Revenue growth: +38.5% as reported
Better activity in a more favorable economic
environment
Regulatory News:
Air Liquide (Paris:AI):
Q1 2017 Key Figures
- Group revenue: +38.5%5,176 million euros
- of which Gas & Services: +42.2% 5,046 million
euros:
- Gas & Services revenue, comparable basis:
+2.8%*
- of which Industrial Merchant: *2.6%*
- Cash flow :920 million euros
Q1 2017 Highlights
- External parameters: positive currency and energy
impacts.
- Long-term contracts: air gases for steelmaking (France
and Benelux) and nitrogen for the plastics industry (Oman).
- Business portfolio management: exclusive negotiations
with Lincoln Electric on the sale of Air Liquide Welding,
acquisitions in Healthcare (France and Colombia).
- Innovations and new markets: operational and
optimization center for Large Industry production units (France),
two new hydrogen charging stations (Japan).
* Variation Q1 2017/Q1 2016 on a comparable basis,
excluding currency and energy (natural gas and electricity) impact:
2016 base adjusted as if on January 1, 2016 a) Airgas had been
consolidated and the divestments requested by the US regulator
(FTC) had been completed and b) Aqua Lung and Air Liquide Welding
had been deconsolidated (discontinued operations as per IFRS
5).
Commenting on the first quarter of 2017, Benoît Potier, Air
Liquide Chairman and CEO, said:
“The strong growth in sales this quarter reflects the Group's
new scale as a result of the acquisition of Airgas. The increase in
sales was also the result of a significant improvement in
Industrial Merchant, the Group's largest business line, the solid
growth in Healthcare and to a lesser extent in Large Industries, as
well as the strength of the Global Markets & Technologies
business.
In a more favorable economic context, the signs of
improvement observed at the beginning of the year were confirmed
during the first quarter. In fact, all geographies posted growth,
notably North America with a recovery in its industrial
production.
Moreover, the Group continues to deliver recurrent efficiency
gains, to which are added the Airgas synergies thanks to the
successful first steps of the integration, in line with our
expectations. We also posted a sharp increase in cash flow.
Air Liquide is thus on track in the implementation of its
company program for the period 2016-2020.
Assuming a comparable environment, Air Liquide is confident
in its ability to deliver net profit growth in 2017."
Q1 2017 Group revenue reached €
5,176 million, an increase of +38.5% on a reported
basis as compared with Q1 2016. This includes the consolidation of
Airgas sales. Q1 2017 revenue benefited also, to a lesser extent,
from the positive impact of both currency (+2.4%) and energy
(+2.7%). On a comparable basis,1 Q1 2017 Group revenue rose +1.5%
versus Q1 2016, impacted by weaker sales in Engineering and
Construction.
Gas & Services revenue, which totaled €
5,046 million this quarter, is up +42.2% on a
reported basis versus Q1 2016. On a comparable basis, revenue grew
+2.8% this quarter versus Q1 2016, and therefore much improved over
the two previous quarters.
Revenue for all Gas & Services businesses rose this
quarter on a comparable basis, with the exception of Electronics,
which was virtually unchanged:
- In Large Industries, up
+2.7%, revenue growth was driven by a strong rise in demand
for air gases and hydrogen in the United States. The hydrogen
production units in Yanbu, Saudi Arabia, were restarted in January
following a turnaround of the customer's site for planned
maintenance operations at the end of 2016, and reached a production
record in March. Europe benefited from higher air gas
sales volumes in most countries, particularly for the
steel industry, but the sales were lower overall due to
the shutdown of our operations in the Donbass in Ukraine and
comparison effects. The Asia-Pacific region remained solid with,
among other things, increasing sales in Japan for the metal
industry.
- For Industrial Merchant, which
this quarter accounted for 47% of Gas & Services sales, revenue
increased by more than +90% on a reported basis and by +2.6%
on a comparable basis. This is the first positive quarter on a
comparable basis since Q4 2014. Sales were driven by a clear
improvement in business in North America and Europe and by ongoing
sustained growth in China.In Europe, sales were up +4.3%
thanks to higher volumes of liquids, improved cylinder activity,
and the positive impact of the number of working days. Activity was
dynamic in France, Spain, Benelux and Eastern Europe. In North
America, most market segments that Industrial Merchant serves
were up. Demand for oil-related services rose sharply in Canada. At
Airgas in the United States, gas sales were up, having accelerated
in March, and benefited from a positive price effect. In
Asia-Pacific, activity varied according to country: Japan
was affected by lower equipment and installation sales, while
liquid and cylinder volumes remained high. Overall, the price
effect was positive at +1.2%, in a slight uptick in
inflation, compared to just +0.5 % in 2016.
- Electronics revenue was
virtually unchanged at -0.4%. This quarter was characterized
in particular by an unfavorable basis of comparison to Q1 2016 due
to exceptionally high neon prices and equipment and installation
sales last year. The fundamentals of this business line remain
solid. Carrier gas sales were robust in Asia-Pacific and the
overall demand for Advanced Materials continued to be strong (with
sales up by more than +20%). Geographically, revenue was
driven by China, Taiwan and South Korea.
- Healthcare revenue, which rose
by +22.4% on a reported basis and by +5.5% on a comparable
basis, was solid. Revenue rose in all businesses and geographic
areas. Demand for home healthcare services remained high and sales
in Hygiene continued to be strong (+11.3%). Healthcare,
which is pursuing its strategy of geographic expansion, reported
double-digit sales growth in the developing economies.
Engineering and Construction revenue, which came to €
52.7 million, declined sharply (-58.4%) on a comparable basis
versus Q1 2016, adversely impacted by a decline in order intake in
2016. However, order intake showed improvement this quarter, as
compared with Q1 2016, and higher bidding activity.
For Global Markets & Technologies, revenue for the
period was € 77.4 million, up +19.2% on a comparable
basis. Growth was driven by the biogas sector as well as sales of
hydrogen charging stations for mobility, helium sales, and
maritime.
This quarter, the Group generated recurrent efficiency
gains of € 67 million, which is 10% more than
during Q1 2016. The Airgas synergies, which amounted to
45 million USD this quarter, are materializing rapidly, in
line with our expectations.
Cash flow from operating activities before change in
Working Capital Requirements increased markedly and amounted to
€ 920 million. The net debt-to-equity ratio
continued to decrease.
_____________________
1 Variation Q1 2017/Q1 2016 on a comparable basis,
excluding currency and energy (natural gas and electricity) impact:
2016 base adjusted as if on January 1, 2016 a) Airgas had been
consolidated and the divestments requested by the US regulator
(FTC) had been completed and b) Aqua Lung and Air Liquide Welding
had been deconsolidated (discontinued operations as per IFRS
5).
UPCOMING EVENTS
Annual General Meeting of the Shareholders:May 3,
2017
Ex-dividend date:May 15, 2017
Dividend payment date:May 17, 2017
First half 2017 revenue and results:July 28, 2017
The world leader in gases, technologies and services for
Industry and Health, Air Liquide is present in 80 countries with
approximately 67,000 employees and serves more than 3 million
customers and patients. Oxygen, nitrogen and hydrogen are essential
small molecules for life, matter and energy. They embody Air
Liquide’s scientific territory and have been at the core of the
company’s activities since its creation in 1902.
Air Liquide’s ambition is to lead its industry, deliver long
term performance, and contribute to sustainability. The company’s
customer-centric transformation strategy aims at profitable growth
over the long term. It relies on operational excellence, selective
investments, open innovation, and a network organization
implemented by the Group worldwide. Through the commitment and
inventiveness of its people, Air Liquide leverages energy and
environment transition, changes in healthcare and digitization, and
delivers greater value to all its stakeholders.
Air Liquide’s revenue amounted to € 18.1 billion in 2016 and its
solutions that protect life and the environment represent 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.
First Quarter 2017 Revenue
In the 1st quarter of 2017, the Group’s revenue was up
+38.5% in published data with Gas & Services revenue
increasing by +42.2%. This strong growth reflects the
integration of Airgas, but also the recovery in the Industrial
Merchant activity, in particular in North America and Europe. The
currency and energy impacts are also favorable and stand at +5.1%
at the Group level.
On a comparable basis, Gas & Services sales were up
+2.8% year-on-year, improving over the 4th quarter of 2016
(+1.7%). Sales growth in Industrial Merchant, at close to +3%,
after eight consecutive quarters of decline, and the solid increase
in Healthcare at +5.5%, represented solid growth drivers this
quarter. The development of GMT (+19%) also supported growth. Large
Industries sales were in line with expectations (+3%), with
start-ups for the remainder of 2017 mainly expected during the
2nd and especially the 3rd quarter. Underlying activity
momentum remained strong in Electronics, in particular for Advanced
Materials and carrier gases, mainly in China, Taiwan and Singapore,
but growth was penalized by an extremely high basis of comparison
for neon and Equipment & Installation sales in the
1st quarter of 2016. Overall sales improved in all regions,
with the Americas posting its strongest increase in two years.
With 67 million euros delivered over the quarter,
efficiencies were in line with the NEOS objective. Airgas synergies
have materialized rapidly, with an additional 45 million
U.S. dollars in synergies this quarter, including the first
growth synergies. Cash flow from operating activities before
changes in working capital requirements increased markedly and
amounted to 920 million euros. The net debt-to-equity
ratio continued to decrease.
Investment decisions reached approximately 500 million
euros, of which 70 million euros relating to several
acquisitions, three of which were carried out by Airgas. The
investment backlog continued its very gradual decline, as expected,
and stood at 2.0 billion euros; 12-month investment
opportunities were flat overall at 2.1 billion euros.
REVENUE
Revenue
(in millions of euros)
Q1 2016(a)
Q1 2017
Q1 2017/2016
published change
Q1 2017/2016
comparable change(b)
Gas & Services 3,548 5,046 +42.2%
+2.8% Engineering & Construction 124 53
-57.4% -58.4% Global Markets & Technologies 65
77 +18.8% +19.2%
TOTAL REVENUE
3,737 5,176 +38.5%
+1.5%
(a) Q1 2016 figures have been restated to
account for IFRS 5, discontinued operations.(b) Comparable growth
based on 2016 adjusted sales excluding currency and energy price
fluctuation impact.
Revenue Analysis
- Revenue growth
as published is calculated based on the Group’s 2016
sales after the deconsolidation of Aqua Lung and Air Liquide
Welding sales, in accordance with IFRS 5.
- As of the 1st quarter of 2017
and for the entire 2017 fiscal year, Air Liquide will
communicate a comparable sales growth based on 2016 adjusted sales,
excluding currency and energy (natural gas and electricity)
impact.
- Adjusted 2016
sales are computed as if, on January 1st 2016, Airgas
had been fully consolidated and the divestments
requested by the U.S. Federal Trade Commission completed, and
Aqua Lung and Air Liquide Welding had been deconsolidated.
- Reference to
Airgas now corresponds to the Group’s Industrial
Merchant and Healthcare activities in the United States within the
new scope, after the merger of Airgas and Air Liquide U.S.
operations.
- Unless otherwise stated, all changes in
revenue outlined below are on a comparable basis.
Group
Group revenue for the 1st quarter of 2017 reached
5,176 million euros and growth as published was
+38.5% compared with the 1st quarter of 2016, driven by the
consolidation of Airgas sales, a positive currency and energy
impact, of +2.4% and +2.7% respectively, and by an improvement in
Gas & Services activity. Comparable growth was up
+1.5%. This was driven by a solid improvement in Gas &
Services sales, in particular in Industrial Merchant activity,
whereas Engineering & Construction sales remain weak following
a slowdown in order intake in 2016.
Gas & Services
Gas & Services revenue totaled 5,046 million
euros in the 1st quarter of 2017, with comparable growth
of +2.8%. On a published basis, sales were up
+42.2%, thanks to the consolidation of Airgas sales and a
positive currency (+2.5%) and energy (+2.8%) impact.
Revenue
(in millions of euros)
Q1 2016 Q1 2017 Q1
2017/2016
Q1 2017/2016
comparable change
Europe 1,614 1,710 +5.9% +2.6% Americas
824 2,142 +160.0% +3.7% Asia-Pacific
966 1,024 +6.1% +1.6% Middle-East and
Africa 144 170 +17.9% +2.7%
GAS
& SERVICES 3,548 5,046
+42.2% +2.8% Large Industries 1,207
1,392 +15.3% +2.7% Industrial Merchant
1,238 2,384 +92.6% +2.6% Healthcare 695
850 +22.4% +5.5% Electronics 408
420 +3.1% -0.4%
Americas
Gas & Services revenue in the Americas amounted to
2,142 million euros, up +160% as published and
+3.7% on a comparable basis. Driven by the ramp-up of
production units, Large Industries sales improved markedly, with
very solid volumes. The improvement was very significant in
Industrial Merchant, with sales up +2.6% over the quarter. Growth
remained strong in South America, driven notably by developments in
Healthcare.
Americas Gas & Services Revenue
- Large Industries sales were up
markedly at +9.1%, mainly supported by the ramp-up of units
in the United States and South America. Very high hydrogen and air
gases sales in the United States benefited from a limited number of
customer maintenance turnarounds. The commissioning of the hydrogen
cavern in 2016 offers greater flexibility for customers and allows
the Group to develop its on-demand hydrogen sales.
- In Industrial Merchant, the
positive growth over the quarter (+2.6%), with an
acceleration in March, confirmed the signs of improvement
seen at the end of 2016, in particular in the United States and
Canada. This marked a change in trend following two years of
declining revenue. Sales were up in almost all market segments, in
particular in the Food, Beverages, Pharmaceutical, Materials and
Professionals & Retail sectors and also in Energy with marked
increase in Canada. Liquid gas and cylinder volumes were up and the
price impact in the region was +1.8% over the quarter.
- Healthcare revenue was up
+4.8%. Sales in Canada continued to grow, benefiting notably
via the contribution from a bolt-on acquisition in Home Healthcare.
In South America, business continued to improve strongly with
double-digit growth in Brazil and Argentina.
- Sales in Electronics were stable
this quarter (+0.3%). The positive impact on sales of
double-digit growth in Advanced Materials and strong demand in
analytical services offset Equipment & Installation sales that
were weaker than in the 1st quarter of 2016.
Europe
Revenue in Europe totaled 1,710 million euros, up
+2.6%. Growth was solid in Industrial Merchant (+4.3%),
confirming an improvement in the activity and benefiting from a
favorable working day impact. Despite good air gases volumes in
some countries, Large Industries sales were down -2.2%, impacted by
an unfavorable comparison effect and the stoppage of activity in
Ukraine. Healthcare continued to improve in Home Healthcare and
medical gases and enjoyed strong growth in Hygiene and Specialty
Ingredients.
Europe Gas & Services Revenue
- Sales in the Large Industries
activity were down -2.2%. Air gas demand remained strong in
France, Germany and Spain, thanks to an improvement in the steel
markets. Sales were nonetheless penalized by an unfavorable
comparison effect. Eastern Europe continued to grow, except for
Ukraine where the activity was stopped due to recent events in the
Donbass.
- Industrial Merchant revenue was
up +4.3%. It benefited from a favorable calendar
effect, with more working days than in the 1st quarter of 2016.
All markets moved upwards, in particular Glass and Pharmaceutical
sectors. Liquid gas and cylinder volumes were up. Sales momentum in
Iberia, France, Benelux and the United Kingdom was relatively
strong, but remained more contrasted in Germany and Italy. Eastern
European countries continued their sustained growth, particularly
in Russia and Poland. Pricing impacts were up in a context of weak
inflation and stabilized to relatively flat at -0.1%.
- Healthcare posted sustained
growth of +5.4%. The Home Healthcare activity pursued strong
organic growth due to an increase in the number of patients and a
sustained level of activity in Southern Europe. Revenue for medical
gases for hospitals was up supported by an increase in volumes
despite pricing pressure. Hygiene and Specialty Ingredients sales
were up markedly, reinforced notably by an acquisition in Specialty
Ingredients.
- Electronics revenue was up
+1.4%, with carrier gases up and Equipment &
Installation sales for a new site.
Asia-Pacific
Revenue in the Asia-Pacific region increased +1.6% to
1,024 million euros. Performance was contrasted by
country: sales growth in China remained very solid but was negative
in Japan, which continued to be penalized in Electronics by the
strong decrease of neon prices and in Industrial Merchant by slower
Equipment sales.
Asia-Pacific Gas & Services
Revenue
- Large Industries sales were up
+4.5%, thanks to the ramp-up of a unit in Australia, high
hydrogen volumes for refineries in Singapore and oxygen volumes for
steel customers in Japan. Activity in China grew, though without
the benefit of the start-up of new units.
- Industrial Merchant revenue was
down slightly by -0.5%. Performances remained contrasted by
country. Sales in China continued to grow steadily, with an
increase in liquid gas and cylinder volumes. Likewise developing
economies also improved. In Japan, liquid gas volumes were up, but
were subject to pricing pressure and Equipment sales were
significantly weaker than in the 1st quarter of 2016. Prices were
stable in the region this quarter.
- Electronics revenue was down
-1.0%. Underlying activity remained very solid, although the
comparison with 2016 was penalized by weaker Equipment &
Installation sales and the significant drop in neon prices. The
strong growth momentum of Advanced Materials continued in all
countries in the region. Carrier gases showed solid growth, driven
by the ramp-up of new units in China and Singapore.
Middle-East and Africa
Middle East and Africa revenue totaled 170 million
euros, up +2.7%. The hydrogen production units in Yanbu
in Saudi Arabia were started-up again in January following a
maintenance turnaround of the customer site in December 2016 and
posted record production figures in March. Momentum was strong in
Egypt with the continuing pre-loading of Large Industries units and
growing volumes in Industrial Merchant. In South Africa, the
Industrial Merchant activity returned to positive growth,
benefiting in particular from additional working days. This
favorable calendar also contributed to Healthcare growth.
Engineering & Construction
Engineering & Construction revenue totaled
53 million euros, down -58.4% compared with the
1st quarter of 2016, due to the low level of order intake in 2016.
It remained affected by the slowdown in major energy-related
projects and the low number of new projects in a still difficult
global environment.
However, total order intake reached 107 million euros, up
compared with 73 million euros in the 1st quarter of 2016.
Half of all projects concerned air gases production units (ASU).
Lastly, bidding activity was also higher.
Global Markets & Technologies
Global Markets & Technologies revenue was up +19.2%
at 77 million euros. Sales were strong, in particular
in the biogas and maritime sectors. Helium volumes also
increased.
Order intake was up and reached 78 million
euros.
2016 Highlights
Industrial Development
- In early January 2017, Air Liquide and
ArcelorMittal, announced they had recently signed
long-term contracts for the supply of oxygen, nitrogen and
argon to ArcelorMittal’s production sites in Benelux and
France.
- In January 2017, Air Liquide announced
having recently commissioned the largest hydrogen storage
facility in the world. This underground cavern is located in
Beaumont, Texas, in the Gulf Coast region of the U.S. This unique
hydrogen storage cavern complements Air Liquide’s robust supply
capabilities along the Gulf Coast, offering greater flexibility and
reliable hydrogen supply solutions to customers via Air Liquide’s
extensive Gulf Coast Pipeline System. This facility is
1,500 meters deep and nearly 70 meters in
diameter and is capable of holding enough hydrogen to back
up a large-scale steam methane reformer (SMR) unit for 30
days.
- Air Liquide and 12 leading energy,
transport and industry companies have launched on January 17th, a
global initiative to voice a united vision and long-term ambition
for hydrogen to foster the energy transition. In the first global
initiative of its kind, the ‘Hydrogen Council’ is determined
to position hydrogen among the key solutions of the energy
transition and aims to promote hydrogen to help meet
climate goals.
- Air Liquide inaugurated on January 26th
in France, in the frame of the Connect project, an operation
center that is unique in the industrial gas sector. It enables the
remote management of production for 22 of the Group’s units
in France, optimizing their energy consumption and improving their
reliability. With “technological showcase” certification
from the Industry of the Future Alliance, Connect represents an
investment of €20 million. This project is based on the
implementation of new digital technologies at French production
sites and on the creation of new skills.
- In early April, Air Liquide and Oman
Oil Refineries and Petroleum Industries Company (Orpic), Oman’s
national refining company, announced having recently signed a
long term agreement for the supply of nitrogen to the Liwa
Plastics Industries Complex (LPIC), a new plastics production
complex including the country’s first steam cracker Orpic is adding
to its existing production facilities, in Sohar industrial port
area in Oman. Investing around €20 million to build a
state-of-the-art nitrogen production unit with a total capacity of
500 tons of nitrogen per day, Air Liquide will strengthen its
leadership position in a key industrial area to support the growth
of its customer Orpic.
Acquisitions in Healthcare
- Air Liquide pursued its external
growth strategy in Healthcare. The Group announced that its
subsidiary Seppic, designer and supplier of specialty ingredients
for health and beauty, recently finalized the acquisition of the
Serdex division of Bayer. This acquisition strengthens
Seppic’s footprint in natural active ingredients for
cosmetics. The global specialty active ingredients for
cosmetics represent a market over €900 million, of which natural
active ingredients are a fast growing segment.
- The Groupe announced on January 24th
the acquisition of Oxymaster, a national home healthcare
sector player in Colombia. Present in the Colombian market for
almost 20 years, Oxymaster is specialized in home treatment and
support for patients suffering from respiratory conditions
(sleep apnea, Chronic Obstructive Pulmonary Disease, chronic
respiratory failure). Oxymaster has more than 240 employees and
serves over 21,000 patients. The company generated revenues of
approximately €9 million in 2016.
New hydrogen charging stations for mobility in Japan
In March, Air Liquide completed the construction of two hydrogen
charging stations in Japan. The Fukuoka Miyata and Kobe
Shichinomiya stations are respectively the 4th and 5th hydrogen
charging stations for public use in Japan. To date, 75 hydrogen
charging stations have already been designed and installed by Air
Liquide worldwide.
New visual identity
The acquisition of Airgas and the launch of the NEOS Company
Program for the period 2016-2020 mark a new milestone in the
history of Air Liquide. The Group is transforming and is changing
its visual identity with a new logo, the fifth since the
company was founded 115 years ago. This new visual identity, which
embodies the transformation of Air Liquide, is that of a leading
Group, expert and innovative, that is close to its stakeholders and
open to the world.
Bond issue
A transaction, issued under the Group’s €12 billion Euro Medium
Term Note (EMTN) programme, allowed the issue of a
€600 million bond with a 10-year maturity at a yield of
1.116%. This recent transaction brings the total outstanding amount
of bonds issued to this day to approximately €15.2 billion, with an
average maturity of 6.8 years. Proceeds from this bond will allow
the Group to refinance its two bonds maturing in June and July
2017, and to continue funding sustainably its long term growth
while benefiting from very attractive market conditions.
Portfolio Management
Air Liquide announced it has entered into exclusive negotiations
with Lincoln Electric Holdings, Inc. (“Lincoln Electric”)
(Nasdaq: LECO), the world leader in design, development and
manufacture of arc welding products, robotic arc welding systems,
plasma and oxy-fuel cutting equipment, to sell Air Liquide
Welding, its subsidiary specializing in the manufacture of
welding and cutting technologies.
Investment Cycle
Investment Opportunities
At the end of March 2017, the 12-month portfolio of
opportunities totaled 2.1 billion euros, down
slightly compared with 2.2 billion euros at the end of 2016.
New projects entering the portfolio partly offset those signed by
the Group, awarded to the competition or delayed. The global
portfolio, which includes all projects including those which may be
signed after the next 12 months, was solid and stood at between 4.5
and 5 billion euros.
Developing economies represented more than half of the
portfolio, which is greater than at December 31, 2016.
Investment opportunities are greatest in the Americas, followed by
Europe then Asia. This breakdown of the portfolio of opportunities
is similar to the new breakdown of Group sales.
Approximately 40% of the portfolio of opportunities corresponds
to projects with investments of less than 50 million euros and
only a few projects are greater than 100 million euros. The
average size of projects is more modest, thus contributing to a
better distribution of risk.
Investment Decisions and Investment Backlog
In the 1st quarter of 2017, industrial and financial investment
decisions reached almost 500 million euros, with
industrial decisions accounting for around 85% of this amount.
Financial investment decisions reached approximately
70 million euros. These mainly related to an
acquisition in Home Healthcare in Colombia and the acquisitions of
distributors in Industrial Merchant, in particular three in the
United States which highlight the continuing market consolidation
by Airgas.
The investment backlog amounted to
2.0 billion euros, a slight decrease compared
with 2.1 billion euros at the end of 2016. The investment
backlog should lead to a future contribution to revenue of
approximately 0.8 billion euros per year after full
ramp-up.
Start-ups
Two new units started up during the 1st quarter of 2017:
a hydrogen pipeline network in the Middle East and an air
separation unit (ASU) in South America. The main start-ups for the
year are expected at the end of the 2nd quarter and during the
3rd quarter.
Operating Performance
The Group’s efficiency gains in the 1st quarter amounted
to 67 million euros. This performance was based on
continued efforts and integrated many projects throughout the
Group, principally this quarter, in industrial operations
(production, logistics), in purchasing and in the reorganization of
certain activities. Regarding industrial operations, daily energy
management review and bulk supply chain optimization in certain
geographies represent an important part of efficiencies. There is
also a more important contribution from realignement and
restructuring in Engineering & Construction and in several
countries.
The additional Airgas synergies have materialized rapidly
and reached 45 million U.S. dollars in the 1st quarter.
They came in particular from internal bulk sourcing, implementation
of shared services and improvement of back-office processes. The
first revenue synergies materialized with better availability of
bulk products and new offers proposed to customers.
Cash flow from operating activities before changes in working
capital requirements for the first three months of 2017
amounted to 920 million euros and corresponded to 17.8% of
Group revenue. In particular, this enabled to ensure financing for
net capital expenditures which amounted to 630 million euros for
the 1st quarter 2017, out of which approximately 560 million euros
in industrial investments. The net debt-to-equity ratio pursued its
decrease which started end of 2016.
Outlook
The strong growth in sales this quarter reflects the Group's new
scale as a result of the acquisition of Airgas. The increase in
sales was also the result of a significant improvement in
Industrial Merchant, the Group's largest business line, the solid
growth in Healthcare and to a lesser extent in Large Industries, as
well as the strength of the Global Markets & Technologies
business.
In a more favorable economic context, the signs of improvement
observed at the beginning of the year were confirmed during the
first quarter. In fact, all geographies posted growth, notably
North America with a recovery in its industrial production.
Moreover, the Group continues to deliver recurrent efficiency
gains, to which are added the Airgas synergies thanks to the
successful first steps of the integration, in line with
expectations. A sharp increase in cash flow was also posted.
Air Liquide is thus on track in the implementation of its
company program for the period 2016-2020.
Assuming a comparable environment, Air Liquide is confident in
its ability to deliver net profit growth in 2017.
APPENDICES
Significant scope, currency and energy impact
- Currency and
energy impacts
Since January 1st, 2015, the energy impact includes natural gas
and electricity impacts. It may also include other Large Industries
energy feedstocks in the future.
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 of 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.
Considering the disposal of Aqua Lung closed on December 30,
2016, and the fact that Air Liquide entered into exclusive
negotiations with Lincoln Electric to sell its Air Liquide Welding
subsidiary (press release of March 2, 2017), these “Other
Activities” are no longer consolidated in Group sales, in
accordance with IFRS 5.
Revenue growth as published
is calculated based on the Group’s 2016 sales after the
deconsolidation of Aqua Lung and Air Liquide Welding
revenue, in accordance with IFRS 5.
- Adjusted 2016
sales and comparable growth
The closing of the Airgas acquisition was effective on May 23,
2016 and the Industrial Merchant and Healthcare activities of
Airgas and Air Liquide in the United States were merged on October
1, 2016. As a consequence, it is no longer possible to isolate Air
Liquide and Airgas activities as to the former scope.
Reference to Airgas now
corresponds to the Group’s Industrial Merchant and Healthcare
activities in the United States within the new scope after the
merger of Airgas and Air Liquide U.S. operations.
In addition to the comparison of published figures, adjusted
2016 sales data is provided below to offer a comparable basis for
2016: adjusted 2016 sales are
computed as if, on January 1st 2016, Airgas had
been fully consolidated and the divestments requested by
the U.S. Federal Trade Commission completed, and Aqua Lung
and Air Liquide Welding had been deconsolidated.
As of the 1st quarter of 2017 and for the
entire 2017 fiscal year, Air Liquide will communicate a
comparable sales growth based on 2016 adjusted sales, excluding
currency and energy (natural gas and electricity) impact.
Quarterly 2016 adjusted sales:
in €m Q1 2016 Q2 2016
Q3 2016 Q4 2016 FY 2016
Group 4,857 4,877
4,922 5,156 19,812 Gas &
Services 4,668 4,666 4,744 4,930
19,008 Industrial Merchant 2,261 2,271 2,270
2,293 9,095 Healthcare 792 807
813 846 3,258
Americas 1,944
1,957 2,003 2,003 7,907 Americas IM
1,381 1,370 1,381 1,369 5,501
Americas HC 181 186 191 188 746
NB: figures not reported in the above table are already
published data and are not impacted by the Airgas acquisition
adjustment.
Consolidated 2017 1st quarter revenue includes the following
impact:
In millions of euros RevenueQ1 2017
Q1 2017/2016
published
change
Currency(a)
Naturalgas(a)
Electricity(a) Q1
2017/2016comparablechange(b) Group
5,176 +38.5% +117.0 +104.3 +25.3
+1.5% Gas & Services
5,046 +42.2%
+116.0 +104.3 +25.3 +2.8%
(a) Based on Q1 2016 adjusted sales as if, on
January 1st 2016, Airgas had been fully consolidated and the
divestments requested by the U.S. Federal Trade Commission
completed, and Aqua Lung and Air Liquide Welding had been
deconsolidated.(b) Comparable growth based on 2016 adjusted sales
excluding currency and energy price fluctuation impact.
For the Group,
- The currency impact was +2.4%.
- The impact of natural gas price
fluctuations was +2.2%.
- The impact of electricity price
fluctuations was +0.5%.
For Gas & Services,
- The currency impact was +2.5%.
- The impact of natural gas price
fluctuations was +2.2%.
- The impact of electricity price
fluctuations was +0.6%.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170425006739/en/
Corporate CommunicationsAnnie Fournier, +33 (0)1 40 62 51
31Caroline Brugier, +33 (0)1 40 62 50 59Aurélie Wayser-Langevin,
+33 (0)1 40 62 56 19orInvestor RelationsParis, +33 (0)1 40
62 50 87Radnor, +1 610 263 8277
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