Regulatory News:
Air Liquide (Paris:AI):
Key Figures (in millions of 2021/2020 as 2021/2020
euros) Q1 2021 published comparable (a)
Group Revenue 5,334 -0.7% +3.8%
of which Gas & Services 5,103 -1.7% +2.8%
of which Engineering &
Construction 76 +44.5% +48.5%
of which Global Markets &
Technologies 155 +22.0% +25.7%
(a) Change excluding the currency, energy (natural gas and
electricity) and significant scope impacts, see reconciliation in
appendix.
Commenting on sales in the 1(st) quarter of 2021, Benoît Potier,
Chairman and CEO of the Air Liquide Group, said:
"This first quarter saw solid growth of +3.8% on a comparable
basis, confirming the trend recorded in the fourth quarter of
2020.
Sales reached 5.3 billion euros, including 5.1 billion euros for
Gas & Services, which grew +2.8% on a comparable basis. This
growth confirms the recovery seen in all of our Gas & Services
activities. Strong momentum was also seen in the Engineering &
Construction and Global Markets & Technologies business
lines.
In Gas & Services, which account for 96% of Group sales,
growth was particularly strong in Healthcare at +10%. In the
industrial sector, the Industrial Merchant activity showed positive
growth for the first time since the start of the health crisis,
while Large Industries grew, driven by the start-up of new units
and the marked recovery in the Steel and Chemicals markets. In
terms of geographies, Asia showed very strong growth, led by China,
while Europe grew solidly. The Americas region posted contrasted
performance, impacted by an exceptional cold wave in the United
States.
Regarding efficiencies, the Group continued to take action to
improve performance. In the 1(st) quarter of 2021, 95 million euros
in efficiencies were generated, in line with its target to achieve
400 million euros over the year. In addition, the cost reduction
measures linked to the crisis have been largely maintained in the
context of the gradual recovery in activity. Cash flow is high and
stands at more than 23% of sales, an improvement of +100 basis
points.
The investment decisions for the quarter amounted to 600 million
euros. The 12-month portfolio of opportunities continued to grow
and stands at 3.2 billion euros. The proportion of projects linked
to the energy transition has continued to increase and is now at
46%. These investments will contribute to future growth.
Financial performance and sustainable development are at the
heart of Air Liquide's growth model. In a global health context
that still differs from region to region, the Group remains
committed to supplying healthcare facilities with medical oxygen.
In addition, the Group set out particularly ambitious sustainable
development objectives last March. A structured plan will allow it
to achieve carbon neutrality by 2050 and to accelerate in the field
of hydrogen and the deployment of decarbonization solutions for the
industry.
In 2021, in a context of limited local lockdowns in the first
half of the year and recovery in the second half, Air Liquide is
confident in its ability to further increase its operating margin
and to deliver recurring net profit(1) growth, at constant exchange
rates."
(1) Recurring net profit: Excluding significant and exceptional
items with no impact on recurring operating income. Excluding the
impact of a possible US tax reform in 2021.
Highlights of the 1(st) quarter Sustainable development:Presentation of
ambitious sustainable development objectives, based on three pillars:ACT for a
low-carbon society: Air Liquide has set itself the goal of achieving carbon
neutrality by 2050, with a 33% reduction in its CO(2) emissions by 2035, and
of developing a wide range of low-carbon solutions for its industrial
customers so that they can reduce their own emissions. Work toward better
Healthcare by improving the quality of life of chronic patients in mature
economies and by facilitating access to medical oxygen for rural communities
in low and middle income countries. Trust as the base to engage with employees
and adhering to best governance practices. Memorandum of understanding signed
with ArcelorMittal, aimed at implementing solutions to produce low-carbon
steel in Dunkirk. The two companies are joining forces to transform the steel
production process by developing innovative solutions involving low-carbon
hydrogen and CO(2) capture technologies. First long-term Power Purchase
Agreement for renewable electricity in the Netherlands, for a total capacity
of 25 megawatts from Vattenfall, a major European energy supplier.
Hydrogen:Memorandum of understanding signed with Siemens Energy to develop
high-capacity electrolyzers and sustainably produce low-carbon hydrogen. This
European ecosystem of electrolysis and hydrogen technologies, in the framework
of a Franco-German joint-venture, is supported by the French and German
governments. Inauguration of the world's largest carbon-free hydrogen
production unit based on membrane electrolysis in Canada, with a capacity of
20 MW. Acquisition of a 40% stake in the share capital of H2V Normandy, with a
view to building a low-carbon hydrogen electrolyzer complex in France with a
capacity of up to 200 MW. Completion of the first phase of the construction of
ultra-high purity low-carbon hydrogen electrolyzers in Taiwan. Industry
Long-term supply contract signed with BASF for its new battery materials site
in Germany. Agreement with BASF to increase hydrogen and carbon monoxide
volumes by 20% at the Yeosu industrial complex in South Korea. In Kazakhstan,
acquisition and integration by Air Liquide Munay Tech Gases, a 75% subsidiary
of Air Liquide, of the industrial gas production plants of the Atyrau
refinery, owned by the Kazakh oil company KazMunayGas. ALMTG will operate
these production plants for KazMunayGas under a long-term contract. Investment
in China to create new production capacities and supply industrial gases to
BOE, world leader in flat panels and an Internet of Things specialist, as part
of a long-term agreement, in Sichuan province and in the megacity Chongqing.
Corporate: Changes to Air Liquide's Executive Committee: Jérôme
Pelletan will join the Executive Committee as Chief Financial Officer as of
June 1, 2021. Fabienne Lecorvaisier, Executive Vice-President, will retain
responsibility for the General Secretariat and, as of July 1, 2021, will take
responsibility for Sustainable Development, Public and International Affairs
and Social Programs. François Jackow, Executive Vice-President, will
supervise Innovations and Technologies as of July 1, in addition to his
current responsibilities. Matthieu Giard, Vice President, has been
coordinating and supervising Hydrogen activities since January 1, 2021. He
also retains responsibility for the Global Industrial Merchant business line,
Purchases and the Group's efficiency programs.
Group revenue for Q1 2021 totaled 5,334 million euros, in a
still challenging but improving global health and economic
environment. Sales increased by +3.8% on a comparable basis with Q1
2020, which had been affected by the health crisis in Asia, and
more specifically in China, and then in Europe from mid-March 2020.
The consolidated revenue of Engineering & Construction recorded
strong growth of +48.5% compared to lower activity due to the
pandemic in Q1 2020. Global Markets & Technologies activity was
up by +25.7%, driven by the ramp-up of biogas units and sales of
equipment with high technological added-value. The Group's
published revenue was down slightly by -0.7% due to negative
currency (-5.1%) and significant scope (-2.7%) impacts, partially
offset by the energy impact (+3.3%).
Gas & Services revenue totaled 5,103 million euros, up by +
2.8% on a comparable basis. Sales as published for Q1 2021 were
down -1.7%, penalized by negative currency (-5.1%) and significant
scope (-2.8%) impacts, partially offset by the energy impact
(+3.4%). The significant scope impact mostly reflects the disposal
of Schülke in Healthcare.
-- Gas & Services revenue in the Americas region was down by -1.5% on a
comparable basis, at 2,003 million euros in Q1 2021. In North America,
after a strong month of January, sales were impacted as of mid-February
by the historic winter storm on the Gulf Coast, notably in the Large
Industries business. In Latin America, sales grew strongly in all
businesses. Large Industries revenue was down by -4.2% overall in the
region. Industrial Merchant recorded a sequential recovery, with a
limited drop in sales of -3.2% compared to -5.2% in Q4 2020. Healthcare
remains fully committed to the fight against the pandemic, notably to
meet the exceptionally high demand for medical oxygen, and posted +13.3%
growth in sales. Electronics revenue was close to stable (-0.6%).
-- Revenue for the Europe region reached 1,797 million euros, up by +4.5% on
a comparable basis. Industrial activities have returned to growth, with
higher comparable sales compared to Q1 2019. Large Industries sales were
stable compared to Q1 2020. Industrial Merchant activity showed a strong
improvement, with sales growth of +3.6% in Q1 2021 compared to a -1.3%
decline in Q4 2020. Representing more than a third of Gas & Services
sales in Europe, Healthcare activities remained highly mobilized to fight
against the pandemic, with sales up by +8.8%.
-- Sales in the Asia-Pacific region grew strongly by +6.7% on a comparable
basis, to 1,150 million euros, with all business lines recording growth
in Q1. China (+12.8%) contributed significantly, and benefited from a
favorable comparison basis with Q1 2020 greatly impacted by the health
crisis. In the rest of the region, sales increased by +2.4%. Volumes
recorded strong momentum in Large Industries, which posted a +8.7% rise
in revenue. The strong sales growth in the Industrial Merchant business
(+10.6%) was mainly supported by the momentum in China, with sales in the
rest of the region just returning to growth. The Electronics business
(+1.3%) benefited from the ramp-up of new carrier gases units but with
weaker sales of Advanced Materials and Equipment & Installation.
-- Revenue in the Middle East and Africa totaled 153 million euros, up by a
strong +17.5% on a comparable basis in Q1. Large Industries sales
benefited from a rise in demand from customers connected to the pipeline
network in Saudi Arabia and a favorable comparison effect due to a
customer turnaround in Q1 2020. Industrial Merchant revenue continued to
rise supported by a strong activity in India and Egypt. Healthcare is
mobilized in the fight against Covid-19, with strong sales growth across
the entire region.
All business lines posted growth compared to Q1 2020. Healthcare
sales recorded a strong increase of +10.1% on a comparable basis,
with teams still mobilized in the fight against Covid-19. Large
Industries revenue grew by +3.0% despite the impact of the winter
storm on the Gulf Coast in mid-February, notably supported by the
contribution of new production units. Industrial Merchant revenue
returned to growth (+0.3%), supported by the pick-up in volumes,
solid pricing of +1.6%, and strong activity in China. Sales in
Electronics were up by +1.8% and by +2.8% excluding Equipment &
Installation sales.
The consolidated revenue of Engineering & Construction stood
at 76 million euros, up a strong +48.5%, notably with growth in
sales to third-party customers. Total sales, which include internal
sales, rose by +19% in Q1 2021. Order intake stood at 285 million
euros, with more than 85% of orders corresponding to projects in
Asia, notably in Chemicals.
The sales of Global Markets & Technologies totaled 155
million euros, up a strong +25.7% on a comparable basis, driven
notably by a strong momentum in the Biogas business. Order intake
for Group projects and third-party customers totaled 163 million
euros.
Efficiencies(1) reached 95 million euros, increased by close to
+5% compared with the 1(st) quarter 2020, in line with the annual
objective set at more than 400 million euros. Moreover, the
exceptional cost reduction plan in response to the public health
crisis has continued and was adapted to the progressive recovery in
overall activity, as many local lockdown measures are still in
place. These cost reductions are not, due to their nature,
sustainable in the long-term.
Cash flow from operating activities before changes in working
capital totaled 1,243 million euros, representing an increase of
+3.9% and +9.7% excluding currency impact, once again underlining
the resilience of the business model. This corresponds to 23.3% of
sales, a marked improvement of +100 basis points compared with the
1(st) quarter of 2020. It allowed, in particular, the financing of
industrial capital expenditure, which totaled 688 million euros,
representing 12.9% of sales.
Following an extremely high level of investment decisions
totaling more than 1 billion euros in the 4(th) quarter of 2020,
industrial investment decisions in the 1(st) quarter of 2021
amounted to 569 million euros. The 12-month portfolio of investment
opportunities continues to grow and stood at 3.2 billion euros at
the end of March, approximately 100 million euros more than at the
end of 2020. The nature of opportunities is changing, with energy
transition on the rise, now representing 46% of the portfolio.
The additional contribution to sales of unit start-ups and
ramp-ups is high, totaling 65 million euros over the 1(st) quarter
of 2021. In 2021, the additional contribution to sales of unit
start-ups and ramp-ups is expected to reach around 250 million
euros, plus the contribution from the 16 units in the process of
being acquired in South Africa, pending approval from antitrust
authorities, expected by the end of June. The latter is estimated
at around 60 million euros for 2021, with Air Liquide not managing
energy in a first phase. Revenue should reach over 400 million
euros per year in a second phase, when energy management is fully
integrated, without any significant impact on operating income.
_________________
(1) See definition in Appendix.
Analysis of 1(st) quarter 2021 revenue
Unless otherwise stated, all variations in revenue outlined
below are on a comparable basis, excluding currency, energy
(natural gas and electricity) and significant scope impacts.
REVENUE
Revenue (in 2021/2020 2021/2020
millions of published comparable
euros) Q1 2020 Q1 2021 change change
Gas & Services 5,191 5,103 -1.7% +2.8%
Engineering &
Construction 52 76 +44.5% +48.5%
Global Markets &
Technologies 127 155 +22.0% +25.7%
TOTAL REVENUE 5,370 5,334 -0.7% +3.8%
Group
Group revenue for Q1 2021 totaled 5,334 million euros, in a
still challenging but improving global health and economic
environment. Sales increased by +3.8% on a comparable basis with Q1
2020, which had been affected by the health crisis in Asia, and
more specifically in China, and then in Europe from mid-March 2020.
The consolidated revenue of Engineering & Construction recorded
strong growth of +48.5% compared to lower activity due to the
pandemic in Q1 2020. Global Markets & Technologies activity was
up by +25.7%, driven by the ramp-up of biogas units and sales of
equipment with high technological added-value. The Group's
published revenue was down slightly by -0.7% due to negative
currency (-5.1%) and significant scope (-2.7%) impacts, partially
offset by the energy impact (+3.3%).
Gas & Services
Gas & Services revenue totaled 5,103 million euros, up by +
2.8% on a comparable basis. All business lines posted growth
compared to Q1 2020. Healthcare sales recorded a strong increase of
+10.1%, with teams still mobilized in the fight against Covid-19.
Large Industries revenue grew by +3.0% despite the impact of the
winter storm on the Gulf Coast in mid-February, notably supported
by the contribution of new production units. Industrial Merchant
revenue returned to growth (+0.3%), supported by the pick-up in
volumes, solid pricing of +1.6%, and strong activity in China.
Sales in Electronics were up by +1.8% and by +2.8% excluding
Equipment & Installation sales. Sales as published for Q1 2021
were down -1.7%, penalized by negative currency (-5.1%) and
significant scope (-2.8%) impacts, partially offset by the energy
impact (+3.4%). The significant scope impact reflects the disposal
of Schülke in Healthcare and the reduction or sale of the Group's
stake in several non-strategic distributors in Japan in the second
half of 2020.
Revenue by
geography and
business line 2021/2020 2021/2020
(in millions of published comparable
euros) Q1 2020 Q1 2021 change change
Americas 2,122 2,003 -5.6% -1.5%
Europe 1,791 1,797 +0.4% +4.5%
Asia-Pacific 1,139 1,150 +1.0% +6.7%
Middle East &
Africa 139 153 +10.4% +17.5%
GAS & SERVICES
REVENUE 5,191 5,103 -1.7% +2.8%
Large Industries 1,294 1,445 +11.6% +3.0%
Industrial
Merchant 2,402 2,253 -6.2% +0.3%
Healthcare 982 914 -6.9% +10.1%
Electronics 513 491 -4.3% +1.8%
Americas
Gas & Services revenue in the Americas region was down by
-1.5% at 2,003 million euros in Q1 2021. In North America, after a
strong month of January, sales were impacted as of mid-February by
the historic winter storm on the Gulf Coast, notably in the Large
Industries business. In Latin America, sales grew strongly in all
businesses. Large Industries revenue was down by -4.2% overall in
the region. Industrial Merchant recorded a sequential recovery,
with a limited drop in sales of -3.2% compared to -5.2% in Q4 2020.
Healthcare remains fully committed to the fight against the
pandemic, notably to meet the exceptionally high demand for medical
oxygen, and posted +13.3% growth in sales. Electronics revenue was
close to stable (-0.6%).
-- Large Industries revenue was down by -4.2%. In the United States, air
gases volumes showed strong momentum in January, but the business was
affected by the exceptional winter storm in the Gulf Coast in February,
which also led to a peak in energy prices. As a result, the Cogeneration
business recorded a strong rise in sales, but this did not offset lower
industrial gases sales. In Latin America, oxygen and hydrogen volumes
increased, notably with the ramp-up of new hydrogen units in Argentina
and Mexico.
-- Industrial Merchant sales (-3.2%) continued their sequential recovery
that began in Q3 2020 despite the negative impact of the winter storm in
the United States. Sales to the Food, Pharmaceuticals, Research and
Retail & Craftsmen sectors were up, and sales to Metal Fabrication were
improving, while the Construction sector remained sluggish. In North
America, liquid gas sales returned to their 2019 level and cylinder gas
volumes improved over the quarter. Volumes increased in Latin America,
notably for cylinder gas in Brazil and liquid gas in Argentina. Pricing
remained solid at +2.3%, with a neutral contribution from helium.
-- Healthcare revenue rose by +13.3%, with exceptionally high medical oxygen
sales in the region overall. In the United States, proximity care is
gradually coming back to normal levels, with a progressive return of
non-emergency surgery. Home Healthcare is growing strongly in Latin
America across all therapies, and is picking up very gradually in Canada,
where the reopening of clinics has allowed home care to be prescribed to
new patients.
-- Electronics sales were virtually stable at -0.6%: the strong growth of
Carrier Gases is masked by weaker sales of Advanced Materials, as the
recent price declines have not yet been offset by volume growth.
Europe
Revenue for the Europe region rose by +4.5% to 1,797 million
euros. Industrial activities have returned to growth, with higher
comparable sales compared to Q1 2019. Large Industries sales were
stable compared to Q1 2020. Industrial Merchant activity showed a
strong improvement, with sales growth of +3.6% in Q1 2021 compared
to a -1.3% decline in Q4 2020. Representing more than a third of
Gas & Services sales in Europe, Healthcare activities remained
highly mobilized to fight against the pandemic, with sales up by
+8.8%.
-- Large Industries sales were stable despite oxygen volumes affected by
customer shutdowns in Italy. Volumes to Steel and Chemicals customers
rose, notably supported by the recovery of the automotive sector, in
Germany in particular. Hydrogen volumes to the Chemicals sector increased
and benefited from a favorable comparison basis in Germany. Refining
demand remained weak despite a marked sequential improvement in the
Benelux and Spain. Sales were up in Eastern Europe, benefiting from
strong oxygen demand in Poland, the takeover of a hydrogen unit in
Kazakhstan, and an exceptional sale in Russia.
-- Industrial Merchant revenue grew by a strong +3.6% compared to a -1.3%
decline in Q4 2020. Sales recovered to a higher level than in Q1 2019 for
liquid gas and cylinder gas, with a strong sequential pick-up in volumes,
especially in Italy, the Iberian Peninsula and Germany. Sales to the
Metal Fabrication, Construction, Materials & Energy, Retail & Craftsmen,
and Research sectors were up. Activity was still dynamic in Eastern
Europe, with strong sales growth in Poland, Russia and Turkey. Pricing
remained solid at +1.0%.
-- Still very involved in the fight against Covid-19, the Healthcare
business grew +8.8%. Growth in medical gas sales remained very strong,
despite the already high basis of comparison in Q1 2020. Medical
equipment sales were still high, but are gradually normalizing and will
be compared to exceptionally high 2020 revenue in the coming quarters.
The recovery is accelerating in Home Healthcare, supported in particular
by the launch of therapies for diabetes in new regions and the
development of sleep apnea treatments in Germany and the Iberian
Peninsula. Sales from the Seppic subsidiary also grew strongly, thanks to
high demand in Specialty Ingredients for the cosmetics sector and
adjuvants for avian and swine vaccines.
Europe Air Liquide and BASF have signed a new long-term contract for the
supply of oxygen and nitrogen to one of BASF's largest European sites in
Germany. Air Liquide will invest around 40 million euros in the construction
of a state-of-the-art Air Separation Unit (ASU) at this flagship site for the
production of battery materials for mobility. The ASU is planned to be
operational in 2023. Air Liquide and Siemens Energy have signed a Memorandum
of Understanding to initiate a European ecosystem for electrolysis and
hydrogen technology. This Franco-German cooperation is supported by French and
German Governments. Large hydrogen projects have already been identified to
lay the groundwork for industrial scale electrolyzer systems. A joint
application for funding of a large project under the European Union's Green
Deal was submitted and both partners jointly participate in the German
IPCEI-scheme for hydrogen. Air Liquide and ArcelorMittal have signed a
Memorandum of Understanding with the objective of implementing solutions to
produce low-carbon steel in Dunkirk. The two companies are joining forces to
transform the steel production process through the development of innovative
solutions involving low-carbon hydrogen and CO(2) capture technologies. This
partnership is the first step towards the creation of a new low-carbon
hydrogen and CO(2) capture technologies ecosystem in this major industrial
basin.
Asia-Pacific
Sales in the Asia-Pacific region grew strongly by +6.7% to 1,150
million euros, with all business lines recording growth in Q1.
China (+12.8%) contributed significantly, and benefited from a
favorable comparison basis with Q1 2020 greatly impacted by the
health crisis. In the rest of the region, sales increased by +2.4%.
Volumes recorded strong momentum in Large Industries, which posted
a +8.7% rise in revenue. The strong sales growth in the Industrial
Merchant business (+10.6%) was mainly supported by the momentum in
China, with sales in the rest of the region just returning to
growth. The Electronics business (+1.3%) benefited from the ramp-up
of new units but with weaker sales of Advanced Materials and
Equipment & Installation.
-- Large Industries sales recorded strong growth of +8.7%, notably supported
by strong demand in China (+7.3%), which also benefited from the
favorable comparison basis with Q1 2020. Hydrogen volumes showed good
momentum, notably for refining in Singapore, as well as for Chemicals in
South Korea with the ramp-up of a new production unit and in China.
-- Industrial Merchant revenue rose by +10.6%, driven by the positive
improvement in all activities in China (+33%) compared to Q1 2020 at the
peak of the pandemic. Sales rose sharply in virtually all markets in
China, and demand for the Automotive market is picking up across the
entire region. Outside China, volumes continued to rise sequentially and
sales were back to slight growth, notably driven by emerging economies in
Southeast Asia. Pricing impacts at -0.6% were stable excluding the impact
from helium prices decline.
-- Electronics sales were up by +1.3%, and by +3.7% excluding Equipment &
Installation sales. Carrier Gases posted strong growth despite a high
basis of comparison, benefiting notably from the ramp-up of several
production units in China, Japan and Taiwan. Advanced Materials sales
were affected by the high levels of inventories accumulated in 2020 and
contract renegotiations including lower prices in anticipation of a rise
in volumes.
Asia-Pacific Air Liquide Japan and Itochu Corporation have signed a memorandum
of understanding to collaborate on the development of hydrogen mobility
markets in Japan. Air Liquide has completed the first phase of the
construction of its planned 25 MW electrolysis hydrogen plants in the Tainan
Technology Industrial Park. These plants will provide ultra-high purity
hydrogen to the semiconductor industry as well as serve emerging hydrogen
energy applications in Taiwan. This project is in line with the Group's
Climate Objectives.
Middle East and Africa
Revenue in the Middle East and Africa totaled 153 million euros,
up a strong +17.5% in Q1. Large Industries sales benefited from a
rise in demand from customers connected to the pipeline network in
Saudi Arabia and a favorable comparison basis due to a customer
turnaround in Q1 2020. Industrial Merchant revenue continued to
rise supported by a strong activity in India and Egypt. Healthcare
is mobilized in the fight against Covid-19, with strong sales
growth across the entire region.
Engineering & Construction
The consolidated revenue of Engineering & Construction stood
at 76 million euros, up a strong +48.5%, with growth in sales to
third-party customers and a favorable basis of comparison due to
the closure of the Chinese engineering center during one month in
Q1 2020. Total sales, which include internal sales, rose by +19% in
Q1 2021.
Order intake stood at 285 million euros, close to 200 million
euros more than in 2020, reflecting the efforts of the sales teams
and the postponement of some projects due to the health crisis.
More than 85% of orders correspond to projects in Asia, including a
major contract in Chemicals.
Global Markets & Technologies
The sales of Global Markets & Technologies totaled 155
million euros, up a strong +25.7%. The Biogas business recorded
strong momentum, driven by the ramp-up of production plants in the
United States and Europe and biomethane sales for transport in
France and the United Kingdom. Technology equipment sales rose,
notably for membrane-based gas purification in the United
States.
Order intake for Group projects and third-party customers
totaled 163 million euros, and included major contracts for helium
cryogenic refrigerators, and membrane-based gas purification
systems, notably for biogas.
Global Markets & Technologies In the context of its renovation and expansion
plan, the new Campus Technologies Grenoble, which gathers 1,200 employees, has
completed the construction of the first two buildings. Together with the five
Innovation Campuses in the Air Liquide group, this site is responsible for
designing and manufacturing innovative high-tech solutions for the rising deep
tech and energy transition markets. This transformation project is planned to
be completed in 2022.
Investment cycle
INVESTMENT DECISIONS AND INVESTMENT BACKLOG
Industrial and financial investment decisions totaled 603
million euros in the 1(st) quarter of 2021. This is excluding the
acquisition of 16 air separation units from Sasol in South Africa,
pending approval from the antitrust authorities, expected by the
end of June.
Following an extremely high level of investment decisions
totaling more than 1 billion euros in the 4(th) quarter of 2020,
industrial investment decisions in the 1(st) quarter of 2021
amounted to 569 million euros. Decisions for Industrial Merchant
are high, with, among other decisions, new installations aimed at
accelerating the development of cylinder gas in Europe, including
the automation of France's first major filling center following a
successful pilot project. Industrial decisions include notably the
deployment of logistics equipment for Hydrogen Energy in the United
States and a manufacturing site for tanks and trailers for hydrogen
mobility markets in Asia. The share of industrial decisions
contributing to margin improvement (efficiencies) is increasing; it
reached 17% in the 1(st) quarter of 2021.
Financial investment decisions reached 34 million euros in the
1(st) quarter of 2021, including several small acquisitions for
Industrial Merchant in the United States, Europe and Asia, for
Healthcare in Europe, and for Global Market & Technologies.
The investment backlog remains largely stable at 3.0 billion
euros. Large Industries projects for Chemicals customers represent
the highest share, Electronics projects remain significant and the
Oil & Gas market represents only about 5% of the total. These
investments should lead to a stable future contribution to annual
sales relative to the amount at the end of 2020, i.e. approximately
1.0 billion euros per year after full ramp-up of the units.
START-UPS
Four major units started up during the 1(st) quarter of 2021.
These start-ups relate to carrier gas production units for
Electronics in Asia and production plants for Large Industries in
Canada and Europe including the takeover of a hydrogen production
unit in Kazakhstan.
The additional contribution to sales of unit start-ups and
ramp-ups is high, totaling 65 million euros over the 1(st) quarter
of 2021.
In 2021, the additional contribution to sales of unit start-ups
and ramp-ups is expected to reach around 250 million euros, plus
the contribution from the 16 units in the process of being acquired
in South Africa, pending approval from antitrust authorities,
expected by the end of June. The latter is estimated at around 60
million euros for 2021, with Air Liquide not managing energy in a
first phase. Revenue should reach over 400 million euros per year
in a second phase, when energy management is fully integrated,
without any significant impact on operating income.
Investment Air Liquide increased its presence in Kazakhstan through its 75%
owned joint venture Air Liquide Munay Tech Gases (ALMTG). This represents
approximately 86 million euros of investment for the joint venture to acquire
and modernize hydrogen and nitrogen production units from Atyrau refinery.
INVESTMENT OPPORTUNITIES
The 12-month portfolio of investment opportunities continues to
grow and stood at 3.2 billion euros at the end of March,
approximately 100 million euros more than at the end of 2020, due
to a number of new entries exceeding project signings and portfolio
exits of projects deferred for more than 12 months or won by
competition.
The nature of opportunities is changing, with energy transition
on the rise, now representing 46% of the portfolio. These include
low-carbon hydrogen production by electrolysis and CCS (Carbon
Capture and Storage) projects in Large Industries, and biogas
production projects in Global Markets & Technologies. The share
of Electronics projects remains significant, increasing compared to
the already high level in 2020.
Europe and Asia account for around 80% of the opportunities.
Europe remains the portfolio's leading region thanks to the
numerous energy transition projects, followed very closely by Asia,
driven by Electronics projects. Then come the Americas and the
Middle-East & Africa with similar levels of opportunities.
Operating Performance
Efficiencies(2) reached 95 million euros, a +4.7% increase
compared with the 1(st) quarter 2020, in line with the annual
objective set at more than 400 million euros. These efficiencies
represent cost savings of 2.4%. Industrial efficiencies accounted
for more than 40% of total efficiencies and were notably the result
of initiatives to improve energy efficiency in Large Industries and
supply chain management in Industrial Merchant and Electronics. The
implementation of digital tools aimed at the Group's transformation
continued, with the acceleration of the roll-out of remote
operation centers for Large Industries production units (Smart
Innovative Operations, SIO) and new optimization tools for delivery
routes in Industrial Merchant (Integrated Bulk Operations, IBO).
Efficiencies linked to procurement also increased, notably in
Healthcare. Airgas continued to be a major contributor to overall
efficiencies generated.
Moreover, the exceptional cost reduction plan in response to the
public health crisis has continued and was adapted to the
progressive recovery in overall activity, as many local lockdown
measures are still in place. These cost reductions are not, due to
their nature, sustainable in the long-term.
Cash flow from operating activities before changes in working
capital totaled 1,243 million euros, representing an increase of
+3.9% and +9.7% excluding currency impact, once again underlining
the resilience of the business model. This corresponds to 23.3% of
sales, a marked improvement of +100 basis points compared with the
1(st) quarter of 2020. It allowed, in particular, the financing of
industrial capital expenditure, which totaled 688 million euros,
representing 12.9% of sales.
Efficiencies Air Liquide announced in mid-February the sale of its entities in
Greece to SOL Group. This transaction includes Air Liquide Hellas (ALH) and
Vitalaire Hellas entities, which have 104 employees. The divestment
illustrates Air Liquide's strategy to review its asset portfolio regularly and
focus its expansion in key industrial regions in order to increase its
geographic density and therefore enhance performance. Air Liquide has signed a
long-term Power Purchase Agreement to purchase a total of 25 megawatts of
offshore wind capacity in the Netherlands. Following PPA agreements in the
United States and Spain, this is the first PPA signed by the Group in the
Netherlands. It restates Air Liquide's commitment to lead the way in the
energy transition and to lower its carbon footprint, in line with its Climate
Objectives.
_________________
(2) See definition in Appendix.
Outlook
This first quarter saw solid growth of +3.8% on a comparable
basis, confirming the trend recorded in the fourth quarter of
2020.
Sales reached 5.3 billion euros, including 5.1 billion euros for
Gas & Services, which grew +2.8% on a comparable basis. This
growth confirms the recovery seen in all of our Gas & Services
activities. Strong momentum was also seen in the Engineering &
Construction and Global Markets & Technologies business
lines.
In Gas & Services, which account for 96% of Group sales,
growth was particularly strong in Healthcare at +10%. In the
industrial sector, the Industrial Merchant activity showed positive
growth for the first time since the start of the health crisis,
while Large Industries grew, driven by the start-up of new units
and the marked recovery in the Steel and Chemicals markets. In
terms of geographies, Asia showed very strong growth, led by China,
while Europe grew solidly. The Americas region posted contrasted
performance, impacted by an exceptional cold wave in the United
States.
Regarding efficiencies, the Group continued to take action to
improve performance. In the 1(st) quarter of 2021, 95 million euros
in efficiencies were generated, in line with its target to achieve
400 million euros over the year. In addition, the cost reduction
measures linked to the crisis have been largely maintained in the
context of the gradual recovery in activity. Cash flow is high and
stands at more than 23% of sales, an improvement of +100 basis
points.
The investment decisions for the quarter amounted to 600 million
euros. The 12-month portfolio of opportunities continued to grow
and stands at 3.2 billion euros. The proportion of projects linked
to the energy transition has continued to increase and is now at
46%. These investments will contribute to future growth.
Financial performance and sustainable development are at the
heart of Air Liquide's growth model. In a global health context
that still differs from region to region, the Group remains
committed to supplying healthcare facilities with medical oxygen.
In addition, the Group set out particularly ambitious sustainable
development objectives last March. A structured plan will allow it
to achieve carbon neutrality by 2050 and to accelerate in the field
of hydrogen and the deployment of decarbonization solutions for the
industry.
In 2021, in a context of limited local lockdowns in the first
half of the year and recovery in the second half, Air Liquide is
confident in its ability to further increase its operating margin
and to deliver recurring net profit(1) growth, at constant exchange
rates.
(1) Recurring net profit: Excluding significant and exceptional
items with no impact on recurring operating income. Excluding the
impact of a possible US tax reform in 2021.
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 are the following:
-- Comparable sales change
-- Currency, energy and significant scope impacts
-- Efficiencies
DEFINITION OF CURRENCY, ENERGY 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 eurozone. The
currency impact is calculated based on the aggregates for the
period converted at the exchange rate for the previous period.
In addition, the Group passes on variations in the cost of
energy (electricity and natural gas) to its customers via indexed
invoicing integrated into their medium and long-term contracts.
This indexing can lead to significant variations in sales (mainly
in the Large Industries Business Line) from one period to another
depending on fluctuations in prices on the energy market.
An energy impact is calculated based on the sales of each of the
main subsidiaries in Large Industries. Their consolidation allows
the determination of the energy impact for the Group as a whole.
The foreign exchange rate used is the average annual exchange rate
for the year N-1. Thus, at the subsidiary level, the following
formula provides the energy impact, calculated for natural gas and
electricity respectively:
Energy impact =
Share of sales indexed to energy year (N-1) x (Average energy
price in year (N) - Average energy price in year (N-1))
This indexation effect of electricity and natural gas does not
impact the operating income recurring.
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 changes for sales exclude the currency, energy and
significant scope impacts described above. For the 1(st) quarter
2021, the calculations are the following:
Q1 Q1
2021/2020 Natural Significant 2021/2020
(in millions of Q1 Published Currency gas Electricity scope Comparable
euros) 2021 Growth impact impact impact impact Growth
Revenue
Group 5,334 -0.7% (272) 133 46 (142) +3.8%
Impacts in % -5.1% +2.5% +0.8% -2.7%
Gas & Services 5,103 -1.7% (266) 133 46 (142) +2.8%
Impacts in % -5.1% +2.5% +0.9% -2.8%
Efficiencies
Efficiencies represent a sustainable cost reduction resulting
from an action plan on a specific project. Efficiencies are
identified and managed on a per project basis. Each project is
followed by a team composed in alignment with the nature of the
project (purchasing, operations, human resources...).
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
Annual General Meeting of Shareholders:
May 4, 2021
Dividend Ex-coupon Date:
May 17, 2021
Dividend Payout Date:
May 19, 2021
2021 First Half Revenue and Results:
July 29, 2021
A world leader in gases, technologies and services for Industry and Health,
Air Liquide is present in 78 countries with approximately 64,500 employees and
serves more than 3.8 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 - with a strong commitment to
climate change and energy transition at the heart of its strategy. The
company's customer-centric transformation strategy aims at profitable, regular
and responsible 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 more than 20 billion euros in 2020. Air
Liquide is listed on the Euronext Paris stock exchange (compartment A) and
belongs to the CAC 40, EURO STOXX 50 and FTSE4Good indexes.
View source version on businesswire.com:
https://www.businesswire.com/news/home/20210422006039/en/
CONTACT: Investor Relations
IRTeam@airliquide.com
Media Relations
media@airliquide.com
SOURCE: Air Liquide Group
Copyright Business Wire 2021
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