Another year of growth in revenues, operating margin and net
profit
Regulatory News:
Air Liquide (Paris:AI):
2014 Key figures
- Group revenue: +4.5%*15,358 million euros
- Operating margin up: +20 bps17.1%
- Net profit (Group share): +3.8%**1,665 million
euros
- TSR (1 year) +12.7%(total shareholder return)
- Proposed 2014 dividend of 2.55 euros per share
+10.3%
2014 Highlights
- New contracts in growing markets: air gases in the major
industrial basins of the US Gulf Coast and the Rhine-Ruhr region,
in Brazil and in Australia; ultra-pure carrier gases for
electronics in China
- Further acquisitions in Home Healthcare: SEPRODOM and
ARAIR Assistance in France
- Innovation and technology: Supply of cryogenic equipment
for the ITER project; new Engineering & Construction
manufacturing center in the United Arab Emirates
- New developments for sustainable mobility: Extension of
the hydrogen charging station network for fuel cell electric
vehicles in the United States, in Europe, and in Japan; acquisition
of FordonsGas in Sweden
*change 2014/2013 on a comparable basis: adjusted for currency,
natural gas and significant scope (Anios) impacts**adjusted for
currency and the operating impact of the disposal of Anios
Commenting on the 2014 results, Benoît Potier, Chairman and
CEO of Air Liquide, stated:
“In a mixed environment that was also marked by rapid changes
in exchange rates and the oil price, the Group achieved a solid
2014 performance, in sales, operating margin and cash flow.
“Revenue growth in 2014 was primarily driven by strong
momentum in the Americas, Asia-Pacific and the developing
economies, and by robust Electronics activity. In Europe,
performance remains contrasted, albeit with a slight improvement in
the fourth quarter. Overall, on a comparable basis, all of our Gas
& Services and Engineering & Technology businesses reported
growth in the fourth quarter, as well as for the year as a
whole.
“In 2014, the Group continued to improve its competitiveness,
in particular through successful cost adjustments and substantial
efficiency gains, which contributed to our increased operating
margin.
“The strength of the balance sheet, the investment backlog at
€ 2.8 billion, and the new contracts signed will contribute to
growth in the next few years, as will the initiatives underway
designed to accelerate innovation.
“Assuming a comparable economic environment, Air Liquide
is confident in its ability to deliver another year of net profit
growth in 2015.”
2014 consolidated revenue reached €
15,358 million, an increase of +4.5% over 2013 on a
comparable basis. On a reported basis, the increase was
+0.9 %, reflecting an unfavorable currency impact over the
first three quarters of 2014. Gas & Services revenue,
which reached € 13,867 million, was up +4.1% on
a comparable basis. This performance reflects the combined impact
of organic business growth throughout the year and the contribution
of start-ups, of new production unit ramp-ups, and of
acquisitions.
On a comparable basis, all Gas & Services business lines
saw revenue growth in 2014:
- Large Industries, up +3.6%, benefited from
sustained demand for air gases and hydrogen in Asia, particularly
in China, from higher sales of air gases in the United States and
in Latin America and from higher volumes of hydrogen for the
Northern Europe refining sector.
- The good performance of Industrial Merchant, which was
up +3.0%, is reflected in particular in high volumes in all
product segments in China and by solid sales in North America,
particularly in Canada. In Europe, where the situation is
contrasted between the West and the East, a slight improvement was
observed in the fourth quarter. Sales growth was robust in all
developing economies (+9.0%).
- In Healthcare, up +3.7%, revenue grew in all
geographic zones, posting double-digit growth in South America and
in the developing economies of Asia. Growth was once again driven
by sustained demand for home healthcare (+5.5%), despite
significant tariff pressure in Europe, and by strong hygiene sales
(+6.1%).
- Electronics showed robust growth of +12.0%. This
performance was driven by higher carrier gases sales, especially in
China and in the United States, as well as specialty gas and
advanced precursor (the ALOHA™ range) activity in the United
States, in Japan and in Taiwan. The American company Voltaix,
acquired in 2013, also contributed to the performance of this
business line in 2014.
Engineering & Technology revenue rose +15.6%,
on a comparable basis, reflecting third-party customer project
progress, while the order intake (€ 1.4 billion) is at
a good level.
The Group’s operating margin rose to 17.1%, up +20
basis points, boosted by efficiency gains of €
321 million, well in excess of the annual target. This
improvement was even more pronounced for Gas & Services
(+40 basis points). Net profit (Group share) is €
1,665 million, up +3.8 % when adjusted for the
currency and significant scope impacts and of +1.5% as
reported. The effective tax rate rose from 26.6% in 2013 to 28.3%
in 2014.
The Group’s cash flow model once again demonstrated its
solidity, with net debt at € 6,306 million,
virtually unchanged excluding the currency impact, and a slightly
improved debt to equity ratio of 53%. The return
on capital employed after tax is 11.1% excluding
currency impact (10.8% as reported) and will improve with
the ramp-up of growth projects currently under development.
________
Air Liquide’s Board of Directors, which met on February
16, 2015, approved the audited financial statements for fiscal year
2014. The Group’s Statutory Auditors are in the process of issuing
an unqualified opinion on the financial statements.
At the next Annual General Meeting of Shareholders, the Board of
Directors will propose the payment of a dividend of
2.55 euros per share, an increase of +10.3%,
taking into account the attribution in 2014 of 1 free share for 10
existing. The ex-dividend date has been set for May 18, 2015
and the payment date for May 20, 2015.
The Board also approved the draft resolutions that will be
submitted to the Annual General Meeting on May 6, 2015, in
particular calling for the renewal for a period of four years of
the term of office of Mrs. Siân Herbert-Jones, a member of the
Company’s Board of Directors since 2011, as well as the
appointment, for a four-year term, of Mrs. Geneviève Berger.
The Board of Directors duly noted that the terms of office of
board members Mr. Gérard de la Martinière and Mr. Cornelis Van Lede
will expire at the close of the next Annual General Meeting and
thanked them sincerely for their significant contribution to the
work of the Board and the Board’s committees.
Following the Annual General Meeting, the Board of Directors
would consist of 12 members including, since last year, a board
member who is an employee of the Company, appointed by the Works
Council for France on June 18, 2014. Nine of the eleven members
elected by the Annual General Meeting would be independent as
defined in the internal regulations. The Board would include five
women and six members whose nationality is other than French.
In addition, the Board set executive compensation for 2014 and
2015, details of which will be published on the Air Liquide
corporate website. The components of executive compensation for
2014 will be submitted to the shareholders for their opinion, as
was the case last year, under two specific “Say on Pay”
resolutions.
Lastly, concerning the double-voting rights introduced by the
French Law of March 29, 2014, known as the “Florange law”, the
Board of Directors has decided to propose an amendment to the
Company’s articles of association at the shareholders meeting to
return to the principle of "one share, one voice", in practice for
the last twenty years at Air Liquide. This principle of shareholder
equality is consistent with the logic of preserving interests of
shareholders, whose loyalty has been rewarded in the form of bonus
dividends.
________
Benoît Potier also comments on the Group’s 2014 results
in a video interview available in French and in English at
www.airliquide.com.
Follow the announcement of 2014 results live
on Twitter (hashtag #ALresults)All year long, follow the
latest Air Liquide news on
https://twitter.com/airliquidegroup
UPCOMING EVENTS
2015 1st quarter revenueFriday, April 24,
2015
Annual General MeetingWednesday, May 6, 2015
2015 First half resultsThursday, July 30, 2015
World leader in gases, technologies and services for Industry
and Health, Air Liquide is present in 80 countries with more than
50,000 employees and serves more than 2 million customers and
patients. Oxygen, nitrogen and hydrogen have been at the core of
the company’s activities since its creation in 1902. Air Liquide’s
ambition is to be the leader in its industry, delivering long-term
performance and acting responsibly.
Air Liquide ideas create value over the long term. At the core
of the company’s development are the commitment and constant
inventiveness of its people.
Air Liquide anticipates the challenges of its markets, invests
locally and globally, and delivers high-quality solutions to its
customers and patients, and the scientific community.
The company relies on competitiveness in its operations,
targeted investments in growing markets and innovation to deliver
profitable growth over the long-term.
Air Liquide’s revenues amounted to € 15.4 billion in 2014, and
its solutions that protect life and the environment represented
around 40% of sales. Air Liquide is listed on the Paris Euronext
stock exchange (compartment A) and is a member of the CAC 40
and Dow Jones Euro Stoxx 50 indexes.
2014 Performance
Management report
2014 PERFORMANCE
2
2014 Key figures
2
2014 Highlights
3
2014 Income statement
5
2014 Cash flow and balance sheet
12
INVESTMENT CYCLE AND FINANCING
STRATEGY
15
Investments
15
Financing strategy
16
OUTLOOK
19
APPENDICES
20
4th quarter 2014 revenue
20
Segment information
21
Consolidated income statement
22
Consolidated balance sheet
23
Consolidated cash flow statement
24
2014 PERFORMANCE
The solid performance in 2014, in an unsettled
environment, resulted once again in the Group achieving its
objective of net profit growth. Group revenue reached 15,358
million euros, up +4.5% versus 2013 on a comparable basis. On a
reported basis, growth reached +0.9% penalized, in particular, by a
strong currency impact at the beginning of the year. The Gas &
Services activity has continued to make progress in all business
lines, especially in the Americas and Asia. Developing economies
continued to show sustained momentum, up +14% on a like-for-like
basis. The increase in advanced economies was more modest at +1%,
affected by the economic slowdown in Western Europe.
Greater efforts on costs and efficiency, generating a high
level of savings at 321 million euros, contributed to
increasing the operating margin by nearly +20 basis points to
17.1%. Net profit (Group share) rose to 1,665 million euros,
up +1.5% as published. As an indication only, net profit (Group
share) would have been up +3.8% excluding the currency impact and
the operating impact of the disposal of Anios at end-2013.
Investment decisions totaled 2.1 billion euros,
reflecting greater selectivity in the Group's investment process.
Net cash from operating activities was up +1.0%, as an indication
+2.3% excluding currency, financing investments while strengthening
the Group’s financial structure.
The Board of Directors proposes a nominal dividend to be
submitted to the Shareholders’ Meeting of May 6, 2015 at
2.55 euros per share. This represents an increase of +10.3%
for the shareholder taking into account the free share attribution
on June 2, 2014. The pay-out ratio is estimated at
54.0%.
2014 key figures
(in
millions of euros)
2013 2014
2014/2013published change
2014/2013comparablechange (a)
Group revenue 15,225 15,358 +0.9% +4.5%
of which Gas & Services 13,837 13,867 +0.2% +4.1% Operating
income recurring 2,581 2,634 +2.1% -
Operating income recurring (as % of revenue) 16.9%
17.1% +20bps - Net profit (Group share) 1,640 1,665
+1.5% - Adjusted earnings per share (in euros) (b) 4.79
4.85 +1.3% - Adjusted dividend per share (in
euros) (b) 2.31 2.55 (c) +10.3% - Net
cash flows from operating activities (d) 2,803 2,830 +1.0% - Net
capital expenditure (e) 2,240 1,931
- Net debt 6,062 6,306 -
Debt-to-equity ratio 55.7% 53.3% - Return On Capital Employed –
ROCE after tax(f) 11.1% 10.8% - -
(a) Excluding natural gas, currency and significant scope
impacts. Natural gas is an essential raw material for the
production of hydrogen and the operation of cogeneration units. All
Large Industries hydrogen and cogeneration contracts have clauses
indexing sales to the price of natural gas. Hence, when the natural
gas price varies, the price of hydrogen or steam for the customer
is automatically adjusted proportionately, according to the price
indexation clauses.(b) Adjusted for the free share attribution of
June 2, 2014(c) Subject to the approval of the May 6, 2015
Shareholders’ Meeting.(d) Cash flow from operating activities after
change in working capital requirement and other elements.(e)
Including transactions with minority shareholders.(f) Return On
Capital Employed — ROCE after tax: (net profit after tax before
deduction of minority interests - net cost of debt after
taxes)/(shareholders’ equity + minority interests + net
indebtedness) average over the fiscal year).
2014 highlights
During 2014, Air Liquide continued to expand in growth markets
and major industrial basins, in both developing and advanced
economies. This year was also synonymous for the Group with major
developments in innovation, particularly in hydrogen mobility.
DEVELOPMENT OF INDUSTRIAL ACTIVITY
In 2014, thanks to its industrial competitiveness and its
technological differentiation, Air Liquide strengthened its
positions in the major industrial basins on the Gulf Coast and in
the Rhine-Ruhr area.
- In the United States, Air Liquide
signed two major long term contracts for the supply of 2,400 tons
per day of oxygen each, to two methanol manufacturing plants: one
to be built by Natgasoline (an OCI fully owned subsidiary) in
Beaumont (Texas), and the other for Yuhuang Chemical, Inc., a major
Chinese petrochemical company in St. James Parish (Louisiana). Both
plants will be connected to the pipeline networks and represent an
investment of 230 million euros. Via its Global Engineering and
Construction activities, Air Liquide provides its MegaMethanol®
process technology to both companies, thus demonstrating its
leading position in offering an integrated value proposition for
large-scale methanol production.
- In the Rhine-Ruhr area, Air Liquide
strengthened its position with the signing of a major long-term
supply contract with ThyssenKrupp Steel Europe AG. Industrial gas
requirements, including oxygen (4,600 tons per day), nitrogen and
argon, will be supplied via Air Liquide's local pipeline network.
This 500 km pipeline is fed by Air Liquide Air Separation
Units, including Germany’s largest, (with a capacity of 2,400 tons
per day), which was commissioned in 2012.
- In southern Brazil, Air Liquide
invested 40 million euros in a new Air Separation Unit. This Unit
will both provide gas to Klabin, the country's leading pulp and
paper manufacturer, and help develop the Industrial Merchant and
Healthcare activities in the region.
- In Australia, Air Liquide announces a
long-term agreement with Nyrstar, an integrated mining and metals
company. The Group will invest €60 million in a new Air Separation
Unit at Port Pirie site. The project is designed to reduce the
environmental footprint of the site and to enhance both efficiency
and production capabilities.
- In South Korea, Air Liquide sold its
40% stake in Daesung Industrial Gases in order to focus on the
strategic development of its fully-owned subsidiary, Air Liquide
Korea.
In China, Air Liquide saw major developments during 2014. The
Group strengthened its position in the growing Electronics
sector.
- Air Liquide signed a major long-term
contract with CEC Panda Flat Panel Display Technology (a
joint-venture between CEC Panda and Sharp LCD) for the supply of
ultra-pure carrier gases to their first fab that will manufacture
Oxide-TFT screens, based in Nanjing Crystal Park (Jiangsu
Province). These new screens will be used in mobile devices and TV
sets on Generation 8.5 size glass substrates. Air Liquide will
invest some 25 million euros.
- Air Liquide also signed a major
contract with the BOE Technology Group to supply its new flat panel
fab based in Chongqing in China. The Group invested 30 million
euros in a highly-efficient on-site generator that will produce
30,000 Nm3/h of ultra-high purity nitrogen. Air Liquide will supply
the majority of BOE's fabs in China with a total of 100,000 Nm3/h
of nitrogen for five sites.
FURTHER ADDITIONAL ACQUISITIONS IN HEALTHCARE
An ageing population and the rise in the number of patients
affected by chronic diseases are major public health issues. Air
Liquide continued with its strategy of patients densification in
the Group's geographies through additional acquisitions in home
healthcare.
- In July 2014, Air Liquide acquired
SEPRODOM, a key player in accompanying patients with chronic
diseases at home in the French overseas departments and
territories.
- In December 2014, Air Liquide acquired
the home healthcare service provider ARAIR Assistance (which
generated revenue of 34 million euros in 2013), as well as ARAIR
Group’s support and training services. ARAIR is a leading player in
home healthcare in the Central region of France.
CONTINUED INVESTMENT IN INNOVATION
- In France, the Group made major
investments for a total amount of close to 100 million euros for
the modernization of the Paris-Saclay Research Center, the creation
of a center for the development of gas packaging for industry and
healthcare on the same site, and the launch of a technical center
of excellence for cryogenic production technologies in
Vitry-sur-Seine.
- In the 3rd quarter 2014, Air Liquide
began the construction of a Research and Technology Center in
Shanghai. The center, which will be operational at end-2015,
represents a 25 million euro investment and will cover several
research and development areas. It will ultimately house 200 highly
skilled employees.
- The international ITER project, through
its European organization Fusion For Energy (F4E), entrusted Air
Liquide with the supply of additional cryogenic equipment for a
total of around 65 million euros. This follows on from the signing
of a major contract in 2012 for the supply of three helium
refrigerators with record combined cooling capacity.
MAJOR DEVELOPMENTS IN HYDROGEN MOBILITY
The year 2014 was marked by major advances in the global
deployment of hydrogen energy:
- In France, the first hydrogen filling
station for forklift trucks started up on IKEA's logistic platform
near Lyon. It allows greater productivity thanks to rapid forklift
truck refilling relative to battery recharging time. In Saint-Lô,
France, the Conseil Général de la Manche installed a hydrogen
filling station for its fleet of fuel cell electric vehicles.
- In Denmark, Air Liquide installed four
new hydrogen filling stations, as part of the Copenhagen Hydrogen
Network, supported by the European Commission. These stations
marked a significant step in the creation of a distribution network
at national level.
- In the Netherlands, Air Liquide
inaugurated its first hydrogen filling station for the general
public in September 2014 in Rotterdam. The filling station is part
of the Hydrogen Infrastructure for Transport project, a European
deployment project supported by the European Union.
- In Japan, in Nagoya and Toyota, the
Group built, with Toyota Tsusho Corporation, two hydrogen filling
stations for public use.
- In the United States, Air Liquide
announced a partnership with Toyota to build 12 hydrogen filling
stations in the northeast of the country. This infrastructure will
support the launch in April 2015 of Toyota's "Mirai" hydrogen fuel
cell electric vehicle.
Air Liquide also announced the acquisition of FordonsGas, a
company that distributes Bio- and Natural Gas for Vehicles
(Bio-NGVs) for the Swedish transportation market. Air Liquide will
benefit from FordonsGas' experience in the distribution of an
alternative fuel, useful experience in terms of its infrastructure
deployment strategy in hydrogen mobility.
REFINANCING AT ATTRACTIVE RATES
To refinance debt reaching maturity and continue to fund its
development while benefiting from very attractive market
conditions, in 2014, Air Liquide issued bonds for a total
amount of 858 million euros with maturities of between eight
and 15 years. The main transaction was carried out as part of the
EMTN program for a total of 500 million euros over 10 years and
with a record low coupon of 1.875% per year.
2014 Income Statement
REVENUE
Revenue
(in millions of euros)
2013 2014 2014/2013
change 2014/2013 comparable change (a) Gas
& Services 13,837 13,867 +0.2%
+4.1% Engineering & Technology 803 912
+13.6% +15.6% Other activities 585 579 -1.1% -1.0%
TOTAL
REVENUE 15,225 15,358
+0.9% +4.5%
(a) Excluding currency, natural gas and significant scope
impacts.
Group
The Group’s 2014 revenue reached 15,358 million
euros, a reported increase of +0.9% compared to 2013, penalized
by a negative currency impact of -1.9% which was particularly
strong at the beginning of the year, and a natural gas impact of
-0.6%. On a comparable basis (excluding currency and natural
gas impacts and revised for the impact of the disposal of Anios at
end-2013), revenue for the year increased by +4.5%.
The first quarter benefited from a favorable comparable basis
and sales continued to increase like-for-like during the following
three quarters.
Revenue by quarter (in millions of euros)
Q1
2014 Q2 2014 Q3 2014 Q4
2014 Gas & Services 3,416 3,391 3,446
3,614 Engineering & Technology 175 230 213 294 Other
activities 143 151 142 143
TOTAL
REVENUE 3,734 3,772
3,801 4,051 2014/2013 published change
+1.0% -2.4% +1.0%
+3.9% 2014/2013 comparable change (a)
+6.2% +3.6% +4.3%
+3.9%
(a) Excluding currency, natural gas and significant scope
impacts.
Currency, natural gas and significant
scope impacts
In addition to the comparison of published
figures, financial information is given excluding currency, natural
gas price fluctuation and significant scope impacts.
Since industrial and medical gases are
rarely exported, the impact of currency fluctuations on activity
levels and results is limited to euro translation impacts with
respect to the financial statements of subsidiaries located outside
the euro zone. Fluctuations in natural gas prices are generally
passed on to customers through price indexation clauses.
(in millions of euros)
Group
Gas & Services 2014 revenue 15,358
13,867 2014/2013 published change (in %) +0.9% +0.2%
Currency impact -294 -278 Natural gas impact -87 -87
Significant scope impact -168 -168
2014/2013
comparable change (a) (in %) +4.5%
+4.1% (a) Excluding currency, natural gas and
significant scope impacts.
Gas & Services
Unless otherwise stated, all the changes in revenue outlined
below are on a comparable basis (excluding currency, natural gas
and significant scope impacts).
Gas & Services revenue reached 13,867 million
euros, showing comparable growth of +4.1%, with all
business lines posting growth. Revenue was up +0.2% in published
data, penalized by a negative currency impact of -1.9% and a
natural gas impact of -0.6%.
Revenue
(in millions of euros)
2013 2014 2014/2013
change 2014/2013 comparablechange
(a) Europe 7,058 6,640 -5.9%
-1.1% Americas 3,225 3,416 +5.9% +7.9%
Asia-Pacific 3,184 3,444 +8.2% +11.6%
Middle-East and Africa 370 367 -0.8% +4.6%
GAS &
SERVICES 13,837 13,867
+0.2% +4.1% Industrial Merchant 5,081 5,083
+0.0% +3.0% Large Industries 4,940 4,980 +0.8%
+3.6% Healthcare 2,689 2,570 -4.4% +3.7% Electronics
1,127 1,234 +9.5% +12.0%
(a) Excluding currency, natural gas, and significant scope
impacts
Gas & Services sales share in developing
economies
Due to a higher growth rate, the share of developing economies
in the Gas & Services revenue continued to progress and reached
26% in 2014. This contribution was even higher for industrial
activities at 29.5%.
Europe
Revenue in Europe totaled 6,640 million euros, down
-1.1%. Sales increased slightly, excluding the disposal of the
cogeneration activities at end-2013 and the impact of the drop in
electricity costs. Oxygen levels were stable, whereas demand for
hydrogen increased significantly, a sign of resilience in the North
European industrial basins. The region continued to benefit from
momentum in the developing economies, which increased by +5.4% in a
complex geopolitical context. Sales were down slightly in Western
Europe, with the 4th quarter posting a slight improvement compared
with the previous two quarters.
- Large Industries revenue
decreased by -3.9%. Excluding the disposal of the
cogeneration plants at end-2013 and lower electricity prices, sales
were stable. Hydrogen volumes were up, boosted by demand from the
refining industry mainly in Northern Europe. Oxygen volumes
remained stable, with Eastern and Southern Europe offsetting the
drop in volumes in Northern Europe.
- Industrial Merchant sales
declined slightly by -1.1%. Developing economies continued
to post solid growth thanks to the ramp up of new facilities, in
particular in Russia with growth exceeding +25%. However, business
in advanced economies suffered from a persistently difficult
economic climate. The fourth quarter showed signs of stabilization
with increasing liquid volumes. Spain posted growth for the second
quarter in a row. The price impact was slightly down for the year
at -0.2%, with a small positive price impact in Northern Europe and
Spain.
- Healthcare continued its
development, with +1.9% growth. The Home Healthcare activity
grew by +2.9% with few acquisitions in 2014, still driven by
increased demand and the expansion of the portfolio of therapies
treated. The number of patients has exceeded one million in Europe.
Pressure on tariffs remained throughout the region, in particular
in Spain and France. In medical gases for hospitals, budgetary
pressure affected gas volumes in France and Southern Europe,
whereas Northern Europe saw a slight increase in volumes. In
prevention and well-being, Specialty Ingredients saw a +3.1%
increase in revenue, whereas Schülke's Hygiene activity improved by
+11.0%. The pricing impact was negative during the year, slightly
below -2%.
- Electronics revenue increased
+3.1%, due to an upturn in carrier gas sales.
Americas
Gas & Services revenue in the Americas totaled
3,416 million euros, up +7.9%. Industrial
activity remained sustained in North America, with an increase in
oxygen and hydrogen volumes, a solid improvement in bulk sales and
positive elasticity in Industrial Merchant prices. Growth was
regular over the year in South America, in particular in Large
Industries and Healthcare, and reached close to +15% despite a
slowdown in Brazil at the end of the year.
- Large Industries reported
revenue growth of +4.7%. Oxygen and hydrogen volumes
improved throughout the region, thanks to ramp-ups in Latin America
and sustained demand in North America where customers continued to
benefit from competitive energy prices. Cogeneration volumes were
down markedly following production unit turnarounds in the United
States and a fall in the market price of electricity in
Canada.
- The Industrial Merchant activity was up
+6.4%, driven by very strong bulk sales growth throughout
the region, and in particular in Canada and Mexico where our
activity ramp-up continues. The cylinder activity declined
throughout the region. Pricing campaigns continued all year long,
with an average effect of +4.4% in 2014.
- Healthcare revenue rose by
+10.6% driven by the performance of Home Healthcare in Latin
America (Argentina, Brazil) and Canada which benefited from
additional acquisitions. Sales of medical gases to hospitals also
increased throughout the region. Pricing pressure remains
strong.
- Electronics activity was up
+29.5% benefiting particularly from the acquisition of
Voltaix, a company specializing in molecules and advanced
precursors. The comparison effect of this acquisition came to an
end at the beginning of the fourth quarter. Specialty gas sales in
the United States more than doubled over the year and growth
exceeded +40% for the Aloha range. Carrier gases also
posted solid growth. Equipment and installation sales improved
significantly, evidence of the sector's gradual recovery in the
region.
Asia-Pacific
Revenue in the Asia-Pacific region increased by +11.6% to
3,444 million euros. Sales growth continued in the
region's main countries with strong momentum in all business lines.
China continued to benefit from start-ups in December 2013 and
January 2014. Japan saw growth in all four quarters, thanks to the
cycle peak in Electronics.
- Large Industries sales increased
by +19.1%, buoyed by the ramp-up of the new units in China.
Air gas and hydrogen volumes increased throughout the region.
- Industrial Merchant activity
posted +6.3% growth during the year. Liquid volumes improved
markedly in the region, driven by strong growth in China. The
cylinder activity was also steady despite major pricing pressure.
Developing economies increased strongly at +12.5%, in particular
with a comparable increase of almost +15% in China where all market
segments reported growth. The pricing impact was -0.3% over the
period. Excluding Australia, where there was strong competition,
the pricing impact is positive for the region.
- Electronics sales were up +8.3%.
Japan confirmed a return to growth in 2014, with an improvement of
more than +3% and sales accelerating throughout the year. Sales of
the Aloha range grew by over +60% in the region, mainly in China,
Japan and Taiwan. Carrier gases also posted significant sales
growth, driven by the ramp-up of new contracts in China, Taiwan and
Korea.
Middle-East and Africa
Middle-East and Africa revenue totaled 367 million
euros, up +4.6%. Large Industries improved mainly
in South Africa thanks to the ramp-up of a new unit for the metals
market. Industrial Merchant activity also grew in South
Africa, benefiting from an improvement in the supply of argon
during the year. The situation was more contrasted in the
Middle-East where geopolitical tensions weighed on activities. In
Saudi Arabia, the initial start-up phases of our hydrogen units and
those of our customers on the Yanbu site began, with commissioning
scheduled for the first half of 2015.
Engineering & Technology
Engineering & Technology revenue totaled 912 million
euros, up +15.6% compared to 2013, reflecting
third-party customer project progress.
In 2014, total order intake reached 1.4 billion euros, down
from the record level of 2013. The vast majority of projects
concerned air gas production units. The level of order intake was
well balanced between Group projects and third-party customer
projects and reflects greater selectivity of both Group investments
and third party client projects during the year.
Orders in hand reached 5.3 billion euros as at
December 31, 2014, and reflects a good level of order intake
in 2013 and 2014.
Other activities
Revenue
(in millions of euros)
2013 2014
2014/2013change
2014/2013comparable change
(a)
Welding 404 392 -3.0% -3.0% Diving
181 187 +3.3% +3.5%
TOTAL
585 579 -1.1%
-1.0%
(a) Excluding currency, natural gas, and significant scope
impacts.
The -1.0% decline in revenue for Other activities in 2014
is linked to the weakness of the Welding activity, down -3.0% over
the year. The Welding activity nonetheless improved during the
second half, thanks to a slight recovery in the European metals,
automotive and construction sectors.
Diving (Aqua Lung) was slightly up +3.5% for 2014. The
year was marked by a drop in activity in the military industry as
well as the disposal of non-strategic activities.
OPERATING INCOME RECURRING
Operating income recurring before depreciation and
amortization totaled 3,873 million euros, up +1.5% in
reported figures. The pricing effect was positive on the whole over
the period at +0.4%, partially offsetting cost inflation on
constant volume of +2.0%, and efficiencies were at a very high
level.
For the full year, efficiencies amounted to 321 million
euros, exceeding the annual target of more than
250 million euros. These efficiencies represent a 2.9% cost
saving. Of this amount, 69 million euros stem from the realignment
plans undertaken in 2013 in structures where activity had suffered
from falling demand. In the industrial domain, other projects
designed to reduce energy consumption, optimize the logistics chain
and roll out global or regional purchasing platforms were
continued.
Depreciation and amortization amounted to 1,239 million
euros, slightly up by +0.2%, with the impact of unit start-ups and
acquisitions partly offset by more efficient asset management and
better control over investments.
The Group’s operating income recurring (OIR) reached
2,634 million euros in 2014, an increase of +2.1% over
2013 or +5.1% on a comparable basis. The operating margin (OIR to
revenue) was up +20 basis points at 17.1%.
Gas & Services
Gas & Services operating income recurring totaled
2,738 million euros, up +3.1%. The OIR margin
amounted to 19.7%, compared to 19.2% in 2013. Excluding the natural
gas impact, the operating margin was again up +40 basis
points.
Cost inflation, excluding the impact of energy indexation,
remained relatively stable during the year at +2.5% for the full
year. Prices rose by +0.5% due to continuing efforts in Industrial
Merchant (+1.2%) and despite ongoing pricing pressure in
Healthcare. Efficiencies totaled 298 million euros. A portion
of these efficiencies was absorbed to offset the difference between
cost inflation and rising prices. The remaining efficiencies, i.e.
retention, helped improve the margin. The retention rate was 36% in
2014.
Gas & Services 2014 Operating income recurring
Gas &
Services Operating margin (a) 2012
2013 2014 Europe 18.3% 19.1%
20.3% Americas 24.0% 23.6% 22.7%
Asia-Pacific 15.1% 15.1% 16.0% Middle-East and
Africa 21.2% 17.9% 17.6%
TOTAL
18.8% 19.2% 19.7% (a) Operating
income recurring/revenue, as published.
Operating income recurring in Europe totaled
1,346 million euros, stable compared to 2013. Excluding
the natural gas impact, the operating margin was significantly
higher, up +70 basis points at 19.8%. The operating
margin benefited in particular from efficiencies generated by the
realignment plans initiated in 2013, as well as a reduction in
charges relating to changes in pension plans in France and the
Netherlands. The Large Industries margin was strengthened by
industrial efficiencies while the Healthcare margin, benefiting
from the economies of scale of volume growth, was resilient despite
the pressure on tariffs.
Operating income recurring in the Americas amounted to
776 million euros, up +2.0%. Excluding the
natural gas effect, the operating margin was down -40 basis
points but nonetheless remained at a high level of 23.2%. The
operating margin was penalized by an increase in transport costs
which was partly due to weather conditions at the beginning of the
year and partly offset by industrial efficiencies in Industrial
Merchant and Large Industries.
In Asia-Pacific, operating income recurring amounted to
552 million euros, a marked increase of +14.5%.
The operating margin, excluding natural gas, was up
+90 basis points, thanks to efficiency plans launched
in 2013 in Japan, plant start-ups and the growth of Industrial
Merchant in China as well as industrial efficiencies in Large
Industries and Electronics.
Operating income recurring for Middle East and Africa
amounted to 65 million euros, a decline of
-2.7%. The operating margin was down -30 basis
points, impacted by the geopolitical situation in the Middle
East and by argon supply difficulties in South Africa early in the
year.
Engineering & Technology
Operating income recurring for Engineering & Technology
amounted to 76 million euros. Operating income
recurring as a percentage of revenue at 8.3% remained in line with
the Group's target range of between 5% and 10%.
Other activities
The Group’s Other Activities reported operating income recurring
of 36 million euros, up +10.9%, while the
operating margin as a percentage of revenue totaled 6.1%, an
increase of +60 basis points. This improvement was the result
of efficiencies, in particular related to the realignment plans
initiated in 2013 in Welding.
Research & Development and corporate costs
Research & Development and Corporate Costs include
intersector consolidation adjustments and amounted to
215 million euros, up +11.4%, particularly reflecting
the Group’s efforts to strengthen its innovation structures.
NET PROFIT
Other operating income and expenses showed a positive
balance of 16 million euros compared to a positive balance
of 26 million euros in 2013. They included 37 million euros of
expenses incurred principally for further realignment programs in
various countries, provisions for litigation-related risks, and
certain one-off costs, offset by 63 million euros of capital
gains on disposals, in particular relating to the sale of a polymer
engineering and construction activity.
The net financial expense of -251 million
euros was -17.7% lower than the -305 million euros in
2013.
The net finance costs, up slightly +4.1%, reflects a
stable average cost of net indebtedness at 4.0% coupled with a
slight increase in average net debt over the year, in particular in
developing economies.
Other financial income and expenses decreased significantly to
-21.7 million euros compared with -84.7 million euros in
2013 due to a gain on the partial disposal of a financial stake in
a start up as well as a reduction in financial expenses relating to
revisions in certain pension plans.
Taxes totaled 678 million euros, up +10.9%. The
effective tax rate was 28.3% compared to 26.6% in
2013. This increased rate is the result of the fact that the 2013
rate benefited from the impact of the reduced rate on the capital
gains from the disposal of Anios stake.
The share of profit of associates was 4 million
euros down from 14.5 million in 2013 following the
disposal of a stake in a Korean joint venture. Minority
interests fell by -6.9%, amounting to 59.8 million
euros.
Overall, net profit (Group share) amounted to
1,665 million euros in 2014, up +1.5% in reported
terms.
Net earnings per share were 4.85 euros, up
+1.3% compared to 4.79 euros (adjusted for the 2014
free share attribution) in 2013. The average number of outstanding
shares used for the calculation of net earnings per share as of
December 31, 2014 was 343,214,086.
Change in the number of shares
2013
2014 Average number of outstanding shares (a)
342,664,899 343,214,086
(a) Used to calculate earnings per share, 2013 adjusted for free
share attribution on June 2, 2014.
Number of shares as of December 31, 2013
312,831,676 Options exercised during the year, prior to the
free share attribution 511,594 Cancellation of treasury
shares (1,000,000) Free shares issued 32,095,812 Options exercised
during the year, after the free share attribution 433,801
NUMBER OF SHARES AS OF DECEMBER 31, 2013
344,872,883
DIVIDEND
At the Shareholders’ Meeting on May 6, 2015, the payment of a
dividend of 2.55 euros per share will be proposed to shareholders
for fiscal year 2014, up +10.3% taking into account the free share
attribution on June 2, 2014. Total estimated pay-out taking into
account share buybacks and cancellation will amount to 899 million
euros, up +10.3%, representing a pay-out ratio of 54.0%
The ex-dividend date has been set for May 18, 2015 and the
dividend will be paid from May 20, 2015.
2014 cash flow and balance sheet
(in millions of euros)
2013 2014 Cash flow from operating
activities before change in working capital 2,949
2,943 Change in working capital requirement (19) 74
Other items (127) (187)
Net cash flow from
operating activities 2,803 2,830
Dividends (877) (885) Purchases of property, plant and equipment
and intangible assets, net of disposals (b) (2,240)
(1,931) Increase in share capital 126 60 Purchase of
treasury shares (115) (116) Other 344 (202)
Change
in net indebtedness 41 (244) Net
indebtedness as of December 31 (6,062) (6,306)
Debt-to-equity
ratio as of December 31 56% 53%
NET CASH FLOW FROM OPERATING ACTIVITIES
Cash flow from operating activities before changes in working
capital amounted to 2,943 million euros, down -0.2% compared
to 2013. Net cash from operating activities after changes in
working capital requirement amounted to 2,830 million
euros, up +1.0% compared to 2,803 million euros in 2013, or as an
indication +2.3% excluding currency impact. This performance was in
particular impacted by the expensing of the realignment plans,
provisioned in 2013.
CHANGE IN WORKING CAPITAL REQUIREMENT
The working capital requirement fell slightly (-74 million
euros) in 2014. Excluding taxes, it was quasi stable, in particular
as a result of better recovery of trade receivables, and stood at
6.8% of revenue, compared to 6.6% in 2013.
The increase in other items reflects, in particular, adjustments
to certain pension plans in Europe.
CAPITAL EXPENDITURE
In 2014, gross capital expenditure totaled 2,175 million
euros, including transactions with minority shareholders. Gross
industrial capital expenditure reached 1,902 million euros in
2014, a decrease of -11.8% compared to 2013. The Gross financial
capital expenditure, including transactions with minority
shareholders, amounted to 273 million d'euros. Gross capital
expenditure in the Gas & Services activity, including
transactions with minority shareholders, represented 14.4% of
sales, compared to 17.6%% in 2013.
Group gross
capital expenditure
(in millions of euros)
Industrial investments Financial
investments (a) Total capex 2009
1,411 109 1,520 2010 1,450 332
1,782 2011 1,755 103 1,858 2012 2,008
890 2,898 2013 2,156 401 2,557
2014 1,902 273
2,175 (a) Including transactions with minority shareholders.
The assets disposals, for a total amount of 244 million
euros, included non-strategic activities, in particular the
disposal of a stake in a Korean joint venture and that of a
polymers engineering and construction activity. Including minority
interest buyouts, total net capital expenditure amounted to
1,931 million euros.
Industrial investments
Industrial investments amounted to 1.9 billion euros in
2014, down -11.8% compared to 2013. This trend reflects more
selectivity in projects, strict control of capital expenditure and
efforts to better load existing capacity and in particular, the
recently started-up units.
Gas & Services investment by region was as follows:
Gross Industrial investments by
geographical region (in millions of euros)
Gas &
Services Europe Americas
Asia-Pacific Middle-East and Africa
Total 2013 771 610 512 171 2,064
2014 718 613 379
83 1,793
Financial investments
Financial investments amounted to 179 million euros, 273
million euros including transactions with minority shareholders.
These included the acquisition of Arair and Seprodom in Home
Healthcare, FordonsGas in Biogas, and numerous small acquisitions
of distributors in Industrial Merchant in particular in developing
countries. Disposals of financial investments totaled
15.8 million euros.
NET INDEBTEDNESS
Net indebtedness at December 31, 2014 at 6,306 million
euros, was up 244 million euros compared to the end of
2013, almost entirely due to a negative currency impact of
222 million euros. Excluding the currency effect, the
stability of the debt level reflects solid cash flow and the
efforts to contain the working capital and capital expenditure.
The debt-to-equity ratio was 53%, a slight decrease compared
to December 31, 2013 and confirms a further improvement in the
Group’s financial structure.
ROCE
The return on capital employed after tax was 10.8% versus
11.1% at the end of 2013, reflecting the adverse effect of currency
fluctuations on results and capital employed. At constant exchange
rates, return on capital employed was stable at 11.1%. Assets under
construction, which will contribute to growth in the medium term,
remain high and should gradually decrease with the start-up of
major projects in 2015 and 2016.
In addition, value creation, reflected by the difference
between return on capital employed and the average cost of capital,
continued to increase and reached 570 basis points at the end of
2014.
INVESTMENT CYCLE AND FINANCING STRATEGY
The Group’s steady long-term growth is largely due to its
ability to invest in new projects each year. Industrial gas
investment projects are widespread throughout the world, highly
capital intensive and supported by long-term contracts,
particularly for Large Industries. Air Liquide has thus
tailored its financing strategy to the nature of its projects,
based on the diversification of funding sources, the prudent
management of the balance sheet and innovative financing sourcing.
This financing strategy is fundamental for the Group’s continued
development.
Investments
INVESTMENT OPPORTUNITIES
As at December 31, 2014, the 12-month portfolio of
opportunities totaled 3.2 billion euros, down 400 million
euros compared to end-2013. This change is due to a higher level of
investment decisions during the fourth quarter; the level of
abandoned or delayed projects, exiting the portfolio at the end of
the year was in line with the usual changes observed.
As at December 31, 2014, 64% of projects in the portfolio were
located in developing economies and well spread over the Group's
four geographic regions. Compared to end-December 2013, the share
of European projects decreased to about 20%, as the Group’s
development resources were realigned with the geopolitical context.
The share of projects in China and North America increased
slightly, reflecting renewed investment momentum in 2014 in these
two regions. The share of the rest of Asia declined slightly. The
investment opportunities include nine site takeovers that are
currently operated by the customers themselves, reflecting the
continuing trend towards outsourcing of industrial gas
production.
The majority of the opportunities are in the Large Industries
business line. The share of Large Industries projects relating to
metals has decreased, relating to the chemicals sector remains
stable, whereas the share relating to energy has increased.
INVESTMENT DECISIONS AND INVESTMENT BACKLOG
Investment decisions
(in billions of
euros)
Industrial investment decisions
Financial investment decisions (acquisitions)
Total investment decisions 2010 1.8 0.4
2.2 2011 1.9 0.1 2.0 2012 2.0
0.9 2.9 2013 2.2 0.5 2.7
2014 1.9
0.2 2.1
In 2014, industrial and financial investment decisions,
representing Group commitments to invest, reached 2.1 billion
euros. Three quarters of these decisions relate to growth projects.
Despite a significant drop in the amount of these decisions
compared with the particularly high level seen in 2013 and 2012,
the pace of signatures accelerated throughout the year.
The amount of industrial decisions in 2014 was down by around
0.3 billion euros, reflecting increased selectivity in terms
of investments. Large Industries represented around half of
investment decisions, with Industrial Merchant accounting for a
quarter. The other quarter included Health, Electronics and Other
activities.
In geographical terms, industrial decisions were spread across
all regions. Asia and the Americas represented the Group's two main
investment regions, with numerous projects in energy, valorization
of shale gas in the United States and coal conversion in China.
Europe's share represented around a quarter of investment
decisions.
Financial investment decisions reached some 200 million
euros in 2014. In Home Healthcare, these included the acquisition
of Arair in France and Seprodom in French overseas regions, and
local players in Brazil, Canada and Korea. They also included the
acquisition of FordonsGas in biogas and the acquisition of local
Industrial Merchant players in China, Brazil, Canada, Mexico and
the United Kingdom.
The total investment backlog amounted to 2.8 billion euros,
leading to a future contribution to revenue of approximately 1.2
billion euros after full ramp-up.
START-UPS
In 2014, 20 units were commissioned, a similar level to
that seen in 2013. Some start-ups, initially planned for 2014, will
be completed in 2015.
Start-ups were mainly located in developing economies in 2014.
In China, many of the start-ups were air gas production units for
the chemicals and energy conversion markets. In Asia, the start-ups
were mainly units for the Electronics sector.
The number of start-ups in 2015 should be slightly higher.
Financing strategy
The Group’s financing strategy is regularly reviewed to provide
support to the Group’s development and take into account changes in
financial market conditions, while respecting a credit profile in
line with Standard & Poor’s long term minimum “A” rating. This
credit profile depends on key ratios such as net debt to equity and
cash flow from operations before change in working capital to net
debt. Air Liquide's "A+" rating was confirmed by Standard &
Poor's on November 27, 2014.
In 2014, the existing principles of prudence were
maintained:
- Diversifying financing sources and debt
maturities in order to minimize refinancing risk;
- Backing commercial paper issues with
confirmed credit facilities;
- Hedging interest rate risk to ensure
visibility of funding costs, in line with long-term investment
decisions;
- Funding investments in the currency of
the operating cash flows, to ensure a natural currency
hedging;
- Ever increasing centralization of
funding and excess cash through Air Liquide Finance, a wholly owned
entity of L'Air Liquide S.A..
DIVERSIFYING FUNDING SOURCES
Air Liquide diversifies its financing sources by accessing
various debt markets: commercial paper, bonds and banks.
Air Liquide uses the short-term commercial paper market, in
France, through two French Commercial Paper programs of up to an
outstanding maximum of 3 billion euros, and in the United States
through a US Commercial Paper program (USCP) of up to an
outstanding maximum of 1.5 billion US dollars.
Air Liquide also has a Euro Medium Term Note (EMTN) program to
issue long-term bonds of up to an outstanding maximum amount of 9
billion euros. At the end of 2014, outstanding bonds issued under
this program amounted to 4.5 billion euros (nominal amount). The
Group’s EMTN program allows, in particular, for bonds to be issued
in the main currencies (euro, US dollar, Japanese yen) as well as
in other currencies (Chinese renminbi, Swiss franc, pound sterling
and rouble).
In 2014, the Group conducted four bond issues under its EMTN
program - one public issue for a total amount of 500 million euros
and three through private placements for a total, at December 31,
2014, of 358 million euros, in order to finance its
investments.
As of December 31, 2014, funding through capital markets
accounts for more than 80% of the Group’s total gross debt, for an
amount of bonds outstanding of 5.5 billion euros, across all
programs, and 375.1 million euros of commercial paper.
The Group also raises funds through bank debt (loans and credit
facilities).
To avoid liquidity risk relating to the renewal of funding at
maturity, and in accordance with the Group’s internal policy, the
Group aims to limit its short-term debt maturities to 2.6 billion
euros, an amount which is covered by committed credit facilities.
At December 31, 2014, the amount of debt maturing in 2015 was equal
to 1.3 billion euros.
In addition, the Group has a 1.3 billion euros syndicated credit
facility reaching maturity in November 2019 after the exercise of
the first one-year extension option in 2014. At December 31, 2014,
the contract has a second one-year extension option, if it would be
exercised, would lengthen the maturity to November 2020.
At December 31, 2014 the total amount of undrawn committed
syndicated and bilateral credit facilities was 2.57 billion
euros.
Net indebtedness by currency
2013
2014 Euro 31% 25% US dollar 32%
40% Japanese yen 13% 11% Chinese renminbi 14% 14%
Other 10% 10%
TOTAL 100%
100%
Investments are essentially funded in the currency in which the
cash flows are generated, creating a natural currency hedge. Air
Liquide’s debt is thus mainly in euro, US dollar, Japanese yen and
Chinese renminbi, which reflects the significant weight of these
currencies in the Group’s investments and cash flow.
The share of the Group net indebtedness denominated in euros
decreased mainly because of the rise in the financing of industrial
investments in the United States (in US dollars). The share of net
indebtedness denominated in Japanese yen also decreased, due to
cash raised by the disposal of a stake in a Korean company partly
owned by AL Japan.
CENTRALIZATION OF FUNDING AND EXCESS CASH
To benefit from economies of scale and facilitate capital
markets financing (bonds and commercial paper), the Group uses a
dedicated subsidiary, Air Liquide Finance. At December 31, 2014,
this subsidiary centralized the vast majority of the Group’s
financing transactions. This centralization continued in 2014, in
particular for the financing of investments in developing economies
in Asia and the Americas. It also hedges currency, interest rate
and energy risk for the Group’s subsidiaries in those countries
where it is permitted by law.
In the countries where it is permitted by law, Air Liquide
Finance also centralizes cash flow balances through direct or
indirect daily cashpooling of these outstandings or through term
loans. When this is not possible, there are nonetheless domestic
cashpoolings, allowing periodic intercompany loans to Air Liquide
Finance.
As of December 31, 2014, Air Liquide Finance had granted,
directly or indirectly, the equivalent of 8.0 billion euros in
loans and received 3.7 billion euros in excess cash as deposits.
These transactions were denominated in 24 currencies (primarily the
euro, US dollar, Japanese yen, Chinese renminbi, pound sterling,
Swiss franc, Singaporean dollar and Brazilian real) and extended to
approximately 230 subsidiaries.
The matching by currency within Air Liquide Finance, resulting
from the currency hedging of intra-group loans and borrowings,
enables to avoid generating foreign exchange risk for the
Group.
Furthermore, in certain specific cases (e.g. regulatory
constraints, high country risk, joint-ventures, etc.), the Group
limits its risk by setting up specific finance in the local banking
market, and by using credit-risk insurance.
DEBT MATURITY AND SCHEDULE
To minimize the refinancing risk related to debt maturity
schedules, the Group diversifies financing sources and spreads
maturities over several years. This refinancing risk is also
reduced by the regularity of the cash flow generated from Group
activities.
The average of the Group's debt maturity is 5.4 years, at
December 31, 2014.
The following chart represents the Group's debt maturity
schedule. The single largest annual maturity represents
approximately 18 % of gross debt.
CHANGE IN NET INDEBTEDNESS
Net indebtedness stood at 6,306 million euros as of December 31,
2014, compared to 6,062 million euros as of December 31, 2013, an
increase of 244 million euros.
This increase is due, in particular, to a negative currency
impact, as the euro depreciated against several other currencies at
the end of 2014.
Cash flow generated by the operational activities funds almost
all investments and dividends.
The net debt to equity ratio stood at 53% at the end of
2014 (compared to 56% at the end of 2013). This reduction is due to
greater selectivity in Group's Investment process. The equivalent
ratio calculated using the US method of net indebtedness/(net
indebtedness + shareholder’s equity) reached 35% at the end of
2014, compared to 36% at the end of 2013. The financial expenses
coverage ratio (operating income + share of profit of
associates/net finance costs) stood at 11.6 in 2014 compared to
11.9 in 2013.
The average cost of gross indebtedness increased slightly in
2014 due to the increase in the share of funding in developing
economies where benchmark rates are higher, and the Group's
decision to issue longer-term maturities to benefit from the fall
in interest rates in the main currencies.
The average cost of net indebtedness was 4.0% in 2014,
stable compared to 2013 (4.0%). Cost of net indebtedness is
calculated by dividing net finance costs for the fiscal year (268.8
million euros in 2014, excluding capitalized interest) by the
year’s average outstanding net indebtedness.
This stability is due to the increase in the average cost of
indebtedness in developing economies, which is offset by the
decrease in financial expenses on long-term bond issues and
increasingly centralized cash management.
BANK GUARANTEES
In connection with its Engineering & Construction activity,
the subsidiaries of the Group sometimes grant bank guarantees to
customers, during the tender period (bid bond), and after contract
award, during contract execution until the end of the warranty
period (advance payment bond, retention bond, performance bond, and
warranty bond).
The most common bank guarantees extended to customers to secure
the contractual performance are advance payment guarantees and
performance guarantees.
The projects, for which these guarantees are granted, are
regularly reviewed by the Management and, accordingly, when
guarantee payment calls become probable, the necessary provisions
are recorded in the Consolidated financial statements.
OUTLOOK
In a mixed environment that was also marked by rapid changes in
exchange rates and the oil price, the Group achieved a solid 2014
performance, in sales, operating margin and cash flow.
Revenue growth in 2014 was primarily driven by strong momentum
in the Americas, Asia-Pacific and the developing economies, and by
robust Electronics activity. In Europe, performance remains
contrasted, albeit with a slight improvement in the fourth quarter.
Overall, on a comparable basis, all of our Gas & Services and
Engineering & Technology businesses reported growth in the
fourth quarter, as well as for the year as a whole.
In 2014, the Group continued to improve its competitiveness, in
particular through successful cost adjustments and substantial
efficiency gains, which contributed to our increased operating
margin.
The strength of the balance sheet, the investment backlog at €
2.8 billion, and the new contracts signed will contribute to growth
in the next few years, as will the initiatives underway designed to
accelerate innovation.
Assuming a comparable economic environment, Air Liquide is
confident in its ability to deliver another year of net profit
growth in 2015.
Appendices
4nd quarter 2014 revenue
By geography
RevenuesIn millions of euros
Q4 2013 Q4 2014 Published
Change
Comparablechange
(a)
Europe 1,766 1,693 -4.2% -0.1% Americas
822 905 +10.1% +4.5% Asia-Pacific
826 917 +11.2% +9.3% Middle-East and
Africa 94 99 +5.6% +3.7%
Gas and
Services Revenues 3,508 3,614
+3.0% +3.3% Engineering &
Technology 247 294 +19.0% +16.6% Other
Activities 144 143 -0.1% -1.8%
Group
revenue 3,899 4,051
+3.9% +3.9%
By World business line
RevenuesIn millions of euros
Q4 2013 Q4 2014 Published
Change
Comparablechange
(a)
Large industries 1,261 1,270 +0.8%
+1.2% Industrial Merchant 1,269 1,327 +4.5%
+3.1% Electronics 300 348 +15.8%
+12.9% Healthcare 678 669 -1.4% +3.3%
Gas and Services Revenues 3,508
3,614 +3.0% +3.3%
(a) Excluding currency, natural gas and significant scope
impacts.
Segment information
2013 2014
(in millions of euros and %)
Revenue Operatingincomerecurring OIRmargin
Revenue Operatingincomerecurring OIRmargin
Europe 7,058.3 1,346.3 19.1 % 6,639.7
1 345.5 20.3 % Americas 3,225.0 760.7
23.6 % 3,415.9 776.0 22.7 %
Asia-Pacific 3,184.0 481.8 15.1 %
3,444.6 551.5 16.0 % Middle-East and Africa
369.7 66.3 17.9 % 366.7 64.5
17.6 %
Gas and Services 13,837.0
2,655.1 19.2 % 13,866.9
2,737.5 19.7 % Engineering & Technology
802.9 86.5 10.8 % 912.3 75.8
8.3 % Other activities 585.3 32.1 5.5 %
579.1 35.6 6.1 % Reconciliation -
(193.1) - - (215.1) -
Total
Group 15,225.2 2,580.6
16.9 % 15,358.3 2,633.8
17.1 %
Consolidated income statement
(in millions of euros)
2013 2014 Change 14/13
Revenue 15,225.2 15,358.3 +
0.9 % Other income 189.3 228.2 Purchases
(5,985.1) (6,007.2) Personnel expenses
(2,751.1) (2,653.1) - 3.6 % Other expenses (2,861.4)
(3,053.3)
Operating income recurring before
depreciation and amortization 3,816.9
3,872.9 + 1.5 % Depreciation and amortization expense
(1,236.3) (1,239.1) + 0.2 %
Operating income
recurring 2,580.6 2,633.8 + 2.1
% Other non-recurring operating income 235.1 68.9
Other non-recurring operating expenses (209.2)
(52.9)
Operating income 2,606.5
2,649.8 + 1.7 % Net finance costs (219.9)
(228.9) + 4.1 % Other financial income 14.4
32.8 Other financial expenses (99.1) (54.5)
Income taxes (611.9) (678.4) Share of
profit of associates 14.5 4.0
Profit for
the period 1,704.5 1,724.8 + 1.2
% - Minority interests 64.2 59.8 - Net
profit (Group share) 1,640.3 1,665.0 + 1.5 %
Basic earnings per share
(in euros)
4.79 4.85 + 1.3 %
Diluted earnings per share (in euros)
4.77
4.83 + 1.3 %
Consolidated balance sheet
ASSETS (in millions of euros)
December 31, 2013 December 31, 2014 Goodwill
5,089.8 5,258.6 Other intangible assets 713.2
764.5 Property, plant and equipment 13,225.7
14,554.0
Non-current assets 19,028.7
20,577.1 Non-current financial assets 435.5
447.0 Investments in associates 201.7 100.4 Deferred
tax assets 301.7 245.5 Fair value of non-current
derivatives (assets) 122.4 68.9
Other non-current
assets 1,061.3 861.8 TOTAL
NON-CURRENT ASSETS 20,090.0
21,438.9 Inventories and work-in-progress 792.3
876.2 Trade receivables 2,691.1 2,879.8 Other
current assets 449.8 468.7 Current tax assets
90.7 92.7 Fair value of current derivatives (assets)
40.6 58.5 Cash and cash equivalents 940.1
910.1
TOTAL CURRENT ASSETS 5,004.6
5,286.0 TOTAL ASSETS 25,094.6
26,724.9 EQUITY AND LIABILITIES (in
millions of euros)
December 31, 2013
December 31, 2014 Share capital 1,720.6
1,896.8 Additional paid-in capital 81.2 25.7 Retained
earnings 7,271.2 8,049.7 Treasury shares
(88.2) (100.7) Net profit (Group share) 1,640.3
1,665.0
Shareholders' equity 10,625.1
11,536.5 Minority interests
263.0 290.4 TOTAL EQUITY
10,888.1 11,826.9 Provisions, pensions and
other employee benefits 2,040.5 2,169.3 Deferred tax
liabilities 1,196.3 1,187.7 Non-current borrowings
5,817.5 5,883.8 Other non-current liabilities
191.0 232.2 Fair value of non-current derivatives
(liabilities) 29.4 73.0
TOTAL NON-CURRENT
LIABILITIES 9,274.7 9,546.0
Provisions, pensions and other employee benefits 246.5
293.6 Trade payables 1,922.6 2,183.7 Other
current liabilities 1,407.7 1,223.3 Current tax
payables 156.8 221.4 Current borrowings
1,188.8 1,332.6 Fair value of current derivatives
(liabilities) 9.4 97.4
TOTAL CURRENT
LIABILITIES 4,931.8 5,352.0
TOTAL EQUITY AND LIABILITIES 25,094.6
26,724.9
Consolidated cash flows statement
(in millions of euros)
2013
2014 Operating activities
Net profit (Group share)
1,640.3 1,665.0 Minority interests
64.2 59.8 Adjustments:
• Depreciation and amortization 1,236.3
1,239.1 • Changes in deferred taxes 108.5 84.9 •
Increase (decrease) in provisions 152.3 5.7 • Share
of profit of associates (less dividends received) 12.3
4.7 • Profit/loss on disposal of assets (265.4)
(116.5)
Cash flows from operating activities
before changes in working capital
2,948.5 2,942.7 Changes in working
capital (18.7) 73.5 Other (127.1)
(186.6)
Net cash flows from operating activities
2,802.7 2,829.6 Investing activities
Purchase of property. plant and equipment
and intangible assets
(2,156.1) (1,901.7) Acquisition of subsidiaries and
financial assets (391.9) (179.0)
Proceeds from sale of property. plant and
equipment and intangible assets
312.9 228.6
Proceeds from sale of financial assets
4.2 15.8
Net cash flows used in investing
activities (2,230.9) (1,836.3)
Financing activities Dividends
paid • L'Air Liquide S.A.
(820.2) (838.5) • Minority interests (56.4)
(46.0) Proceeds from issues of share capital 125.5
59.5 Purchase of treasury shares (114.6) (116.4)
Increase (decrease) in borrowings 36.4 76.1
Transactions with minority shareholders (9.1) (94.5)
Net cash flows from (used in) financing activities
(838.4) (959.8) Effect of exchange rate
changes and change in scope of consolidation 33.1
(31.6)
Net increase (decrease) in net cash and cash
equivalents (233.5) 1.9 NET CASH
AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD
1,086.5 853.0 NET CASH AND CASH EQUIVALENTS
AT THE END OF THE PERIOD 853.0
854.9
The analysis of net cash and cash equivalents at the end of
period as follows:
(in millions of euros)
2013
2014 Cash and cash equivalents 940.1
910.1 Bank overdrafts (included in current borrowings)
(87.1) (55.2)
Net cash and cash equivalents
853.0 854.9
Net indebtedness calculation
(in millions of euros)
2013
2014 Non-current borrowings (long-term debt)
(5,817.5) (5,883.8) Current borrowings (short-term debt)
(1,188.8) (1,332.6)
TOTAL GROSS INDEBTEDNESS
(7,006.3) (7,216.4) Cash and cash
equivalents 940.1 910.1 Derivative
instruments (assets) - fair value hedge of borrowings 4.3
TOTAL NET INDEBTEDNESS AT THE END OF THE
PERIOD (6,061.9) (6,306.3)
Statement of changes in net indebtedness
(in millions of euros)
2013
2014 Net indebtedness at the beginning of the
period (6,102.5) (6,061.9) Net cash
flows from operating activities 2,802.7 2,829.6 Net
cash flows used in investing activities (2,230.9)
(1,836.3) Net cash flows used in financing activities excluding
increase (decrease) in borrowings (874.8) (1,035.9)
Total net cash flows (303.0)
(42.6) Effect of exchange rate changes, opening net
indebtedness of newly acquired companies and others 343.6
(201.8)
Change in net indebtedness 40.6
(244.4) NET INDEBTEDNESS AT THE END OF THE
PERIOD (6,061.9) (6,306.3)
Air LiquideCorporate CommunicationsAnnie Fournier, + 33
(0)1 40 62 51 31Caroline Philips, + 33 (0)1 40 62 50
84orInvestor RelationsVirginia Jeanson, +33 (0)1 40 62 57
37Louis Laffont, +33 (0)1 40 62 57 18
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