea-related sales growth in Spain and a marked
increase in the number of diabetic patients monitored, notably in
Scandinavia and France. Sales of Medical Gases for hospitals
improved despite constant price pressure.
Europe
- Air Liquide and PAO Severstal, a steel and mining company and
long-term partner of the Group, have announced the signature, in
March, of a new long-term contract for the supply of oxygen,
nitrogen and argon in Cherepovets (Russia). Air Liquide will
invest around 50 million euros in the construction of a
state-of-the art Air Separation Unit (ASU), which will improve
significantly the energy efficiency of the production process and
reduce CO2 emissions by 20,000 tons per year. The new
signature illustrates the Group’s development strategy in key
industrial basins and demonstrates its ability to create value for
its customers.
- Air Liquide, Europe’s leader in home healthcare, announced in
April the acquisition of the Spanish startup DiaLibre. With
this acquisition, the Group reinforces its service offering
throughout the diabetic patient's care pathway, from the
distribution of medical equipment to the personalized support of
diabetic patients. DiaLibre’s offering combines personalized
therapeutic support programs and medical follow‑up for patients
using innovative technologies.
- Mid-June, Air Liquide announced the acquisition of Medidis
in the Netherlands, a major player for the treatment of
respiratory diseases at home and the production and supply of
medical oxygen. The acquisition of this Dutch actor, employing
more than 70 people and generating revenue of approximately
11 million euros in 2017, allows Air Liquide, present in the
home healthcare market in the Netherlands for more than 20 years,
to strengthen its position in a growing market.
Asia-Pacific
Revenue in the Asia Pacific zone totaled 2,405 million
euros in the 1st half of 2019, up +11.1%. Sales growth
in Large Industries (+13.2%) benefited from several start-ups in
the 4th quarter of 2018 in China. Industrial Merchant was up
markedly (+5.2%), in particular in China. Following record growth
in the 4th quarter of 2018, Electronics maintained a significant
increase in revenue during the 1st half of 2019 (+16.1%).
■ Large Industries sales were up
+13.2%, benefiting notably from three start-ups in China
during the 4th quarter of 2018. Moreover, hydrogen sales in
Singapore and oxygen sales in Australia improved markedly over the
half-year.
■ Industrial Merchant revenue posted solid
growth during the 1st half of 2019 (+5.2%), driven by
double‑digit growth in China and by high helium sales across the
region. In China, cylinder gas volumes were up significantly.
Growth in Japan remained stable, with cylinder gas sales offsetting
the decline in liquid gas sales. The markets remained overall well
oriented, except for the Automotive sector. Nonetheless, our sales
in this sector continued to improve thanks to an increase in helium
prices and volumes. Price impacts in the region stood at
+1.4% over the half-year.
■ Electronics revenue was up +16.1%.
Equipment & Installations sales were up by more than +30% and
those of Carrier Gases and Advanced Materials posted double-digit
growth. These were driven by the ramp-up of Carrier Gases units in
China, Singapore and Japan and the start-ups of 4 units in China
and Japan during the 1st half of the year. The success of the new
enScribeTM offering for the etching of electronic chips contributed
to the development of Advanced Materials. These new molecules also
contribute to the reduction in the greenhouse gas emissions of
integrated circuit manufacturers.
Middle East and Africa
Revenue in the Middle East and Africa amounted to 303 million
euros, up +2.0% over the half-year. Large Industries
growth was penalized by a major maintenance stoppage in South
Africa during the 2nd quarter. Industrial Merchant activity
remained very dynamic in the Middle East, Egypt and India.
Development continued in Healthcare in Egypt and Saudi Arabia.
Engineering & Construction
Consolidated Engineering & Construction revenue totaled
176 million euros, down -3.8% compared with the 1st half of
2018 due to a larger proportion of Group projects, notably in Large
Industries and Electronics, following the rise in investment
decisions.
Order intake for the Group or third-party customers reached
380 million euros over the half-year. They came from the
Americas, followed by Asia and Europe. They mainly related to Air
Separation Units and ultra-pure nitrogen production units for the
semi-conductor industry.
Global Markets & Technologies
Global Markets & Technologies sales were up +10.7% in
the 1st half of the year at 240 million euros. Biogas
remained the main contributor to growth, with the start-up and
ramp-up of several biomethane units in the United States and
Europe. Sales related to the Turbo-Brayton technology, which
enables the refrigeration and liquefaction of natural gas when
transported by sea, also posted strong growth: the solution allows
the reliquefaction of boil-off gases directly on-board vessels.
During the 2nd quarter, equipment sales to the space industry
slowed due to a change in technology relating to Ariane 6.
Order intake for Group projects and third-party customers
totaled 261 million euros, up +14.2% compared with the 1st
half of 2018.
Innovation and Global Markets &
Technologies
- Air Liquide inaugurated in March its Tokyo Innovation Campus
in Japan. This newest Campus, representing an investment of
50 million euros, illustrates the Group’s open innovation
approach, with a focus on energy transition & environment,
healthcare, digital transformation and development of Advanced
Materials for Electronics. It will gather nearly 200
employees in a state-of-the art new 8,000‑square-meter
site.
- In April, Air Liquide announced having signed more than 20
contracts worth a total of 100 million euros thanks to a
solution that reduces greenhouse gas emissions for the maritime
industry. The Group developed a refrigeration and liquefying
technology based on the Turbo-Brayton physical principle, which
reliquefies the evaporated natural gas in LNG (Liquefied Natural
Gas) vessels and keep it under its liquid form in the container.
The cryogenic equipment that uses this technology enables shipping
companies and freight forwarders to comply with maritime
industry regulations on greenhouse gas emission. With these
contracts, Air Liquide is helping to prevent more than 120,000
tonnes of CO2‑equivalent emissions per year.
- Air Liquide and Houpu (Chengdu Huaqi Houpu Holding co.)
announced at the end of April the finalization of the creation of
Air Liquide Houpu Hydrogen Equipment, a joint venture for the
development, production and distribution of hydrogen refueling
stations for Fuel Cell Electric Vehicles. This collaboration
will combine Air Liquide’s global technological expertise in clean
hydrogen mobility solutions with Houpu’s leadership in the
production and construction of natural gas refilling stations on
the Chinese market.
OPERATING INCOME RECURRING
Operating income recurring before depreciation and
amortization reached 2,878 million euros, up
+15.3% as published compared to the 1st half of 2018 and up
+10.1% excluding the impact of IFRS 16 in effect since
January 1, 2019. As such, operating expenses relating to leases are
now accounted for under depreciation and amortization and financial
expenses. Other operating expenses and income was therefore
slightly down compared with the 1st half of 2018. Purchases
and personnel costs, which were not affected by this
accounting change, increased at a slower pace than sales (+7.1% and
+6.9% respectively compared with sales growth of +7.8% as
published), thanks to the continued attention paid to costs. Raw
materials and equipment purchases were up in Electronics and
Engineering & Construction and energy purchases increased due
to the start-up and ramp-up of new units. Part of the increase in
personnel costs was due to the acquisition of Tech Air in the
United States.
Depreciation and amortization reached 1,064 million
euros, up markedly at +21.1% due to the application of IFRS 16.
Excluding the currency impact and the impact of IFRS 16, and
despite the contribution from the start-ups, the increase in
depreciation and amortization remained below that of revenue, at
+4.5%.
Group Operating Income Recurring (OIR) amounted to
1,814 million euros in the 1st half of 2019, an increase of
+12.2% as published. Comparable growth was +9.4%. The operating
margin (OIR to revenue) stood at 16.6%, an improvement
of +70 basis points compared with the 1st half of 2018,
including +10 basis points coming from the application of IFRS 16.
The energy impact was not material over the half-year. The
improvement in operating margin was driven by three factors: an
increase in prices in a context of higher inflation and measures in
favor of the product mix; the first results from the strenghtened
efficiencies program; and the active portfolio management.
Efficiencies amounted to 197 million euros during
the first six months of the year, up by a strong +13.9% compared
with the 1st half of 2018 and in line with the annual objective now
fixed at more than 400 million euros, due to the reinforcement of
the program since the beginning of the year. They represented
savings of 2.6% of the cost base. The increase in efficiencies was
driven by three main factors: the deployment of a continuous
improvement approach – 14,000 employees have already received
process optimization training out of a target of 30,000; the
continuation of the Group’s transformation with the pooling
of shared platforms and the acceleration of the implementation of
new digital tools - including the roll-out of remote control and
optimization centers for Large Industries production units (Smart
Innovative Operations, SIO); the optimization of the supply
chain. This has led to a marked increase in efficiency
investments (+63%).
Efficiencies
- Early May, Air Liquide and STMicroelectronics announced a
collaborative initiative on digital transformation to
accelerate the development of digital solutions for industrial
applications. This cooperation will extend the long-standing
business relationship established over the past decades between
both companies.
Gas & Services
Gas & Services operating income recurring totaled 1,938
million euros, up +11.4% as published compared with the 1st
half of 2018. The operating margin as published stood at
18.4%, an improvement of +60 basis points compared
with the 1st half of 2018, including +10 basis points coming from
the application of IFRS 16. The energy impact on the margin was not
material over the half-year.
Selling prices were up +1.9% over the first six months of the
year, driven in particular by Industrial Merchant which saw a
strong +3.7% increase due to higher inflation, high helium
demand and voluntary sales measures. Prices were almost flat in
Electronics and Healthcare.
Gas & Services Operating margin
(a)
S1 2018
S1 2019
S1 2019, excluding energy
impact
Americas
16.4%
17.3%
17.4%
Europe
18.8%
19.0%
19.1%
Asia-Pacific
19.3%
19.7%
19.7%
Middle East & Africa
14.3%
15.7%
14.1%
TOTAL
17.8%
18.4%
18.4%
(a) Operating income recurring/revenue, as published
figures.
Operating income recurring for the Americas region stood
at 730 million euros in the 1st half of 2019, a strong
increase of +14.8% due in particular to the acquisition of
Tech Air in the United States at the end of the 1st quarter of
2019. Excluding the energy impact, the operating margin stood at
17.4%, representing a +100 basis point increase compared
with the 1st half of 2018. Industrial Merchant’s margin improved
markedly, notably due to the contribution of efficiencies, in
particular at Airgas, and a high pricing impact across the region.
The same was true in Electronics, thanks to the momentum of
Advanced Materials.
Operating income recurring in the Europe region reached
688 million euros, an increase of +5.6%. Excluding
the energy impact, the operating margin was 19.1%, a +30 basis
point increase mainly due to sustained demand in Large
Industries, stronger price effects in Industrial Merchant and
efficiencies generated across all business lines.
Operating income recurring in Asia Pacific stood at
473 million euros, an increase of +16.2%. The
operating margin reached 19.7%, up +40 basis points with no
energy impact. This improvement was driven by strong sales growth
in Large Industries with unit start-ups in China during the 4th
quarter of 2018, high cylinder gas volumes in China, as well as
stronger price effects in Industrial Merchant. Efficiencies
generated in the region and across all business lines were
high.
Operating income recurring for the Middle East and Africa
region amounted to 47 million euros, an increase of
+2.2% compared with the 1st half of 2018. Excluding the
energy impact, the operating margin was 14.1%, down ‑20 basis
points due to the activity slowdown in Industrial Merchant and
Healthcare in Africa.
Engineering & Construction
Operating income recurring for Engineering & Construction
broke even in the 1st half of 2019 due to the gradual
increase in activity. It should continue to improve progressively
to reach a medium-term margin of between 5% and 10%.
Global Markets & Technologies
Operating income recurring for Global Markets & Technologies
was 24 million euros and the operating margin was 9.9% over
the first six months of the year. A portion of these activities is
in start-up phase and the margin level, which depends on the nature
of the projects carried out during the period, may vary
significantly.
Research & Development and Corporate costs
Research & Development expenses and Corporate Costs totaled
149 million euros, up +16.8% compared with the 1st half of
2018 mainly due to the stepping up of the Group’s digital
transformation and the development of innovation.
Research & Development
- Early June, Air Liquide inaugurated, at its new Paris
Innovation Campus, Accelair, an entity dedicated
exclusively to deeptech start-ups. In line with its open
innovation strategy, the Group will welcome approximately twenty
start-ups, which will benefit from dedicated workspaces and a
support program with Air Liquide experts.
- Three winners of the 2018 Scientific Challenge were
rewarded at the end of June by Air Liquide out of more than 132
proposals from 34 countries. Teams of researchers, start-ups and
private or public institutes were invited to submit scientific
research projects aimed at improving air quality and fighting
climate change. The three winners received the “Air Liquide
Scientific Prize” endowed with 50 000 euros and have signed a
partnership agreement with the Group that will enable them to
receive 1.5 million euros in funding, shared between the three
projects.
NET PROFIT
Other operating income and expenses showed a net
balance of -86 million euros. This was mainly related to costs
for realignment plans in various countries and businesses and the
loss on the disposal of the Fujian units, which was provisioned
following the signature of an acquisition agreement by the
customer.
Disposal
- Early June, Air Liquide China announced that it has entered
into an agreement to sell to its customer Fujian Shenyuan New
Materials the integrated gas complex in Fujian. This
transaction will reinforce the ability of Air Liquide to invest
in its main industrial basins, including in China, and to focus
on other high potential activities. This decision is also in line
with Air Liquide’s climate objectives. This transaction is expected
to close in Q3 2019, subject to closing conditions.
The financial result amounted to -239 million
euros compared with -145 million euros in the 1st half of 2018.
Net finance costs, at -206 million euros, were up 84 million euros,
mainly due to the application of IFRS 16 and an unfavorable basis
of comparison with the 1st half of 2018 when a non-recurring gain
of around 55 million euros relating to debt restructuring in the
United States was recognized. The average cost of net
indebtedness was stable at 3.0% compared with the end of
June 2018.
Income tax expense stood at 385 million euros, an
increase of +26 million euros compared with the 1st half of 2018.
The effective tax rate reached 25.9%, up +100 basis points
in particular due to the non-deductibility of the provision
relating to the disposal of the Fujian units.
The share of profit of associates reached 3 million
euros, a similar amount to that of the 1st half of 2018. The
share of minority interests in net profit amounted to 48
million euros, an increase of +5.3%, as the profit from
subsidiaries with minority shareholders rose, particularly in
Asia.
Net profit (Group share) amounted to 1,059 million
euros in the 1st half of 2019, an increase of +1.8% as
published. Excluding the exceptional loss provisioned following the
disposal agreement of the Fujian units in the 1st half of 2019 and
the non-recurring gain on net finance costs in the 1st half of
2018, recurring net profit was up +12.1%. The application of
IFRS 16 had a slightly unfavorable impact on net profit but this
was not material.
Net earnings per share, at 2.48 euros, were up
+1.6% compared with the 1st half of 2018, in line with the
increase in net profit (Group share). The average number of
outstanding shares used for the calculation of net earnings per
share as of June 30, 2019 was 427,301,005.
Change in the number of shares
H1 2018
H1 2019
Average number of outstanding shares
426,482,436
427,301,005
Change in Net Indebtedness
Cash flow from operating activities before changes in working
capital requirements amounted to 2,297 million euros in
the 1st half of 2019, an increase of +14.8%. Growth was +8.6%
excluding IFRS 16, which was slightly higher than the increase
in sales as published. Cash flow from operating activities before
changes in working capital requirements stood at the high level of
21.0% of sales, an improvement of +130 basis points and of
+10 basis points excluding the IFRS 16 impact. Operating expenses
relating to leases under the application of IFRS 16 are now
accounted for as financing transactions, which improves cash flow
from operating activities by an amount equivalent to that of
operating income before depreciation and amortization due to
IFRS16.
Net cash flow from operating activities after changes in
working capital requirements amounted to 1,958 million
euros, up +10.6% compared with the 1st half of 2018 and
+3.6% excluding IFRS 16.
Working capital requirement (WCR) was up 331 million
euros compared with December 31, 2018, due mainly to sales
growth and an increase in inventory relating to the very high level
of Equipment & Installation sales. The WCR excluding taxes to
sales ratio improved to 5.8% compared with 8.3% at June 30,
2018, mainly due to the introduction of a non-recourse factoring
program at Airgas during the 2nd half of 2018.
Gross capital expenditure totaled 1,648 million
euros. Group gross industrial capital expenditure amounted to
1,201 million euros, up +9.6% compared with the 1st half of 2018.
They represented 11.0% of sales, in line with the NEOS strategic
plan. Financial investments reached 446 million euros, a high
amount given the acquisition of Tech Air in the United States.
Proceeds from the sale of fixed assets, for a total of
111 million euros, mainly related to the disposal of an
Airgas safety services business and an advance payment on the
disposal of the Fujian units following the signature of an
acquisition agreement by the customer. These divestitures are part
of the Group’s active business portfolio management. Net capital
expenditure totaled 1,537 million euros.
Net debt at June 30, 2019 reached 13,699 million
euros, a decrease of 518 million euros compared with June 30,
2018. Net debt at the end of June excluded the liabilities linked
to leases (IFRS16). The net debt to equity ratio,
adjusted for the seasonal effect of the dividend payment, stood at
70.7%, down compared with the end of June 2018 (78.6%).
The recurring Return on Capital Employed (ROCE) stood at
8.3%3 at the end of the 1st half 2019, up +30 basis
points.
1 Excluding the exceptional loss provisioned following the
disposal agreement of the Fujian units in the 1 half of 2019, see
reconciliation in appendix.
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 reached
1.8 billion euros in the 1st half of 2019, up more than 300
million euros compared with the 1st half of 2018 mainly due to the
acquisition of Tech Air in the United States.
Industrial investment decisions totaled 1.3 billion
euros. These included a major Air Separation Unit connected to
Air Liquide’s pipeline network in the United States, the largest
membrane-based electrolyzer in the world in Canada for the
production of carbon-free hydrogen, a hydrogen production unit in
the Philippines with partial capture and recovery of CO2, two
ultra-pure nitrogen production units in China for Electronics
customers and a biomethane project in Norway. Investments aimed at
generating efficiencies were up +63% compared with the 1st half of
2018.
Financial investment decisions totaled 0.5 billion
euros and included the acquisition of Tech Air, one of the
largest independent distributors of industrial gases and welding
supplies in the United States. The Group also acquired an 18.6%
stake in the capital of Canada-based Hydrogenics, a leader in
equipment for hydrogen production through electrolysis and fuel
cells. Other bolt-on acquisitions were carried out in Industrial
Merchant and Healthcare, including that of Medidis in the
Netherlands, a local player in the treatment of respiratory
diseases at home and the supply of medical oxygen. Finally, Air
Liquide and its partner in two joint ventures in China swapped
their stakes, allowing the Group to strengthen its presence in the
Beijing region.
The total investment backlog amounted to 2.2 billion
euros, an increase of more than 100 million euros compared with
the end of March 2019, new investment decisions fully offsetting
the start-up of new units. These investments should lead to a
future contribution to annual sales of approximately 0.85
billion euros per year after full ramp-up of the units.
Investment decisions
- In January 2019, Air Liquide announced the acquisition of
18.6% stake in the capital of the Canadian company Hydrogenics
Corporation, representing an investment of 20.5 million US
dollars (18 million euros). In February, the Group announced
the construction in Canada of the largest membrane-based
electrolyzer in the world to develop its carbon-free
hydrogen production. This 20 megawatts electrolyzer,
with Hydrogenics technology, allows the Group to reaffirm
its long-term commitment to the hydrogen energy markets and its
ambition to be a major player in the supply of carbon-free
hydrogen.
- Airgas, an Air Liquide company, completed in March the
acquisition of Tech Air, one of the largest independent
distributors of industrial gases and welding supplies serving
various geographies in the United States. Serving more than
45,000 customers and generating annual revenue of
approximately 190 million US dollars, Tech Air will allow
Airgas to further strengthen its network in the United States with
a complementary footprint to better serve customers while
generating very significant efficiencies.
- Air Liquide continues to develop its home healthcare activity
in Europe with the acquisition of Sleep & Health SA and
Megamed AG, two historic players in this sector and based in
Switzerland. These acquisitions enable the Group to serve more than
3,000 new patients and strengthen the position of Air
Liquide, leader in home healthcare in Europe, in a growing market
within a mature healthcare system.
- Mid-June, Air Liquide announced the signature of two
long-term supply agreements with Marathon Petroleum Company for a
total of up to 900 tonnes per day of oxygen for Marathon
Petroleum’s Refineries in Texas City, Texas and Garyville,
Louisiana. The two agreements nearly double the amount of
oxygen that Air Liquide will supply to Marathon Petroleum in
total. Both sites are located on the Gulf Coast.
- Air Liquide has signed a long-term agreement with Gulf Coast
Growth Ventures (GCGV) at the beginning of July, a 50/50 joint
venture between ExxonMobil and SABIC. The Group will supply
2,000 tons per day of oxygen and 900 tons per day of nitrogen
from its industrial gas pipeline network to GCGV’s planned
ethane cracker facility located near Corpus Christi, in Texas. To
support the new agreement and additional volumes, Air Liquide plans
to invest nearly 140 million US dollars to build a new
world-scale Air Separation Unit and related infrastructure
investments.
START-UPS
Around ten new units started up during the 1st half of
2019. These included for Large Industries new hydrogen and
air gases production capacities in the United States, Brazil and
France and the start-up in Mexico of a hydrogen supply contract.
Ultra-pure nitrogen and Advanced Materials production units were
also started-up in Asia in Electronics, as well as an Air
Separation Unit and a CO2 capture and recovery unit in the United
States in Industrial Merchant. Finally, Air Liquide started
up the supply of biomethane to Scottish distilleries in Global
Markets & Technologies.
The contribution to sales of these unit ramp-ups and
start-ups totaled 185 million euros in the 1st half of 2019,
driven mainly by the start-up of Large Industries units in the 4th
quarter of 2018 in China, and units for Electronics customers in
the 1st half of 2019 in Asia. Over 2019, the contribution should
reach approximately 300 million euros.
PORTFOLIO OF OPPORTUNITIES
The 12-month portfolio of opportunities stabilized at the
high level of 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.
The Americas remained the leading region within the portfolio
with more than one third of opportunities, followed by Europe and
Asia. 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 seven projects. The average size of projects was stable at
around 20 million euros of investment. More than one third of
the portfolio of opportunities contributed to the Climate
Objectives.
Risk Factors
There was no change in risk factors during the first half. Risk
factors are described in the 2018 Reference Document on pages 40 to
45.
2019 Outlook
The first half of the year combined sustained sales growth and a
significant improvement in the operating margin.
The Group’s sales totaled nearly 11 billion euros, driven by
dynamic sales in Gas & Services as well as in Global Markets
& Technologies. Gas & Services revenue, which accounts for
96% of the Group’s total revenue, grew by close to +8% and by
approximatively +5% on a comparable basis4. All Gas & Services
activities progressed, with very strong performances in Electronics
and Healthcare, in line with previous quarters. In a more
contrasted market environment, sales grew in every region of the
world, with a good dynamic in Europe and growth that remains
sustained in Asia-Pacific, specifically in China.
The Group’s operating margin improved significantly, increasing
by +70 bps. This good performance results from a combination of
three kinds of actions: a pricing policy reflective of higher
costs, dynamic portfolio management, and a substantial
reinforcement of efficiency programs. Stepping up sharply in the
2nd quarter, these programs have resulted in efficiencies totaling
197 million euros for the six months just ended, in line with our
target of more than 400 million euros per year. Recurring net
profit5 rose by +12 %, cash flow by +14.8%. The balance sheet
remains strong, with the net debt6 to equity ratio lower than on
June 30, 2018. Recurring ROCE7 increased to reach 8.3%.
The investment decisions of the first half, which include the
acquisition of Tech Air in the United States, came to 1.8 billion
euros, an increase of +22% compared with the 1st half of 2018.
Industrial investment backlog reached 2.2 billion euros and will
contribute to the Group’s future growth.
Assuming a comparable environment, Air Liquide is confident in
its ability to deliver net profit growth in 2019, at constant
exchange rates.
1 Growth excluding the currency, energy (natural gas and
electricity), and significant scope impacts; see reconciliation in
appendix. 2 Recurring net profit growth excluding the exceptional
loss provisioned following the disposal agreement of the Fujian
units in the 1 half of 2019 and the non-recurring gain on net
finance costs in the 1st half of 2018. 3 Excluding lease
liabilities (IFRS16). 4 Excluding exceptional items, see
reconciliation in appendix.
APPENDICES
Impact of IFRS16 on June 30, 2019
As of January 1, 2019, the Group financial statements include
the impacts of the mandatory adoption of the standard IFRS16 «
Leases » issued on January 13, 2016 with no restatement of prior
period financial statements. The standard does not affect
the recognition of revenue for the Group. The main impact of
the application of IFRS16 for the Group as a lessee consists of the
recognition on the balance sheet of all lease contracts, without
distinction between finance and operating leases. In the course of
its activity, the Group as a lessee enters in contracts mainly for
the following type of assets:
■ Land, buildings and offices;
■ Transportation equipment, in particular for
Industrial Merchant and Healthcare;
■ Other equipment.
Any contract containing a lease leads to the recognition on
the lessee’s balance sheet of a lease liability measured at the
present value of the remaining lease payments and a right-of-use
asset measured at the amount equal to the lease liability,
adjusted by the amount of any prepaid or accrued lease payments as
well as of any provision for onerous leases recognized in the
balance sheet as of December 31, 2018.
Impacts on the Group financial statements on June 30, 2019
are detailed in the following appendices.
Currency, energy and significant scope impacts
(Semester)
Applied method
In addition to the comparison of published figures, financial
information is given excluding currency, natural gas and
electricity price fluctuation and significant scope
impacts.
■ Since industrial and medical gases are rarely
exported, the impact of currency fluctuations on activity levels
and results is limited to euro translation impacts with respect to
the financial statements of subsidiaries located outside the euro
zone. 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 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.
■ 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.
(in millions of euros)
H1 2019
H1 2019/2018 Published
Growth
Currency impact
Natural gas impact
Electricity impact
Significant scope
impact
H1 2019/2018 Comparable
Growth
Revenue
Group
10,952
+7.8%
251
(30)
34
40
+4.9%
Impacts in %
+2.5%
-0.3%
+0.3%
+0.4%
Gas & Services
10,536
+7.8%
245
(30)
34
40
+4.9%
Impacts in %
+2.5%
-0.4%
+0.4%
+0.4%
Operating Income Recurring
Group
1,814
+12.2%
38
-
-
7
+9.4%
Impacts in %
+2.4%
+0.4%
Gas & Services
1,938
+11.4%
37
-
-
7
+8.9%
Impacts in %
+2.1%
+0.4%
The energy impact is negligible on the half-year, the positive
electricity impact overall offsetting that of natural gas. There is
therefore no impact on the operating margin.
The acquisition of Tech Air finalized in March 2019
generates a significant scope impact starting on the 2nd quarter of
2019.
The recurring net profit (Group share) reached 1,126.0
million euros for the 1st half 2019 excluding the exceptional
loss provisioned following the disposal agreement of the Fujian
units in the 1st half of 2019. For the 1st half 2018, the recurring
net profit (Group share) reached 1,004.5 million euros and excluded
the non-recurring gain on net finance costs. The recurring net
profit growth therefore amounted to 1,126.0 / 1,004.5 – 1 =
+12.1%.
Currency, energy and significant scope impacts
(Quarter)
Consolidated 2019 2nd quarter revenue includes the following
impact:
(in millions of euros)
Q2 2019
Q2 2019/2018 Published
Growth
Currency impact
Natural gas impact
Electricity impact
Significant scope
impact
Q2 2019/2018 Comparable
Growth
Revenue
Group
5,511
+7.0%
106
(36)
7
40
+4.7%
Impacts in %
+2.1%
-0.7%
+0.1%
+0.8%
Gas & Services
5,299
+7.3%
103
(36)
7
40
+5.0%
Impacts in %
+2.1%
-0.7%
+0.1%
+0.8%
2nd quarter 2019 revenue
BY GEOGRAPHY
Revenue
(in millions of euros)
Q2 2018
Q2 2019
Published change
Comparable change
Americas
1,973
2,148
+8.8%
+2.4%
Europe
1,711
1,782
+4.1%
+5.7%
Asia-Pacific
1,091
1,211
+10.9%
+9.2%
Middle East & Africa
163
158
-3.0%
+0.1%
Gas & Services Revenue
4,938
5,299
+7.3%
+5.0%
Engineering & Construction
95
83
-11.0%
-11.7%
Global Markets & Technologies
119
129
+8.3%
+6.7%
GROUP REVENUE
5,152
5,511
+7.0%
+4.7%
BY WORLD BUSINESS LINe
Revenue
(in millions of euros)
Q2 2018
Q2 2019
Published change
Comparable change
Large industries
1,353
1,414
+4.4%
+5.7%
Industrial Merchant
2,293
2,462
+7.4%
+2.3%
Healthcare
864
924
+6.9%
+6.7%
Electronics
428
499
+16.4%
+13.2%
GAS & SERVICES REVENUE
4,938
5,299
+7.3%
+5.0%
Geographic and segment information
H1 2018
H1 2019
(in millions of euros and %)
Revenue
Operating income
recurring
OIR margin
Revenue
Operating income
recurring
OIR margin
Americas
3,873.6
635.7
16.4%
4,217.2
729.8
17.3%
Europe
3,464.4
651.4
18.8%
3,611.2
687.9
19.0%
Asia-Pacific
2,107.5
407.2
19.3%
2,404.9
473.3
19.7%
Middle East and Africa
323.7
46.4
14.3%
302.5
47.4
15.7%
Gas and Services
9,769.2
1,740.7
17.8%
10,535.8
1,938.4
18.4%
Engineering and Construction
180.1
(14.7)
-8.2%
176.3
0.2
0.1%
Global Markets & Technologies
213.1
18.4
8.6%
240.0
23.8
9.9%
Reconciliation
-
(127.1)
-
-
(148.5)
-
TOTAL GROUP
10,162.4
1,617.3
15.9%
10,952.1
1,813.9
16.6%
Consolidated income statement
(in millions of euros)
1st half 2018
1st half 2019
1st half 2019 ex. IFRS
16
Revenue
10,162.4
10,952.1
10,952.1
Other income
74.3
78.1
78.1
Purchases
(3,949.0)
(4,230.3)
(4,230.3)
Personnel expenses
(2,041.7)
(2,183.5)
(2,183.5)
Other expenses
(1,750.1)
(1,738.8)
(1,868.5)
Operating income recurring before
depreciation and amortization
2,495.9
2,877.6
2,747.9
Depreciation and amortization expenses
(878.6)
(1,063.7)
(944.7)
Operating income recurring
1,617.3
1,813.9
1,803.2
Other non-recurring operating income
2.1
0.1
0.1
Other non-recurring operating expenses
(32.5)
(85.7)
(85.6)
Operating income
1,586.9
1,728.3
1,717.7
Net finance costs
(122.2)
(205.7)
(185.1)
Other financial income
10.5
3.8
3.8
Other financial expenses
(32.9)
(36.6)
(36.6)
Income taxes
(359.6)
(385.4)
(387.8)
Share of profit of associates
3.1
2.8
2.8
PROFIT FOR THE PERIOD
1,085.8
1,107.2
1,114.8
- Minority interests
45.6
48.0
48.0
- Net profit (Group share)
1,040.2
1,059.2
1,066.8
Basic earnings per share (in
euros)
2.44
2.48
2.50
Consolidated balance sheet
ASSETS (in millions of euros)
December 31, 2018
June 30, 2019
Goodwill
13,345.0
13,754.8
Other intangible assets
1,598.7
1,578.7
Property, plant and equipment
19,248.2
20,868.0
Non-current assets
34,191.9
36,201.5
Non-current financial assets
524.9
608.0
Investments in associates
142.1
155.3
Deferred tax assets
282.8
326.9
Fair value of non-current derivatives
(assets)
75.9
25.5
Other non-current assets
1,025.7
1,115.7
TOTAL NON-CURRENT ASSETS
35,217.6
37,317.2
Inventories and work-in-progress
1,460.1
1,567.0
Trade receivables
2,500.4
2,664.4
Other current assets
892.0
866.8
Current tax assets
140.7
59.1
Fair value of current derivatives
(assets)
44.2
49.3
Cash and cash equivalents
1,725.6
1,033.5
TOTAL CURRENT ASSETS
6,763.0
6,240.1
TOTAL ASSETS
41,980.6
43,557.3
LIABILITIES (in millions of
euros)
December 31, 2018
June 30, 2019
Share capital
2,361.8
2,358.3
Additional paid-in capital
2,884.5
2,802.7
Retained earnings
10,544.4
11,468.2
Treasury shares
(121.0)
(160.8)
Net profit (Group share)
2,113.4
1,059.2
Shareholders' equity
17,783.1
17,527.6
Minority interests
424.3
438.4
TOTAL EQUITY
18,207.4
17,966.0
Provisions, pensions and other employee
benefits
2,410.7
2,557.2
Deferred tax liabilities
1,955.9
1,894.6
Non-current borrowings
11,701.6
11,123.7
Non-current lease liabilities
8.0
1,105.3
Other non-current liabilities
250.0
388.1
Fair value of non-current derivatives
(liabilities)
18.4
21.8
TOTAL NON-CURRENT LIABILITIES
16,344.6
17,090.7
Provisions, pensions and other employee
benefits
325.1
278.2
Trade payables
2,714.5
2,527.0
Other current liabilities
1,639.8
1,614.4
Current tax payables
171.2
166.2
Current borrowings
2,546.3
3,608.6
Current lease liabilities
4.6
234.5
Fair value of current derivatives
(liabilities)
27.1
71.7
TOTAL CURRENT LIABILITIES
7,428.6
8,500.6
TOTAL EQUITY AND LIABILITIES
41,980.6
43,557.3
Consolidated cash flow statement
1st half 2018
1st half 2019
1st half 2019 ex.
IFRS16
(in millions of euros)
Operating activities
Net profit (Group share)
1,040.2
1,059.2
1,066.8
Minority interests
45.6
48.0
48.0
Adjustments:
• Depreciation and amortization
878.6
1,063.7
944.7
• Changes in deferred taxes(a)
20.1
(0.8)
1.6
• Changes in provisions
(53.5)
36.6
36.6
• Share of profit of associates
(3.1)
(2.8)
(2.8)
• Profit/loss on disposal of assets
(11.5)
(54.9)
(54.9)
• Net finance costs
83.7
147.9
132.2
Cash flows from operating activities
before changes in working capital
2,000.1
2,296.9
2,172.2
Changes in working capital
(196.0)
(330.7)
(330.7)
Others
(34.4)
(8.1)
(8.1)
Net cash flows from operating
activities
1,769.7
1,958.1
1,833.4
Investing activities
Purchase of property, plant and equipment
and intangible assets
(1,096.4)
(1,201.3)
(1,201.3)
Acquisition of consolidated companies and
financial assets
(74.5)
(446.4)
(446.4)
Proceeds from sale of property, plant and
equipment and intangible assets
35.0
110.8
110.8
Proceeds from sale of financial assets
0.2
0.1
0.1
Dividends received from equity
affiliates
3.0
1.3
1.3
Net cash flows used in investing
activities
(1,132.7)
(1,535.5)
(1,535.5)
Financing activities
Dividends paid
• L'Air Liquide S.A.
(1,158.5)
(1,161.9)
(1,161.9)
• Minority interests
(54.2)
(36.2)
(36.2)
Proceeds from issues of share capital
36.4
23.4
23.4
Purchase of treasury shares
(63.5)
(148.8)
(148.8)
Net financial interests paid
(78.7)
(187.5)
(173.5)
Increase (decrease) in borrowings
220.3
399.5
510.2
Transactions with minority
shareholders
(0.4)
(1.5)
(1.5)
Net cash flows from (used in) financing
activities
(1,098.6)
(1,113.0)
(988.3)
Effect of exchange rate changes and change
in scope of consolidation
30.0
24.7
24.7
Net increase (decrease) in net cash and
cash equivalents
(431.6)
(665.7)
(665.7)
NET CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF THE PERIOD
1,515.7
1,548.6
1,548.6
NET CASH AND CASH EQUIVALENTS AT THE
END OF THE PERIOD
1,084.1
882.9
882.9
(a) Changes in deferred taxes reported in
the consolidated cash flow statement do not include changes in
deferred taxes relating to disposals of assets and capitalized
finance costs.
The analysis of net cash and cash equivalents at the end of
the period is as follows:
(in millions of euros)
June 30,
2018
December 31, 2018
June 30, 2019
Cash and cash equivalents
1,189.2
1,725.6
1,033.5
Bank overdrafts (included in current
borrowings)
(105.1)
(177.0)
(150.6)
NET CASH AND CASH EQUIVALENTS
1,084.1
1,548.6
882.9
Net indebtedness calculation
(in millions of euros)
June 30,
2018
December 31, 2018
June 30, 2019
Non-current borrowings
(12,512.4)
(11,701.6)
(11,123.7)
Non-current lease liabilities
(8.3)
(8.0)
(1,105.3)
Current borrowings
(2,881.5)
(2,546.3)
(3,608.6)
Current lease liabilities
(4.3)
(4.6)
(234.5)
TOTAL GROSS INDEBTEDNESS
(15,406.5)
(14,260.5)
(16,072.1)
Cash and cash equivalents
1,189.2
1,725.6
1,033.5
TOTAL NET INDEBTEDNESS AT THE END OF
THE PERIOD
(14,217.3)
(12,534.9)
(15,038.6) (1)
Statement of changes in net indebtedness
(in millions of euros)
June 30,
2018
December 31, 2018
June 30, 2019
Net indebtedness at the beginning of
the period
(13,370.9)
(13,370.9)
(12,534.9)
Net cash flows from operating
activities
1,769.7
4,716.4
1,958.1
Net cash flows used in investing
activities
(1,132.7)
(2,270.2)
(1,535.5)
Net cash flows used in financing
activities excluding changes in borrowings
(1,240.2)
(1,161.6)
(1,325.0)
Total net cash flows
(603.2)
1,284.6
(902.4)
Effect of exchange rate changes, opening
net indebtedness of newly acquired companies and others
(159.5)
(236.2)
(1,457.2)
Adjustment of net finance costs
(83.7)
(212.4)
(144.1)
Change in net indebtedness
(846.4)
836.0
(2,503.7)
NET INDEBTEDNESS AT THE END OF THE
PERIOD
(14,217.3)
(12,534.9)
(15,038.6) (1)
(1) Net indebtedness excluding lease liabilities amounts to
(13,698.8) million euros as of June 30, 2019.
Return on Capital Employed – ROCE
Applied method
Return on capital employed after tax is calculated based on the
Group’s consolidated financial statements, by applying the
following ratio for the period in question:
For the numerator: net profit - net finance costs after taxes
for the period in question.
For the denominator: the average of (total shareholders' equity
+ net debt2) at the end of the past three half-years.
ROCE H1 2019
H1 2018
2018
H1 2019
ROCE
Calculation
(in millions of euros)
(a)
(b)
(c)
Numerator
((b)-(a))+(c)
Net profit after tax before
deduction of minority interests
1,085.8
2,207.4
1,107.2
2,228.8
Net finance costs
-122.2
-303.4
-205.7
-386.9
Group effective tax rate (1)
25.2%
25.5%
25.4%
-
Net financial costs after tax
-91.4
-226.0
-153.5
-288.1
Net profit after tax before
deduction of minority interests - Net financial costs after
tax
1,177.2
2,433.4
1,260.7
2,516.9
Denominator
((a)+(b)+(c))/3
Total equity
16,769.4
18,207.4
17,966.0
17,647.6
Net debt (2)
14,217.3
12,534.9
13,698.8
13,483.7
Average of (total equity + net
debt)
31,131.3
Published ROCE
8.1%
Recurring ROCE
8.3%
The Recurring ROCE for the 1st half 2019
excludes the exceptional loss provisioned following the disposal
agreement of the Fujian unit in the 2nd quarter 2019.
ROCE H1 2018
H1 2017
2017
H1 2018
ROCE
Calculation
(in millions of euros)
(a)
(b)
(c)
Numerator
((b)-(a))+(c)
Net profit after tax before
deduction of minority interests
976.5
2,291.6
1,085.8
2,400.9
Net finance costs
-222.9
-421.9
-122.2
-321.2
Group effective tax rate (1)
27.9%
29.4%
25.2%
-
Net financial costs after tax
-160.8
-297.9
-91.4
-228.5
Net profit after tax before
deduction of minority interests - Net financial costs after
tax
1,137.3
2,589.5
1,177.2
2,629.4
Denominator
((a)+(b)+(c))/3
Total equity
16,049.0
16,718.4
16,769.4
16,512.3
Net debt
15,610.1
13,370.9
14,217.3
14,399.4
Average of (total equity + net
debt)
30,911.7
Published ROCE
8.5%
Recurring ROCE
8.0%
The Recurring ROCE for the 1st half 2018
excludes the 2017 non-cash impacts of exceptional items and the US
tax reform.
(1) Excluding non-recurring tax
impacts.
(2) Net debt does not include the
liabilities linked to leases (IFRS16).
The recurring return on capital employed after tax
(ROCE) stood at 8.3% in the 1st half of 2019, up +30
basis points.
The slideshow that accompanies this release
is available as of 9:00 am (Paris time) at
www.airliquide.com.
Throughout the year, follow Air Liquide on
Twitter: @AirLiquideGroup.
UPCOMING EVENTS
2019 Third Quarter Revenue: October 24, 2019
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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