Regulatory News:
Air Liquide (Paris:AI):
Key Figures
(in millions of euros)
Q3 2022
2022/2021
as published
2022/2021
comparable(a)
Group Revenue
8,247
+41.3%
+8.3%
of which Gas & Services
7,897
+41.4%
+7.2%
of which Engineering &
Construction
115
+41.1%
+37.3%
of which Global Markets &
Technologies
235
+39.5%
+32.7%
(a) Change excluding the
currency, energy (natural gas and electricity) and significant
scope impacts, see reconciliation in appendix.
Commenting on 3rd quarter sales for 2022, François Jackow,
Chief Executive Officer of Air Liquide, stated:
“The Group maintained a strong growth momentum during the third
quarter despite a complex macroeconomic environment. Revenue, at
close to 8.3 billion euros, was up +8.3% on a comparable basis and
up +41.3% on a published basis, demonstrating the robustness of Air
Liquide’s business model in the context of a surge in energy
prices. All activities improved: Gas & Services,
Engineering & Construction and Global Markets &
Technologies.
Within Gas & Services, which accounts for 96% of sales, the
business was driven in particular by the momentum of
Electronics, the solid performance of Industrial Merchant and
growth in Healthcare. In terms of geographies, activity was
particularly strong in the Americas and Asia, and was more
contrasted in Europe.
The Group resolutely pursues its continuous performance
improvement measures. Against a backdrop of high inflation,
value creation and dynamic pricing management in Industrial
Merchant allow the Group to recover the increase in costs while, in
Large Industries, energy price increases are contractually passed
on to customers. Operational efficiencies, in an inflationary
context, stood at the very good level of 262 million euros over
nine months. The business portfolio is actively managed. Cash flow
remained high at 24%(1) of sales.
12-month investment opportunities remain high, at more
than 3 billion euros. More than 40% are related to the
energy transition. In this context, the Group has decided to invest
1.1 billion euros this quarter, notably in Electronics and
in projects that contribute to the fight against climate change.
The robust and diversified investment backlog(2), currently
running at 3.4 billion euros, is particularly promising for
future growth.
With our clear strategic plan, ADVANCE, which further
reinforces the resilience of its business model, for full year
2022, assuming no significant economic disruption, Air
Liquide is confident in its ability to further increase its
operating margin and to deliver recurring net profit growth, at
constant exchange rates(3).”
(1) Cash Flow from Operations before changes in WCR on Sales
excluding energy pass through impact. (2) Russian projects have
been removed from Q3 2022 Backlog. (3) Operating margin excluding
energy impact. Recurring net profit excluding exceptional and
significant transactions that have no impact on the Operating
Income Recurring, and excluding the impact of any US tax reform in
2022.
Highlights of the 3rd quarter 2022
- Electronics:
- Under long-term contracts, investment of
around 500 million euros in the construction of three
new ultra-high purity industrial gas production plants
for two of the world’s largest semiconductor manufacturers in
Taiwan.
- Hydrogen and energy transition:
- Investment of 200 million euros by
Shanghai Chemical Industry Park Industrial Gases (SCIPIG), an Air
Liquide subsidiary, in the construction of two hydrogen
production units with carbon capture and recycling technology
in Shanghai Chemical Industry Park.
- Launch by Air Liquide of its
biomethane business in China with the construction of its first
production plant – with a capacity of 75 GWh/year – in
Huai’an City, in the Jiangsu Province.
- Healthcare:
- Development of the home healthcare
offering with the acquisition of the diabetes division of
Ethitech in South Africa by VitalAire, home healthcare subsidiary
of Air Liquide.
- Corporate:
- Russia divestment project: signing
of a letter of intent with the local management team to transfer
Russian operations to them in the form of an MBO (Management Buy
Out) as part of an orderly, viable and responsible transfer of
operations. The execution of this project remains subject to
Russian regulatory approvals.
- Credit rating upgrade by Moody’s for
the Air Liquide Group, from “A3” to “A2” for its long-term
rating and from “P2” to “P1” for its short-term rating. The
outlook associated with the ratings is stable.
- Successful launch of a long-term bond
issue for a total of 600 million euros to finance the
Group’s long-term growth.
- Sale of Air Liquide’s Industrial
Merchant activities in Saudi Arabia, in line with the Group’s
strategy to regularly review its asset portfolio and focus on
selected fast developing areas and activities.
- Gold medal awarded to Air Liquide
by EcoVadis, the world’s largest provider of business
sustainability ratings, for the Group’s action on Sustainability
for a sixth year in a row.
- As of September 15, the Air Liquide
Foundation has supported more than 35 associative projects,
supervised by 15 Group subsidiaries, for the benefit of 60,000
refugees from Ukraine in 7 countries thanks to a financial donation
of 700,000 euros.
Group revenue for the 3rd quarter of 2022 totaled
8,247 million euros, a strong growth of +8.3% on a
comparable basis with the 3rd quarter of 2021. The Group’s
revenue as published posted a significant increase of
+41.3% in the 3rd quarter, with a record high energy impact of
+24.4% as well as a favorable currency impact of +8.8%, while the
significant scope impact was limited at -0.2%.
This performance was delivered in a challenging context of
exceptionally high energy prices, strong inflation, strain on
supply chains and the war in Ukraine. The Group benefited from a
solid business model and diversity of business reach in terms of
geographies, businesses, end-markets and customers which
ensured a resilient performance and allowed the Group to
take advantage of all growth opportunities. Its core
positioning in growth markets of the future (in particular the
energy transition, Semiconductors and Healthcare) reinforces these
attributes.
Gas & Services revenue amounted to 7,897 million
euros in the 3rd quarter of 2022, up by +7.2% on a
comparable basis. As published revenue for Gas &
Services increased by a significant +41.4% in the 3rd
quarter, benefiting from a historically high energy impact (+25.6%)
and a positive currency impact (+8.9%). The significant scope
impact was limited (-0.3%).
- Gas & Services revenue in the Americas totaled
2,936 million euros in the 3rd quarter, representing a
strong comparable growth of +12.8%. The Large Industries
business (+5.7%) benefited from the ramp-up of new units and solid
demand. In the Industrial Merchant business, sales increased by
+16.5%, driven by the marked rise in prices and a raise in volumes,
excluding helium. Healthcare revenue was up +4.5% due to dynamic
activity in the Proximity Care business in the United States and
the Home Healthcare business in Latin America, despite a strong
decrease in volumes of medical oxygen for the treatment of covid-19
compared to 2021. A strong increase in Electronics sales (+10.3%)
also contributed to the dynamic growth in the Americas.
- Revenue in Europe was stable (-0.2%) at 3,266
million euros in the 3rd quarter. Activity was contrasted from
one business line to another. Large Industries was impacted by a
slowing demand from Steel and Chemical customers but volumes showed
a limited decrease in a context of soaring energy prices. The
difference between comparable sales growth (-27.5%) and volume
evolution (-6%) is due to a calculation effect of the energy
impact. Indeed, for Large Industries, the method values the energy
impact of the year on the basis of the volumes of the preceding
year times the difference of energy prices. Consequently, in the
3rd quarter, the rise in energy prices being exceptionally strong
and volumes slightly down, the energy impact is amplified, as well
as a combined effect, which reduced comparable sales of Large
Industries. In Industrial Merchant, sales rose by more than +30%,
with the pricing impact reaching a new record high of +29.9% and
volumes remaining resilient. The Healthcare business saw strong
growth of +5.8%, driven by dynamic Home Healthcare and despite a
high basis of comparison due to the covid-19 pandemic in 2021.
- Revenue in Asia Pacific rose by +10.9% on a
comparable basis in the 3rd quarter to 1,474 million euros.
It benefited from particularly dynamic activity in the Electronics
business (+21.8%). Large Industries sales grew by +3.1%, driven by
China. Industrial Merchant revenue rose by +8.9%, benefiting from
the acceleration of price increases.
- Revenue in the Middle East and Africa slightly decreased
by -1.2% to 221 million euros in the 3rd quarter. The
Large Industries sales grew and those of the Industrial Merchant
were impacted by small divestitures in the Middle East. In
Healthcare, medical oxygen sales for the treatment of the covid-19
were lower than in 2021.
As in the 1st half-year, the two drivers for the 3rd quarter
were the Industrial Merchant business, which grew very
sharply by +18.0% on a comparable basis due to a record
pricing impact and resilient volumes, and the Electronics
business, which saw revenues climb by +20.9%. Large
Industries sales were down by -10.4% with volumes
decreasing by -2%, the gap being explained by an effect
related to the calculation of the energy impact in a context of
exceptionally strong increase of energy prices in Europe (see
explanations above). A strong growth in the Americas, benefiting
from unit ramp-ups, and a solid activity in Asia partially offset
the slowing demand in Europe. Healthcare recorded robust
growth (+4.5%), driven in particular by a dynamic Home
Healthcare business and despite lower volumes of medical oxygen for
the treatment of covid-19.
Consolidated revenue from Engineering & Construction
totaled 115 million euros in the 3rd quarter, posting a
comparable growth of +37.3% and reflecting the increase in
order intake from third-party customers in recent quarters.
Global Markets & Technologies posted a sharp
+32.7% increase in revenue to 235 million euros in
the 3rd quarter. Biogas retained strong momentum and benefited from
sales prices increase linked to the spike in energy price.
Prices in the Industrial Merchant activity rose sharply
by +18.0% in the 3rd quarter, demonstrating the Group's
ability to transfer the sharp rise in costs. Efficiencies
amounted to 262 million euros over the first nine months of the
year. In a context of high inflation, unfavorable to procurement
efficiencies, limiting the cost increase remained a priority and
increased focus was put on operational efficiencies. The
portfolio management was particularly active with the
integration of 12 acquisitions and the completion of 4 divestitures
since the beginning of the year.
Cash flow from operating activities before changes in net
working capital amounted to 4,569 million euros at the
end of September 2022, a strong growth of + 23.5% in a context of
high inflation, demonstrating the business model resilience. This
corresponds to a high level of 23.8% of sales excluding energy
impact.
Industrial and financial investment decisions reached a
high level of 1,114 million euros in the 3rd quarter of
2022. They account for 2,910 million euros year to date
compared with 2,302 million euros over the same period in 2021,
excluding the acquisition of 16 Air Separation Units from Sasol in
South Africa for approximately 480 million euros. The investment
backlog was high at 3.4 billion euros.
The additional contribution to sales1 of unit start-ups
and ramp-ups totaled 288 million euros at the end of
September. The contribution expected for 2022 is between
400 and 425 million euros, a slight decline of 10 million euros
compared with previous estimates due to the deconsolidation of the
Group’s subsidiary in Russia as of September 1st.
The 12-month portfolio of investment opportunities stood
at more than 3.0 billion euros at the end of September 2022,
driven by projects linked to the energy transition, which
accounted for more than 40% of the portfolio.
For the sixth year in a row, Air Liquide has been awarded
a gold medal for its sustainability performance from
EcoVadis, one of the world’s largest providers of business
sustainability ratings. Air Liquide is hence positioned in the top
3% of all companies evaluated.
Analysis of 3rd quarter 2022 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 millions of euros)
Q3 2021
Q3 2022
2022/2021
published
change
2022/2021
comparable
change
Gas & Services
5,585
7,897
+41.4%
+7.2%
Engineering & Construction
81
115
+41.1%
+37.3%
Global Markets & Technologies
168
235
+39.5%
+32.7%
TOTAL REVENUE
5,834
8,247
+41.3%
+8.3%
Revenue by Quarter
(in millions of euros)
Q1 2022
Q2 2022
Q3 2022
Gas & Services
6,590
7,010
7,897
Engineering & Construction
108
113
115
Global Markets & Technologies
189
197
235
TOTAL REVENUE
6,887
7,320
8,247
2022/2021 Group published
change
+29.1%
+32.8%
+41.3%
2022/2021 Group comparable
change
+7.9%
+7.5%
+8.3%
2022/2021 Gas & Services comparable
change
+7.1%
+7.3%
+7.2%
Group
Group revenue for the 3rd quarter of 2022 totaled
8,247 million euros, a strong growth of +8.3% on a
comparable basis with the 3rd quarter of 2021.
This performance was delivered in a challenging context of
exceptionally high energy prices, strong inflation, strain on
supply chains and the war in Ukraine. The Group benefited from a
solid business model and diversity of business reach in terms of
geographies, businesses, end-markets and customers which
ensured a resilient performance and allowed the Group to
take advantage of all growth opportunities. Its core
positioning in growth markets of the future (in particular the
energy transition, Semiconductors and Healthcare) reinforces these
attributes.
Consolidated sales of the Engineering & Construction
business grew by +37.3%, reflecting the increase in order
intake in recent quarters. Global Markets & Technologies
continued its growth momentum with sales up by +32.7% in the
3rd quarter, driven in particular by the Biogas business
development.
The Group’s revenue as published posted a significant
increase of +41.3% in the 3rd quarter, with a record high
energy impact of +24.4% as well as a favorable currency impact of
+8.8%, while the significant scope impact was limited at -0.2%.
Gas & Services
Gas & Services revenue amounted to 7,897 million
euros in the 3rd quarter of 2022, up by +7.2% on a
comparable basis. As in the 1st half-year, the two drivers for the
3rd quarter were the Industrial Merchant business, which
grew very sharply by +18.0% due to a record pricing impact
and resilient volumes, and the Electronics business, which
saw revenues climb by +20.9%. Large Industries sales
were down by -10.4% with volumes decreasing by
-2%, the gap being explained by an effect related to the
calculation of the energy impact in a context of exceptionally
strong increase of energy prices in Europe (see explanations below,
in the Europe part). A strong growth in the Americas, benefiting
from unit ramp-ups, and a solid activity in Asia partially offset
the slowing demand in Europe. Healthcare recorded robust
growth (+4.5%), driven in particular by a dynamic Home
Healthcare business and despite lower volumes of medical oxygen for
the treatment of covid-19.
As published revenue for Gas & Services increased by
a significant +41.4% in the 3rd quarter, benefiting from a
record energy impact (+25.6%) and a positive currency impact
(+8.9%). The significant scope impact was limited (-0.3%).
Revenue by geography and business
line
(in millions of euros)
Q3 2021
Q3 2022
2022/2021
published
change
2022/2021
comparable
change
Americas
2,144
2,936
+36.9%
+12.8%
Europe
2,038
3,266
+60.3%
-0.2%
Asia-Pacific
1,197
1,474
+23.1%
+10.9%
Middle East & Africa
206
221
+7.3%
-1.2%
GAS & SERVICES REVENUE
5,585
7,897
+41.4%
+7.2%
Large Industries
1,743
3,112
+78.5%
-10.4%
Industrial Merchant
2,384
3,092
+29.7%
+18.0%
Healthcare
921
999
+8.5%
+4.5%
Electronics
537
694
+29.1%
+20.9%
Americas
Gas & Services revenue in the Americas totaled 2,936
million euros in the 3rd quarter, a sharp growth of
+12.8%. The Large Industries business (+5.7%) benefited from
the ramp-up of new units and solid demand. In the Industrial
Merchant business, sales increased by +16.5%, driven by the marked
rise in prices and a raise in volumes, excluding helium. Healthcare
revenue was up +4.5% due to dynamic activity in the Proximity Care
business in the United States and the Home Healthcare business in
Latin America, despite a strong decrease in volumes of medical
oxygen for the treatment of covid-19 compared to 2021. A strong
increase (+10.3%) in Electronics sales also contributed to the
dynamic growth in the Americas.
- Revenue for Large Industries rose by +5.7% during
the 3rd quarter. Air gas volumes climbed markedly, driven by the
contribution of new units to supply customers in Chemicals and
despite a slightly lower demand from Steel. Hydrogen sales
benefited from the ramp-up of a unit in Mexico, which offset the
impact of several customer maintenance turnarounds in the United
States. The cogeneration activity was dynamic, particularly in
Canada.
- Industrial Merchant sales rose by +16.5% in the
3rd quarter. Pricing continued to increase, reaching +16.1%, which
offset the rise in costs in an inflationary context. Excluding
helium, volumes grew by +2%, in particular bulk and hardgoods,
while the volume growth of cylinder gas was more moderate. Sales
grew across all sectors, particularly in the Automotive,
Fabrication, Food and Energy sectors.
- Healthcare revenue was up +4.5% in the 3rd
quarter, despite a strong decrease in volumes of medical oxygen for
the treatment of covid-19 compared to 2021. Sales in Medical Gases
rose in the United States as a result of dynamic activity and
pricing in Proximity Care. In Latin America, Home Healthcare sales
increased sharply and Medical Gases contribution turned positive
again.
- Revenue from Electronics saw a marked increase of
+10.3% during the 3rd quarter. Carrier Gas growth was driven
by the helium high prices and the progression of bulk volumes.
Specialty Materials sales were considerably higher, benefiting
notably from the increase in rare gas prices. Lastly, Equipment
& Installation sales were particularly strong this
quarter.
Europe
Revenue in Europe was stable (-0.2%) at 3,266
million euros in the 3rd quarter. Activity was contrasted from
one business line to another. Large Industries was impacted by a
slowing demand from Steel and Chemical customers but volumes showed
a limited decrease in a context of soaring energy prices. The
difference between comparable sales growth (-27.5%) and volume
evolution (-6%) is due to a calculation effect of the energy
impact. Indeed, for Large Industries, the method values the energy
impact of the year on the basis of the volumes of the preceding
year times the difference of energy prices. Consequently, in the
3rd quarter, the rise in energy prices being exceptionally strong
and volumes slightly down, the energy impact is amplified, as well
as a combined effect, which reduced comparable sales of Large
Industries. In Industrial Merchant, sales rose by more than +30%,
with the pricing impact reaching a new record high of +29.9% and
volumes remaining resilient. The Healthcare business saw strong
growth of +5.8%, driven by dynamic Home Healthcare and despite a
high basis of comparison due to the covid-19 pandemic in 2021.
- In a context of very strong energy prices increase which
continued in the 3rd quarter, Large Industries sales
decreased by -27.5% on a comparable basis, mainly impacted
by the above explained combined effect. Volumes are down -6%,
impacted by a slowing demand from Steel and Chemical customers,
notably in Germany and Benelux. Moreover, certain refineries used
lighter crude oils, which need less hydrogen.
- The Industrial Merchant business recorded exceptionally
high growth of +30.2%, driven by a record pricing impact of
+29.9%. Amid an inflationary environment, contractual indexation
and proactive pricing campaigns once again proved wholly effective.
Volumes were up slightly, showing a strong resilience, particularly
for cylinder gas. Sales increased across all sectors, particularly
Food, Fabrication and Materials.
- Healthcare sales recorded strong growth of +5.8%.
This was driven by dynamic activity in the Home Healthcare
business, in particular for the treatment of diabetes. Specialty
Ingredients sales also saw a pronounced increase, driven by higher
volumes and price increases to offset higher costs. In Medical
Gases, the unfavorable basis of comparison resulting from high
oxygen consumption during the covid-19 pandemic in 2021 has been
mitigated and price increases partially offset inflation-related
rises in costs.
Europe
- Air Liquide confirmed its intention to withdraw from
Russia. Taking a responsible and orderly approach, the Group
has signed a Memorandum of Understanding with the local management
team with the objective to transfer its activities in Russia in the
framework of an MBO (Management Buy Out). This project is
notably subject to Russian regulatory approvals. In parallel, as a
consequence of the evolution of the geopolitical context, the
activities of the Group in Russia will no longer be consolidated
starting September 1, 2022.
Asia Pacific
Revenue in Asia Pacific rose by +10.9% in the 3rd quarter
to 1,474 million euros. It benefited from particularly
dynamic activity in the Electronics business (+21.8%). Large
Industries sales grew by +3.1%, driven by China. Industrial
Merchant revenue increased by +8.9%, benefiting from the
acceleration of price increases.
- Revenue for Large Industries rose by +3.1% during
the 3rd quarter. This was driven by strong sales growth of +9% in
China, in particular in the air gases business. In the rest of
Asia, sales were affected by soft demand, particularly for Steel in
Japan and Chemicals in South Korea.
- Industrial Merchant sales grew by +8.9% over the
quarter and increased in all countries. Pricing accelerated across
the whole region, reaching +9.3% in the 3rd quarter. Volumes were
still down compared to the 3rd quarter of 2021 but they were
improving sequentially. In China, sales growth benefited from the
increase in prices and the consolidation of small acquisitions. In
the region, particularly in China, revenue posted a particularly
marked progress in the Automotive, Energy, Technologies and Food
sectors.
- Revenue for Electronics increased substantially by
+21.8% in the 3rd quarter. Growth in the Carrier Gases,
Specialty Materials and Equipment & Installations business
segments exceeded +20%. Carrier Gases benefited from a start-up in
China in the 3rd quarter and the ramp-up of several plants. Part of
the sales growth in Specialty Materials was due to the increase in
rare gas prices. Advanced Materials sales also posted double-digit
growth, with a sharp increase in volumes, particularly in Singapore
and China.
Asia Pacific
- Air Liquide announced the construction of three units in
Taiwan to supply, in the framework of long-term
contracts, two of the world’s largest semiconductor
manufacturers with large volumes of ultra high purity
industrial gases for their leading edge fabs. Air Liquide Far
Eastern, a joint venture between Air Liquide and Far Eastern Group,
will invest a total of approximately 500 million euros in
these state-of-the-art production units. Air Liquide Far Eastern
had already invested more than 400 million euros between
2019 and 2021 in Taiwan to provide ultra pure gases to
Electronics customers.
Middle East and Africa
Revenue in the Middle East and Africa slightly decreased by
-1.2% to 221 million euros in the 3rd quarter. The
strong sales in India and Egypt explained the good performance of
the Large Industries. In the Industrial Merchant business, the
higher prices partially offset the small divestitures in the Middle
East. Sales in the Healthcare business were lower than the high
level recorded in the 3rd quarter of 2021 as a result of the
covid-19 pandemic.
Middle East and Africa
- Following on the Industrial Merchant activities divestitures in
the United Arab Emirates and in Bahrain carried out in the 1st half
of 2022, Air Liquide announced this quarter the sale of its
Industrial Merchant business in Saudi Arabia. Air Liquide is
well-positioned to further grow its already strong presence
in the Gulf Cooperation Council (GCC) region, in particular in
Saudi Arabia, in Large Industries and Healthcare
businesses, and pursue the many opportunities emerging with
clean Hydrogen and Energy Transition.
Engineering & Construction
Consolidated revenue from Engineering & Construction totaled
115 million euros in the 3rd quarter, posting growth of
+37.3% and reflecting the increase in order intake from
third-party customers in recent quarters.
Order intake reached 169 million euros in the 3rd
quarter. Third-party customer orders related in particular to
helium liquefaction equipment and Air Separation Units (ASUs).
Global Markets & Technologies
Global Markets & Technologies posted a sharp +32.7%
increase in revenue to 235 million euros in the 3rd quarter.
Biogas retained strong momentum and benefited from sales prices
increase linked to the spike in energy price. Higher sales of
Turbo-Brayton LNG reliquefaction units also contributed to the
growth.
Order intake for Group projects and third-party customers
totaled 243 million euros in the 3rd quarter, a strong
increase of +31% compared with 2021. These orders mainly concerned
Turbo-Brayton LNG reliquefaction units, a helium liquefaction unit
and equipment for the Electronics, hydrogen and biogas markets.
Investment Cycle
INVESTMENT DECISIONS AND INVESTMENT BACKLOG
Industrial and financial investment decisions reached a
high level of 1,114 million euros in the 3rd quarter of
2022. They account for 2,910 million euros year to date
compared with 2,302 million euros over the same period in 2021,
excluding the acquisition of 16 Air Separation Units (ASUs) from
Sasol in South Africa for approximately 480 million euros.
Industrial investment decisions reached 1,074 million
euros in the 3rd quarter and 2,813 million euros at the end of
September 2022, representing a marked increase compared with 2,215
million euros in 2021. Momentum in the Electronics business
remained robust, with the signature of several carrier gas
contracts in Taiwan representing an investment of about 500 million
euros. In Large Industries, decisions mainly related to the
electrification of several air separation units in China, which
currently run on coal-generated steam produced by the customer,
which will reduce the Group’s CO2 emissions by approximately 1%.
They also included the first investments aimed at improving the
efficiency of the production units acquired in South Africa in
2021. In Industrial Merchant, investment decisions included
several small on-site production units, notably for a project to
convert a glass furnace to oxy-combustion, which will reduce the
customer’s natural gas consumption and thus its CO2 emissions.
Finally, several investment projects were approved in Global
Markets & Technologies, in particular for the production of
liquified biogas in Italy and the first biogas project using manure
in the United States.
Financial investment decisions reached 40 million
euros in the 3rd quarter. These mainly included an acquisition
in Healthcare in South Africa specialized in diabetes care
and bolt-on acquisitions in the Industrial Merchant business
in the United States and China.
The investment backlog was high at 3.4 billion
euros with a large number of projects in Electronics, notably
in Asia. The future contribution to annual revenue after
full ramp-up of the units is expected to be 1.3 billion
euros.
START-UPS
The main start-ups during the 3rd quarter of 2022 related
to production plants in Asia. These mainly involved the supply of
ultra-pure nitrogen for an Electronics customer in China,
which will allow the Group to strengthen its position in a key
basin.
The additional contribution to sales2 of unit start-ups
and ramp-ups totaled 288 million euros at the end of
September. The contribution expected for 2022 is between
400 and 425 million euros, a slight decline of 10 million euros
compared with previous estimates due to the deconsolidation of the
Group’s subsidiary in Russia as of September 1st.
INVESTMENT OPPORTUNITIES
The 12-month portfolio of investment opportunities stood
at more than 3.0 billion euros at the end of September 2022,
driven by projects linked to the energy transition, which
accounted for more than 40% of the portfolio. These mainly included
projects for renewable hydrogen production by water electrolysis,
facilities for the capture of CO2 emitted by the Group’s or its
customers’ units, as well as hydrogen mobility projects in Europe
and Asia. The breakdown of investment opportunities was well
balanced across the various geographies.
Operating Performance
Prices in the Industrial Merchant activity rose sharply
by +18.0% in the 3rd quarter, demonstrating the Group's
ability to transfer the sharp rise in costs. Prices are also up in
Large Industries, Electronics and Healthcare.
Efficiencies reached 95 million euros in the 3rd quarter.
They amounted to 262 million euros over the first nine
months of the year and represented 2.2% of the cost base. In a
context of high inflation, unfavorable to procurement efficiencies,
limiting the cost increase remained a priority and increased focus
was put on operational efficiencies. Thus, industrial
efficiencies are up compared to 2021 and contributed to more
than half of efficiencies. They include energy efficiency and unit
optimization projects in Large Industries and projects to improve
the cylinder gas supply chain in Industrial Merchant. The Group's
digital transformation continued: in Large Industries with
the connection of new units to remote operation centers (Smart
Innovative Operations, SIO), in Industrial Merchant with the
acceleration of the tools implementation to optimize delivery
routes (Integrated Bulk Operations, IBO) and in Healthcare with the
deployment of remote patient monitoring platforms. The continued
implementation of shared service centers and the global continuous
improvement program also contributed to efficiencies.
During the first 9 months of the year, portfolio
management was particularly active with the integration
of 11 small acquisitions: in Healthcare in the United States and
South Africa, and in Industrial Merchant in the United States,
China and the Netherlands. In Large Industries, Air Liquide took
control of a joint activity in China in the 2nd quarter. In
addition, the Group continues to focus on its most profitable
activities and completed 4 divestitures of Industrial Merchant
businesses in the Middle East and Mexico.
Cash flow from operating activities before changes in net
working capital amounted to 4,569 million euros at the
end of September 2022, a strong growth of + 23.5% in a context of
high inflation, demonstrating the business model resilience. This
corresponds to a high level of 23.8% of sales excluding energy
impact, and of 20.3% of sales as published. As of September 30,
2022, gross industrial capital expenditure amounted to 2,421
million euros, an increase of +11.1% compared to 2021 and of
+6.0% excluding currency impact. They represented 12.6% of sales
excluding energy impact.
Net debt totaled 11,554 million euros, stable
compared with 11,552 million euros at September 30, 2021, and down
by 456 million euros compared with June 30, 2022. The net
debt-to-equity ratio, adjusted for the seasonal effect of the
dividend payment reached 43.5%.
Operating performance
- In September, Air Liquide successfully launched a 600
million euros bond issuance under conditions which
remain very competitive in spite of the recent tightening of
the credit market. This emission is dedicated to the refinancing of
its September 2022 bond maturities and to the financing of its long
term growth. Moody’s credit rating agency announced its
decision to upgrade the Group’s long term rating to “A2”,
versus “A3” previously, as well as its short term rating to
“P1”, as opposed to “P2” before. The outlook associated with
the ratings is stable. These ratings relate to all debt instruments
issued by Air Liquide SA and Air Liquide Finance.
Outlook
The Group maintained a strong growth momentum during the third
quarter despite a complex macroeconomic environment. Revenue, at
close to 8.3 billion euros, was up +8.3% on a comparable basis and
up +41.3% on a published basis, demonstrating the robustness of Air
Liquide’s business model in the context of a surge in energy
prices. All activities improved: Gas & Services,
Engineering & Construction and Global Markets &
Technologies.
Within Gas & Services, which accounts for 96% of sales, the
business was driven in particular by the momentum of
Electronics, the solid performance of Industrial Merchant and
growth in Healthcare. In terms of geographies, activity was
particularly strong in the Americas and Asia, and was more
contrasted in Europe.
The Group resolutely pursues its continuous performance
improvement measures. Against a backdrop of high inflation,
value creation and dynamic pricing management in Industrial
Merchant allow the Group to recover the increase in costs while, in
Large Industries, energy price increases are contractually passed
on to customers. Operational efficiencies, in an inflationary
context, stood at the very good level of 262 million euros over
nine months. The business portfolio is actively managed. Cash flow
remained high at 24%3 of sales.
12-month investment opportunities remain high, at more
than 3 billion euros. More than 40% are related to the
energy transition. In this context, the Group has decided to invest
1.1 billion euros this quarter, notably in Electronics and
in projects that contribute to the fight against climate change.
The robust and diversified investment backlog4, currently
running at 3.4 billion euros, is particularly promising for
future growth.
With our clear strategic plan, ADVANCE, which further
reinforces the resilience of its business model, for full year
2022, assuming no significant economic disruption, Air
Liquide is confident in its ability to further increase its
operating margin and to deliver recurring net profit growth, at
constant exchange rates5.
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:
- Currency, energy and significant scope impacts
- Comparable sales change
- 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 euro zone. The
currency effect is calculated based on the aggregates for the
period converted at the exchange rate for the previous period.
In addition, the Group passes on variations in the cost of
energy (electricity and natural gas) to its customers via indexed
invoicing integrated into their medium and long-term contracts.
This indexing can lead to significant variations in sales (mainly
in the Large Industries Business Line) from one period to another
depending on fluctuations in prices on the energy market.
An energy impact is calculated based on the sales of each
of the main subsidiaries in Large Industries. Their consolidation
allows the determination of the energy impact for the Group as a
whole. The foreign exchange rate used is the average annual
exchange rate for the year N-1. Thus, at the subsidiary level, the
following formula provides the energy impact, calculated for
natural gas and electricity respectively:
Energy impact = Share of sales indexed to energy year (N-1) x
(Average energy price 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 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.
Comparable sales change
Comparable change for sales excludes the currency, energy and
significant scope impacts described above.
For the 3rd quarter 2022 the calculations are the following:
(in millions of euros)
Q3 2022
Q3 2022/2021
Published
Growth
Currency
impact
Natural
gas impact
Electricity
impact
Significant
scope
impact
Q3 2022/2021
Comparable
Growth
Revenue
Group
8,247
+41.3%
515
1,014
412
(14)
+8.3%
Impacts in %
+8.8%
+17.3%
+7.1%
-0.2%
Gas & Services
7,897
+41.4%
500
1,014
412
(14)
+7.2%
Impacts in %
+8.9%
+18.2%
+7.4%
-0.3%
(in millions of euros)
YTD 2022
YTD 2022/2021
Published
Growth
Currency
impact
Natural
gas impact
Electricity
impact
Significant
scope
impact
YTD 2022/2021
Comparable
Growth
Revenue
Group
22,454
+34.6%
1,138
2,310
947
58
+7.9%
Impacts in %
+6.8%
+13.9%
+5.6%
+0.4%
Gas & Services
21,497
+34.9%
1,106
2,310
947
58
+7.2%
Impacts in %
+6.9%
+14.5%
+6.0%
+0.3%
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...).
Year to date revenue
By Geography
Revenue
(in millions of euros)
YTD 2021
YTD 2022
YTD
Published
change
YTD
Comparable
change
Americas
6,203
7,953
+28.2%
+10.5%
Europe
5,695
8,690
+52.6%
+4.1%
Asia-Pacific
3,523
4,220
+19.8%
+7.3%
Middle East & Africa
514
634
+23.3%
+0.1%
GAS & SERVICES REVENUE
15,935
21,497
+34.9%
+7.2%
Engineering & Construction
250
336
+34.4%
+31.7%
Global Markets & Technologies
495
621
+25.2%
+20.3%
GROUP REVENUE
16,680
22,454
+34.6%
+7.9%
By Business Line
Revenue
(in millions of euros)
YTD 2021
YTD 2022
YTD
Published
change
YTD
Comparable
change
Large Industries
4,659
8,052
+72.8%
-4.8%
Industrial Merchant
6,979
8,602
+23.3%
+14.5%
Healthcare
2,756
2,924
+6.1%
+3.1%
Electronics
1,541
1,919
+24.4%
+17.4%
GAS & SERVICES REVENUE
15,935
21,497
+34.9%
+7.2%
Sales and investments key figures synthesis
The following tables gather data already available in
this report. They complement the key figures indicated in
the table on the first page.
Sales
Q3 2022 split of revenue and comparable
growth in %
Total
Large
Industries(a)
Industrial
Merchant
Electronics
Healthcare
Americas
100%
22%
64%
5%
9%
+12.8%
+5.7%
+16.5%
+10.3%
+4.5%
Europe
100%
56%
22%
2%
20%
-0.2%
-27.5%
+30.2%
N.C.
+5.8%
Asia-Pacific
100%
35%
28%
34%
3%
+10.9%
+3.1%
+8.9%
+21.8%
N.C.
Middle East and Africa
100%
N.C.
N.C.
N.C.
N.C.
-1.2%
100%
39%
39%
9%
13%
Gas & Services
+7.2%
-10.4%
+18.0%
+20.9%
+4.5%
Engineering & Construction
+37.3%
Global Markets & Technologies
+32.7%
GROUP TOTAL
+8.3%
N.C.: Not communicated.
(a) See explanations in the Europe part of
this document.
Investments
(in billion euros)
Q3 2022
12-month portfolio of investment
opportunities(a)
3.0
Investment decisions since beginning of
the year
2.9
Investment backlog(a)
3.4
Additional contribution to revenue of unit
start-ups and ramp-ups since beginning of the year
0.3
(a) At the end of the reporting
period.
The slideshow that accompanies this release
is available as of 7:20 am (Paris time) at www.airliquide.com.
Throughout the year, follow Air Liquide on Twitter:
@AirLiquideGroup.
UPCOMING EVENTS
2022 Full Year results: February 16, 2023
A world leader in gases, technologies and services for Industry
and Health, Air Liquide is present in 75 countries with
approximately 66,400 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.
Taking action today while preparing the future is at the heart
of Air Liquide’s strategy. With ADVANCE, its strategic plan for
2025, Air Liquide is targeting a global performance, combining
financial and extra-financial dimensions. Positioned on new
markets, the Group benefits from major assets such as its business
model combining resilience and strength, its ability to innovate
and its technological expertise. The Group develops solutions
contributing to climate and the energy transition—particularly with
hydrogen—and takes action to progress in areas of healthcare,
digital and high technologies.
Air Liquide’s revenue amounted to more than 23 billion euros in
2021. Air Liquide is listed on the Euronext Paris stock exchange
(compartment A) and belongs to the CAC 40, CAC 40 ESG, EURO STOXX
50 and FTSE4Good indexes.
1 Including the additional contribution from Sasol ASUs takeover
accounted for in significant perimeter (72 million euros at the end
of September 2022 and estimated at 135 million euros in 2022). 2
Including the additional contribution from Sasol ASUs takeover
accounted for in significant perimeter (72 million euros at the end
of September 2022 and estimated at 135 million euros in 2022). 3
Cash flow from operations before changes in working capital
requirement on sales excluding energy pass through impact. 4 Since
the 1st half of 2022, Russian projects have been removed from the
investment backlog. 5 Operating margin excluding energy impact.
Recurring net profit excluding exceptional and significant
transactions that have no impact on the Operating Income Recurring,
and excluding the impact of any US tax reform in 2022.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221024005867/en/
Investor Relations IRTeam@airliquide.com +33 1 40 62 51
50
Media Relations media@airliquide.com +33 1 40 62 58
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