2015 Objective Maintained
Regulatory News:
Air Liquide (Paris:AI):
H1 2015 key figures
Group revenue:8,115 million
euros
+8.1%
Operating margin up at
17.4%*
+70 bps
Net profit (Group share):849
million euros
+12.5%
* Operating margin at 16.8% at constant energy prices, up +10
bps.
First half 2015 highlights
- Numerous production unit
start-ups: 12 in total, including Yanbu (Saudi Arabia) and the
Dormagen hydrogen and carbon monoxide plant (Germany).
- New investments in growing
markets: including South Africa for the construction of the
largest air separation unit ever built and China for the supply of
oxygen to a major copper producer.
- Further acquisitions in
Healthcare: reinforcement in home healthcare (Germany and
Ireland), and in hygiene (Czech Republic and Asia Pacific).
- Developments in hydrogen energy for
mobility: inauguration of charging stations (Japan, Denmark,
France); contract for the conversion of a fleet of forklifts to
hydrogen (France).
Commenting on the first half of 2015, Benoît Potier, Chairman
and CEO of Air Liquide, stated:
“In an uncertain global economic environment, Air Liquide
delivered sustained growth over the first half of 2015. It was
driven by the strong performance of our Healthcare and Electronics
businesses, by the developing economies, by a favourable currency
impact and by a quarter on quarter improvement in Large
Industries.
We saw growth across all geographies over the period. In
Europe, a gradual recovery is firming up in certain sectors, while
North American industrial markets are affected by the slowdown in
services related to oil exploration. Asia-Pacific continues to
benefit from growth in China and the positive performance of Japan.
Furthermore, the start-up of the Yanbu project in Saudi Arabia is
accelerating growth in the Middle East and Africa and increases our
global hydrogen production capacity by nearly 20%.
Air Liquide’s operating performance over the period was
solid, reflected in a high operating margin and another increase in
net profit.
The investment decisions made over the period, which totalled
1.3 billion euros, the signing of new contracts and the
commissioning of new units are paving the way for growth in the
next few years. This is also the case for the innovations and
technologies currently under development.
Assuming a comparable economic environment, Air Liquide
is confident in its ability to deliver another year of net profit
growth in 2015.”
Group revenue for the first half of 2015 was €
8,115 million, an increase of +8.1% on a reported
basis and of +3.2% on a comparable basis1 compared with the first
six months of 2014. The positive currency effect (+7.8%) was partly
offset by the negative impact of energy prices (-2.9%).
Gas & Services sales, at € 7,340 million,
were up +7.8% on a reported basis and +3.1% on a comparable
basis in the first half of 2015. Compared with the first
quarter, the second quarter of 2015 saw a sequential improvement in
sales. Developing economies remain dynamic, with Gas &
Services sales for the first six months of 2015 up +9.9% on
a comparable basis.
In the first half of 2015, Gas & Services sales
growth on a comparable basis was contrasted:
- Healthcare revenue rose by a significant +6.8%,
boosted by the dynamism of home healthcare, despite significant
pricing pressure in Europe, by acquisitions completed in late 2014
and in the first half of 2015, by our expansion in developing
economies, and by the +12.2% increase in hygiene-related
sales.
- Electronics continued to deliver robust revenue growth
of +13.1%. Sales of all our product lines were up, in
particular sales of advanced materials, which include the ALOHA™
and the Voltaix offers, which rose +36.0%. Within
Asia-Pacific, double digit growth was recorded in China, Japan,
Taiwan and Singapore.
- Large Industries revenue was up +2.6% for the
first half of 2015. This business line reported a solid performance
in the second quarter, with sales up +5.0%. Growth in the
first half of the year was driven mainly by the ramp-up of
production units in China and higher volumes of air gases in the
second quarter in Northern Europe, for customers in the chemical
and steel industries, as well as in North America. The start-up of
two large hydrogen production units in Yanbu during the second
quarter also contributed to growth.
- In Industrial Merchant, where revenue was down
-0.7%, the situation remains varied, with a slight increase
in bulk volumes in Europe and solid growth in Spain and Eastern
Europe, while North American volumes were impacted by moderate
manufacturing activity and lower demand for oil-related services.
In Asia-Pacific, sales in Australia were down, affected by the
downturn in the mining sector. Sales in China and Southeast Asia
continued to grow in the first half of the year. The price effect
was positive over the period at +1.0% against a global backdrop of
low inflation.
Engineering and Technology revenue rose by +10.5%
compared with the first half of 2014 on a comparable basis,
reflecting the progress made on projects underway for third-party
customers. Total order intake reached € 600 million for the
first half of 2015, an increase of +11.0% compared with the
first six months of 2014.
The Group’s operating margin reached 17.4%. This
strong performance was driven primarily by low energy prices and a
good level of efficiency gains delivered by Air Liquide,
which amounted to € 132 million, in line with the
annual target of achieving over € 250 million. Net profit (Group
share) reached € 849 million, an increase of
+12.5% on a reported basis (+5.2% excluding currency
impact). Cash flow (before the changes in Working Capital
Requirements) is up +13.0% versus the first six months of
2014 (+5.1% excluding currency impact). Net debt increased
to € 7.9 billion; the net debt to equity ratio remains
under control below 60%. Standard & Poor’s confirmed its A+
rating of Air Liquide in June 2015. The return on capital
employed (ROCE), after tax, was unchanged compared with year
end 2014 at 10.8%.
H1 2015 performance
In millions of euros
Reported
Excluding currency,energy and
significantM&A impacts
Group revenue 8,115 M€ +8.1% +3.2%
of which Gas & Services
7,340 M€
+7.8%
+3.1%
Operating income recurring
1,409 M€
+12.3%
+4.7%
Net profit (Group share) 849 M€ +12.5% +5.2%
Net debt as of June 30, 2015 7,927
M€
________
The Air Liquide Board of Directors met on July 29, 2015.
During this meeting, the Board of Directors reviewed the
consolidated financial statements for the six months ended June 30,
2015.
Limited review procedures were completed with respect to the
consolidated interim financial statements, and an unqualified
review report is in the process of being issued by the statutory
auditors.
________
Follow the announcement of first half
results live on Twitter using the hashtag #ALresultsAll year
long, follow Air Liquide news on
https://twitter.com/airliquidegroup
UPCOMING EVENTS
3rd quarter 2015 revenueOctober 27,
2015
Actionaria trade show, Paris, FranceNovember 20 and 21,
2015
2015 annual resultsFebruary 16, 2016
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 revenue amounted to € 15.4 billion in 2014, and
its solutions that protect life and the environment represented
more than 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.
www.airliquide.comFollow us on Twitter
@AirLiquideGroup
1 Adjusted for currency, energy (natural gas and electricity)
and significant M&A impacts
H1 2015 PerformanceManagement report
H1 2015 PERFORMANCE
2
H1 2015 Key figures
2
H1 2015 Highlights
3
H1 2015 Income statement
5
Change in net indebtedness
12
INVESTMENT CYCLE
13
OUTLOOK
14
APPENDIX
15
Q2 2015 revenue
15
Currency, energy and significant scope
impacts
16
Segment information
17
Consolidated income statement
18
Consolidated balance sheet
19
Consolidated cash flow statement
20
H1 2015 PERFORMANCE
In first half of 2015, Air Liquide reported sustained growth in
an uncertain global economic environment. Group revenue stood at
8,115 million euros, up +8.1% as reported and +3.2% on a comparable
basis compared to first half 2014. The positive currency impact of
+7.8% was partially offset by a negative energy impact of -2.9%.
Gas and Services sales were up +7.8% as reported and +3.1% on a
comparable basis. Developing economies saw sustained momentum,
growing +10% on a comparable basis. Europe’s recovery was still
very gradual. Growth in Asia was more contrasted but the
Electronics sector remained highly dynamic, notably in Japan, and
strong sales continued in China. In North America, Industrial
Merchant sales were still impacted by a soft manufacturing sector
and lower volumes in the oil well services sector. Growth in Latin
America was solid, despite a difficult environment in Brazil. The
Middle East and Africa region benefited from the startup of two
large-scale hydrogen production plants in Yanbu (Saudi Arabia).
Ongoing cost reduction efforts led to efficiency gains of 132
million euros, in line with objectives. This helped increasing the
operating margin to a high of 17.4%, with a positive contribution
of low energy prices. Net profit (Group share) rose to
849 million euros, up +12.5% as reported and +5.2% excluding
currency impact. Cash flow from operations before changes in
working capital requirements amounted to 1,575 million euros,
representing 19.4% of sales, up +13.0% compared to the first half
of 2014 (+5.1% excluding currency impact).
Investment opportunities over the next 12 months stood at 2.9
billion euros at end of June 2015. Investment decisions reached 1.3
billion euros, the same level as in the second half 2014. The
investment backlog amounted to 2.1 billion euros and over time
should generate fully ramped-up annual sales of 0.9 billion
euros.
H1 2015 Key figures
(in
millions of euros)
H1 2014 H1 2015
2015/2014publishedchange
2015/2014comparablechange (a)
Total revenue 7,506 8,115 +8.1% +3.2%
Of which Gas & Services 6,807 7,340 +7.8%
+3.1% Operating income recurring 1,254 1,409
+12.3% +4.7% Operating income recurring (as % of
revenue) 16.7% 17.4 % +70 pbs - Net
profit (Group share) 755 849 +12.5% -
Earnings per share (in euros) 2.20 2.48 +12.7%
- Net cash flows from operating activities (b) 1,147
965 -15.8% - Net capital expenditure (c)
943 1,188 - - Net debt 6,797
7,927 - - Debt-to-equity ratio(d) 57%
59 % - - Return On Capital Employed – ROCE
after tax(e) 10.8% 10.8% - -
(a) Excluding natural gas, electricity, currency and significant
scope impacts.(b) Cash flow from operating activities after change
in working capital and other elements.(c) Including transactions
with minority shareholders(d) Adjusted to spread the dividend
payment in H1 out over the full year(e) Return On Capital Employed
after tax: (net profit after tax before deduction of minority
interests - average of net cost of debt after taxes for the
periods 2nd half 2014 and 1st half 2015) / average of
(shareholders’ equity + minority interests + net
indebtedness) for the periods June 30, 2014 to June 30, 2015.
H1 2015 Highlights
During the first half 2015, Air Liquide pursued its development
initiatives in growing markets and major industrial basins, both in
advanced and developing economies. In the first six months of 2015,
the Group also reinforced its position in Healthcare and pursued
energy transition initiatives.
INDUSTRIAL ACTIVITY DEVELOPMENT
In first half of 2015, Air Liquide announced several
important start-ups in Large Industries, and pursued its
development initiatives through selective industrial
investments.
- In Germany, Air Liquide inaugurated its
new Steam Methane Reformer (SMR) unit located in Dormagen, near
Cologne. The Group invested around 100 million euros in this highly
flexible, state-of-the-art production unit. This SMR, which has an
annual production capacity of 22,000 tonnes of hydrogen and 120,000
tonnes of carbon monoxide, will supply Bayer MaterialScience’s new
large-scale TDI (toluene diisocyanate) plant. It will also provide
other customers on the Rhine-Ruhr pipeline network with
hydrogen.
- In Yanbu, Saudi Arabia, Air Liquide
started up its largest industrial investment ever. With two
global-scale hydrogen production units and one purification unit,
the Air Liquide site has a total hydrogen capacity of 340,000
Nm3/hour. This investment of around 350 million euros will supply
hydrogen to the new YASREF refinery (a joint venture between Saudi
Aramco and Sinopec), under a long-term agreement. Hydrogen will
allow the reduction of the sulfur content of fuels produced. With
the start-up of these new units, the Group’s hydrogen production
capacity increased by close to 20%.
- In China, Air Liquide announced a
long-term agreement with Shandong Fangyuan, China’s leading
privately-owned copper smelter and one of the world’s largest
copper producers. The Group will invest around 60 million euros in
a state-of-the-art ASU (Air Separation Unit) with a capacity of
2,000 tonnes of oxygen per day, expected to be commissioned by the
second half of 2017. This new ASU offers energy efficiencies as
well as optimal reliability and safety. The oxygen supplied will
boost productivity of the smelter while reducing overall CO2
emissions and maintenance costs.
- Air Liquide and Sasol, an international
integrated energy and chemicals company, signed a long-term
agreement for the supply of large quantities of industrial gases to
Sasol’s Secunda site in South Africa (140 km East of Johannesburg).
Air Liquide will invest around 200 million euros for the
construction of the largest Air Separation Unit (ASU) ever built,
with a total capacity of 5,000 tonnes of oxygen per day (equivalent
to 5,800 tonnes per day at sea level). It is the first time Sasol
will outsource its oxygen needs to a specialist of industrial gas
production at its Secunda site.
- In Australia, Air Liquide announced a
new long-term agreement with Nyrstar, an integrated mining and
metals company. Air Liquide will invest 60 million euros in a 1,400
tonnes per day new Air Separation Unit (ASU), to help Nyrstar
reduce the environmental footprint of the site and enhance both
efficiency and production capabilities. Near Adelaide, Air Liquide
also announced a partnership to recover carbon dioxide (CO2)
emitted by AGL Energy Limited’s power station at its Torrens Island
site. This unit will have a capacity of 50,000 tonnes of CO2 per
year.
NEW DEVELOPMENTS IN HEALTHCARE
An ageing population and the rise in the number of patients
affected by chronic diseases are major public health issues.
Air Liquide pursued its strategy of patients’ densification in the
Group's geographies through additional acquisitions in Home
Healthcare.
- In Germany, the Group strengthened its
Home Healthcare offering with the acquisition of Optimal Medical
Therapies (OMT). OMT provides services for around 5,000 patients
and is recognized for its expertise in home infusion services that
include immunotherapy, pain management, and the treatment of
pulmonary hypertension and Parkinson’s disease.
- Air Liquide expanded its Home
Healthcare business with the acquisition of Baywater Healthcare
Ireland Limited in Ireland, a major player in treating and
monitoring respiratory diseases in the patient's home (oxygen
therapy, continuous positive airway pressure and non-invasive
ventilation).
Schülke, Air Liquide Healthcare’s subsidiary specializing in
hygiene, expanded its presence through two acquisitions during the
first half.
- In Asia-Pacific, it acquired Healthcare
Antisepsis Solutions (HAS), the skin disinfection and hygiene
business unit for Advanced Sterilization Products, a division of
Ethicon, Inc.
- In Eastern Europe, Schülke increased
its presence and widened its range of complementary products
through the acquisition of the Hygiene division of Bochemie, a
major player in the Czech Republic.
ENERGY TRANSITION DEVELOPMENTS
Important developments occurred in the energy transition
field.
- Air Liquide announced that is has
acquired a 5% stake in the capital of Fonroche Biogaz, a subsidiary
of the Fonroche Group, a key player in the production of renewable
energies. In connection with this acquisition, the two groups plan
to pool their skills in order to develop, in partnership, projects
involving the purification and upgrading of biogas for the French
market.
- The Group was chosen by FM Logistic, an
international logistics and supply chain group, to provide support
for its planned deployment of hydrogen-powered forklift trucks on
its sites. At its logistics platform located near the city of
Orléans (France), Air Liquide installed a hydrogen charging station
that will service FM Logistic’s forklifts equipped with hydrogen
fuel cells.
- During first half of 2015, Air Liquide
inaugurated a charging station at its Sassenage site in Isère
(France). It will allow the users of the Hyway project, the first
French project to deploy fleets of hydrogen-powered electric
vehicles, to recharge their vehicles with hydrogen. This project
follows the installations of several hydrogen charging stations in
Saint-Lô in France, in Denmark and in Nagoya and Toyota in
Japan.
BOND ISSUE
Air Liquide issued bonds in first half 2015 for a total amount
of 988 million euros at the date of the issue, to refinance the
bonds reaching maturity and fund the development while benefiting
from very attractive market conditions. Two fixed-rate issues cover
maturities between 7 and 10 years and two variable-rates ones
between 2 to 3 years. The major issue was made under the EMTN
program for an amount of 500 million euros with a 10-year maturity
and a coupon of 1.25% p.a.
One of the issues allowed Air Liquide Finance to innovate again
with the issue of its first Chinese renminbi-denominated
bond on the Taiwanese market (“Formosa Bond”) for a total of
500 million Chinese renminbi, equivalent to 68 million euros at the
date of the issue. Air Liquide is thus the first non-Taiwanese
corporate to issue bonds in Chinese renminbi on this market.
H1 2015 Income Statement
REVENUE
Revenue(in millions of euros)
H1 2014 H1 2015
2015/2014change
2015/2014comparablechange (a)
Gas & Services 6,807 7,340 +7.8%
+3.1% Engineering & Technology 405 477
+17.6% +10.5% Other activities 294 298
+1.6% -3.3%
TOTAL REVENUE 7,506
8,115 +8.1% +3.2%
(a) Excluding currency, energy and significant scope
impacts.
Group
Group revenue for H1 2015 stood at 8,115 million
euros, a reported increase of +8.1% compared to H1 2014.
This was boosted by a positive currency impact of +7.8%, which was
partially offset by a negative energy impact (-2.9%). Comparable
growth was up +3.2%.
Q2 sales were stronger than in Q1.
Revenue by quarter (in
millions of euros)
Q1 2015 Q2 2015 Gas
& Services 3,632 3,708 Engineering &
Technology 217 259 Other activities 144
154
TOTAL REVENUE 3,993 4,121
2015/2014 published change +7.0% +
9.3 % 2015/2014 comparable change (a)
+3.0% + 3.4 %
(a) Excluding currency, energy and significant scope
impacts.
Currency, energy and significant scope impacts
In addition to the comparison of published figures, financial
information is given excluding currency, energy (natural gas and
electricity) price fluctuation and significant scope impacts.
Since industrial and medical gases are rarely exported, the
impact of currency fluctuations on activity levels and results is
limited to euro translation impacts with respect to the financial
statements of subsidiaries located outside the euro zone.
Fluctuations in natural gas and electricity prices are generally
passed on to customers through price indexation clauses. Natural
gas is an essential raw material for the production of hydrogen and
the operation of cogeneration plants. Electricity consumption is
significant for Air Separation Units. For example, 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.
(in millions of euros)
Group Gas &
Services H1 2015 revenue 8,115
7,340 2015/2014 published change (in %) +8.1%
+7.8% Currency impact +585 +542 Natural gas impact
-193 -193 Electricity impact -24 -24
Significant scope impact 0 0
2015/2014 comparable
change (a) (in %) +3.2%
+3.1% (a) Excluding currency, energy and significant scope
impacts.
Gas & Services
Unless otherwise stated, all the changes in revenue outlined
below are on a comparable basis: excluding currency, energy
(natural gas and electricity) and significant scope impacts.
Gas & Services revenue stood at 7,340 million
euros, a reported increase of +7.8% compared to H1 2014.
This was boosted by a positive currency impact of +7.9% which was
partially offset by a negative energy impact (-3.2%). Comparable
growth was +3.1%, with growth in all geographic regions.
Comparable growth in Q2 was higher than that in Q1, +3.5% versus
+2.6%.
Revenue(in millions of euros)
H1 2014 H1 2015
2015/2014change
2015/2014comparable change
(a)
Europe 3,346 3,390 +1.3% +2.3% Americas
1,647 1,813 +10.1% +0.7% Asia-Pacific
1,637 1,914 +16.9% +6.0% Middle-East
and Africa 177 223 +26.1% +13.0%
Gas
& Services 6,807 7,340
+7.8% +3.1% Large Industries 2,493
2,565 +2.9% +2.6% Industrial Merchant
2,480 2,660 +7.3% -0.7% Healthcare
1,263 1,382 +9.4% +6.8% Electronics 571
733 +28.3% +13.1%
(a) Excluding currency, energy and significant scope
impacts.
Europe
Revenue in Europe was up by +2.3% to 3,390 million
euros, sign of a very gradual recovery. Gas & Services
sales for Industry posted positive growth in Q2 for the first time
since Q2 2013. For H1 overall, sales for Industry were stable. The
Large Industries business was slightly down for H1 as a whole but
showed an increase in Q2, with higher volumes in Northern Europe.
H1 Industrial Merchant sales were stable with wide variations
persisting between countries. Europe continued to benefit from the
momentum of developing economies. Healthcare also posted strong
growth in the region and was up by +7.3%.
Europe Gas & Services H1 2015 revenue
- Large Industries business fell
slightly by -1.0% in H1 but increased by +1.8% in Q2. Air
gases volumes rose in Northern Europe in Q2, driven by the
chemicals and metals industry sectors. Cogeneration plants also
contributed to growth, while hydrogen volumes were down compared to
their high level in 2014. Sales in Eastern Europe posted a limited
increase, supported by Poland.
- Revenue for the Industrial
Merchant activity was more or less stable, dropping
-0.3% in H1. In developing economies, sales continued to
rise steadily, especially in Russia and Poland, and grew by +8.1%.
In advanced economies, the economic environment remained
challenging, especially for the oil sector, and contrasted. Sales
growth remained solid in Iberia and Scandinavia. Liquid volumes
were low in Italy but stabilized in Germany and were up slightly in
France. Pricing was down during H1 by -0.3%.
- The Healthcare segment continued
to expand posting +7.3% growth. The Home Healthcare activity
was up by +8.9%, driven by the increased number of patients, a
larger portfolio of therapies treated, and acquisitions made in
late 2014 and during H1 2015. There was no let-up in pricing
pressure, especially in Spain, France and Germany. Pricing was down
-2.5% during the semester. Hygiene activity was up +12.2% supported
by acquisitions made in H1.
- Electronics revenue was up
sharply by +23.1% in H1, with strong sales across all
product lines particularly in Equipment and Installation.
Americas
Gas & Services revenue in the Americas was up by
+0.7% to 1,813 million euros. Manufacturing
activity was weak in North America, largely due to the slowdown in
the oil exploration sector. The adverse effects caused by the drop
in oil price were more marked than anticipated and had a
particularly strong impact on Industrial Merchant sales. In Large
Industries, after a series of temporary turnarounds in Q1 for
maintenance purposes, air separation units gradually resumed
operations in Q2. Sales continued to increase in South America,
especially in the Large Industries and Healthcare segments.
Americas Gas & Services H1 2015 Revenue
- Large Industries posted
+0.5% sales growth for the first half. In North America,
hydrogen volumes continued to be impacted by customer temporary
maintenance outages. Air gases volumes gradually increased in Q2
after the turnarounds at the beginning of the year. In South
America, business continued to develop as production ramped up at
plants that began operating in 2014.
- Industrial Merchant activity
dropped by -1.3% as a result of the slowdown in
manufacturing activity in North America, where a depressed oil
price is impacting the oil exploration sector and a strong dollar
is limiting exports. Brazil evolves also in a difficult economic
environment. Liquid revenue in the Americas was down slightly with
lower volumes, while Cylinder sales proved more resilient although
with wide variations between countries. Pricing in the region was
up by +4.4%.
- Healthcare revenue rose by
+7.2% driven by stronger number of patients for Home
Healthcare in Canada supported by an acquisition, and in South
America. Sales of Medical Gases for hospitals enjoyed strong growth
in South America (Argentina and Brazil).
- Electronics activity was up by
+4.9%, reflecting a dynamic business with a strong
comparison basis in H1 2014, which included high sales of Equipment
and Installation. Carrier gases and advanced molecules activities
continued to experience vigorous growth.
Asia-Pacific
Revenue in the Asia-Pacific region was up by +6.0% to
1,914 million euros. The region showed diverse country
environments but benefited from the ramp-up of Large Industries
plants in China and a dynamic Electronics sector. China recorded
solid sales, up by +15% in H1, while Japan also posted positive
growth supported by strong sales in Electronics.
Asia-Pacific Gas & Services H1 2015 Revenue
- Large Industries sales were up
by +7.2%, thanks to the ramp-up of plants that began
operating in China in 2014, although this impact is starting to
level out. Air gases and hydrogen volumes in the region are
rising.
- Industrial Merchant activity was
almost stable (-0.2%) in H1, although the situation varies
from country to country. China and South-East Asia thrived as
Liquid volumes increased. Sales were down in Australia as a result
of the weak mining sector, in Japan and also in Singapore, where
the economy is suffering from the slowdown in the oil industry.
Pricing pressure intensified in the region and prices were down by
-1.3% in H1.
- Electronics continued to post
strong sales, rising by +14.4% with double-digit growth in
China, Japan, Taiwan and Singapore. Advanced molecule sales were up
by more than +50%. Equipment and Installation activity also
continued to do well.
Middle-East and Africa
Middle East and Africa revenue amounted to 223 million
euros, an increase of +13.0%. Sales benefited from the
start-up of two large-scale hydrogen production plants in Yanbu
(Saudi Arabia) in Q2. South Africa continued to demonstrate steady
growth in Large Industries as production ramped up at a plant which
had been in service since H1 2014. The country also experienced
steady growth in the Industrial Merchant and Healthcare segments.
Business was also up in Egypt but remained weak in North Africa,
where economic development is heavily impacted by geopolitical
instability.
Engineering & Technology
Engineering & Technology revenue amounted to
477 million euros, an increase of +17.6% as
reported compared with H1 2014, reflecting progress in third-party
customer projects.
For H1 2015, total order intake was up +11% to 600
million euros, versus 541 million euros for H1 2014. The
vast majority of projects concerned air separation units.
At 5.3 billion euros, the amount for total orders in-hand is +7%
higher than at the end of June 2014 and stable compared to the
level at the end of December 2014.
Other activities
Revenue(in millions of euros)
H1 2014 H1 2015 2015/2014
change
2015/2014 comparablechange
(a)
Welding 193 190 - 1.8 % - 2.7 % Diving
101 108 + 8.1 % - 4.4 %
TOTAL
294 298 + 1.6 %
- 3.3 %
(a) Excluding currency, energy and significant scope
impacts.
Other Activities revenue in H1 2015 fell by -3.3%
to 298 million euros.
- Welding revenue was down by
-2.7%, still affected by the weak European economy.
- The Diving activity (Aqua
LungTM) posted a strong reported growth and a -4.4% drop in
sales on a comparable basis after the disposal of a non-strategic
business in late 2014. Excluding this disposal, revenue growth was
positive.
OPERATING INCOME RECURRING
Operating income recurring before depreciation and
amortization totaled 2,102 million euros, up +12.3%
and +4.3% excluding the impact of currency. Depreciation and
amortization amounted to 693 million euros, up +12.3% (+3.4%
excluding the currency impact).
Group Operating Income Recurring (OIR) amounted to 1,409
million euros in first half 2015, up +12.3% compared
with first half 2014, and +4.7% excluding the currency
impact, demonstrating positive leverage on sales. Operating
margin (OIR to revenue) was up +70 basis points to 17.4%,
having benefited from substantial efficiencies and a favorable
energy impact. Excluding the energy impacta, the operating margin
increased by +10 basis points.
Efficiencies amounted to 132 million euros during
the first six months of the year, in line with the annual target of
over 250 million euros. These efficiencies represented cost saving
of 2.1% over the cost base, relative to 2.7% of the cost base in
first half 2014. Half of these efficiencies stemmed from industrial
projects (plant optimization, logistics planning, maintenance
processes), one third came from purchasing and the remaining from
administrative efficiencies.
Gas & Services
Operating income recurring in the Gas & Services
activity amounted to 1,432 million euros, an increase of
+10.7%. The OIR margin stood at 19.5%, compared with 19.0%
for first half 2014. Excluding the energy impact, this ratio was
down by -10 basis points.
Cost inflation, excluding the impact of energy indexation, was
+2.7% in the first half. Prices continued to increase by +0.2%
largely due to the continued efforts within Industrial Merchant
(+1.0%), a small improvement in Electronics (+0.8%) and despite
continued tariff pressure in Healthcare. Delivered efficiencies
amounted to 121 million euros, some of which was absorbed in
offsetting the difference between cost inflation and pricing. The
remainder helped improve profit margins resulting in a retention
rate of 12% during the semester.
Gas & Services H1 2015 Operating income recurring
Gas & Services Operating margin (a) H1
2014 H1 2015 Europe 19.9% 19.7 %
Americas 19.9% 21.2 % Asia-Pacific 16.8%
17.5 % Middle-East and Africa 15.3% 19.5 %
TOTAL 19.0% 19.5 % (a) Operating
income recurring/revenue.
Operating income recurring in Europe was up by
+0.7% to 669 million euros. Excluding the energy
impact, the operating margin was down by -40 basis points as
a result of pricing pressure in the Healthcare segment,
particularly in France and Southern Europe.
Operating income recurring in the Americas amounted to
385 million euros, up by +17.6% thanks to a
significant currency impact (+0.1% on a constant currency basis).
Operating margin, excluding the energy impact, fell by -10 basis
points.
In Asia-Pacific, operating income recurring amounted to
335 million euros, an increase of +21.7% due to a
significant impact from currency (+5.5% on a constant currency
basis). The operating margin, excluding the energy impact, was
stable despite pricing pressure in Australia. This pressure
was offset by manufacturing efficiencies, particularly in China and
the Electronics business line.
Operating income recurring in the Middle East and Africa
region amounted to 43 million euros, up +60.1% thanks
to the startup of plants in Yanbu and a strong currency impact
(+38.0% on a constant currency basis). Operating margin was up
+420 basis points, excluding the energy impact.
Engineering & Technology
Operating income recurring for Engineering & Technology
amounted to 34 million euros. Operating income
recurring as a percentage of revenue was 7.0%. The margin remained
within the target range of 5 to 10%.
Other activities
The Group’s Other Activities posted operating income recurring
of 23 million euros, up +37.8% as a result of the
solid improvement in the Welding business margin and, to a lesser
extent, a better Diving segment margin. Operating income recurring
to revenue reached 7.6%, an increase of +200 basis points
over first half 2014.
Research & Development and corporate costs
Research & Development and corporate costs including
consolidation adjustments were down -5.6% to 80 million
euros, reflecting tight control over corporate costs.
NET PROFIT
Other operating income and expenses had an almost
stable negative balance of -7 million euros compared to
first half 2014.
Net financial costs, at -157 million euros,
increased by +7.8% compared with the -146 million euros reported in
first half 2014. Cost of debt was up +9.5% but decreased
by -2.2% excluding currency impact. The average cost of net
debt slightly decreased to 3.9% from 4.0% at December 31,
2014 and 4.1% in first half 2014, primarily as a result of new
bonds issued under favorable conditions. Other financial income and
expenses was up by +2.3%.
The effective tax rate was 29.2%, down by -10
basis points compared to first half 2014. Taxes totaled
363 million euros, up +12.5%, reflecting the increase in gross
profit before tax.
The Group’s share of profit of associates amounted to
6.5 million euros, compared with 3.7 million euros
in first half 2014. Minority interests rose by +39%
to 39 million euros, the profit of subsidiaries with minority
shareholders recording a strong increase (Saudi Arabia, China and
Taiwan).
Overall, first half 2015 net profit (Group share)
amounted to 849 million euros, a reported increase of +12.5%
and +5.2% excluding the currency impact.
Earnings per share amounted to 2.48 euros, a
reported increase of +12.7% or +5.5% excluding the currency
impact compared with first half 2014. The average number of
outstanding shares used to calculate net earnings per share as of
June 30, 2015 was 342,824,901.
Change in the number of shares
H1 2014 H1 2015 Average number
of outstanding shares (a) 343,094,668 342,824,901 (a)
Used to calculate net earnings per share.
Change in net indebtedness
Cash flow from operations before changes in working capital
requirements amounted to 1,575 million euros,
representing 19.4% of sales, up +13.0% compared with first
half 2014 and +5.1% excluding the impact of currency. Net cash flow
after changes in working capital requirement stood at 965 million
euros, down compared to first half 2014.
The change in working capital requirement, which
amounted to -578 million euros in first half 2015, was adversely
impacted by around 270 million euros due to currency and projects
cycle in the Engineering and Construction segment. Therefore, the
working capital-to-sales ratio, excluding taxes, increased from
8.4% in the first half 2014 to 10.6% as of end of June 2015. The
ratio for Gas and Services remained almost stable.
Gross industrial capital expenditure was up +7.6% to 1,006
million euros. Including acquisitions for an amount of 198 million
euros, transactions with minority shareholders and cash from
divestitures, total net capital expenditure stood at 1,188 million
euros, up +26.0% over first half 2014. This result reflected the
strong business activity from bolt-on acquisitions in the
Healthcare segment.
Net indebtedness as of June 30, 2015 totaled 7,927
million euros, an increase of 1,621 million euros over December
31, 2014, reflecting the usual seasonal effect of the full payment
of the 2014 dividend in first half 2015. Net indebtedness was also
heavily impacted by a negative currency effect amounting to 279
million euros. Net debt-to-equity stood at 59%, adjusted for the
impact of the seasonality of the dividend. This compares with 57%
at June 30, 2014, adjusted for the impact of the seasonality of the
dividend and 53% at the end of 2014. The Group’s financial
structure remains solid, guaranteeing the flexibility to continue
to seize investment opportunities.
Return on capital employed after tax was 10.8% at
June 30, 2015, unchanged compared with the reported ratio at the
end of 2014.
CAPITAL EXPENDITURE
Gross capital expenditure in first half 2015 amounted to 1,215
million euros. This amount included 198 million euros spent for
several bolt-on acquisitions mainly in the Healthcare activity.
Disposals of fixed assets were limited to 27 million euros.
Gross capital expenditure in the Gas & Services activity
represented 15.5% of sales, up compared with first half 2014.
Accordingly, Group net capital expenditure amounted to 1,188
million euros.
INVESTMENT CYCLE
The Group’s steady long-term growth is largely based on its
ability to consistently invest in new projects. Industrial gas
investment projects are spread throughout the world, highly
capital-intensive and supported by long-term contracts,
particularly for Large Industries.
Investments
Investment opportunities
The 12-month opportunity portfolio amounted to 2.9 billion
euros at the end of June 2015, down 300 million euros compared
with the end of 2014. This decrease was primarily due to the high
level of new decisions made during the first half of 2015, up by
+75% compared to H1 2014, particularly with Sasol (South Africa,
200 million euros). The level of abandoned or delayed projects
exiting the portfolio was in line with the usual changes observed.
Developing economies account for 60% of the portfolio, aligned with
the geographic split accounted for at the end of 2014. China and
North America still represent an important share of the
opportunities. Half of the opportunities are for projects with
investment value of less than 50 million euros. The number of
potential unit takeovers is stable.
Investment decisions and investment backlog
Investment decisions continued throughout the half-year, and
amounted to 1.3 billion euros, comparable with H2 2014 and
in net increase with H1 2014 (751 million euros). Industrial
decisions accounted for 80% of the decisions. Numerous acquisitions
were achieved in Healthcare during H1 2015 for an amount of around
200 million euros.
The total investment backlog amounted to 2.1 billion euros,
showing a decrease since the end of 2014. This is explained by the
important impact of start-ups in H1 2015, for instance the large
hydrogen units started in Yanbu in Saudi Arabia in Q2 2015
(investment of more than 350 million euros) and in Dormagen in
Germany (investment of 100 million euros). The investment backlog
should lead to a future contribution to revenue of approximately
0.9 billion euros after full ramp-up.
Start-ups
During the first half, 12 new units were started-up. Those new
units will serve particularly the energy, chemicals and electronics
markets.
Start-ups and progressive ramp-ups of units started more than 12
months ago should contribute to sales of approximately 350 million
euros in 2015.
MAIN RISKS AND UNCERTAINTIES
There was no change in risk factors during first half 2015, as
described in the 2014 Reference Document on pages 26 to 31.
OUTLOOK
In an uncertain global economic environment, Air Liquide
delivered sustained growth over the first half of 2015. It was
driven by the strong performance of Healthcare and Electronics
businesses, by the developing economies, by a favourable currency
impact and by a quarter on quarter improvement in Large
Industries.
Growth was seen across all geographies over the period. In
Europe, a gradual recovery is firming up in certain sectors, while
North American industrial markets are affected by the slowdown in
services related to oil exploration. Asia-Pacific continues to
benefit from growth in China and the positive performance of Japan.
Furthermore, the start-up of the Yanbu project in Saudi Arabia is
accelerating growth in the Middle East and Africa and increases the
Group global hydrogen production capacity by nearly 20%.
Air Liquide’s operating performance over the period was solid,
reflected in a high operating margin and another increase in net
profit.
The investment decisions made over the period, which totaled
1.3 billion euros, the signing of new contracts and the
commissioning of new units are paving the way for growth in the
next few years. This is also the case for the innovations and
technologies currently under development.
Assuming a comparable economic environment, Air Liquide is
confident in its ability to deliver another year of net profit
growth in 2015.
Appendix
2nd quarter 2015 revenue
By geography
Revenues In millions of euros
Q2 2014
Q2 2015
PublishedChange
Comparable change (a) Europe
1,645 1,694 + 3,0 % + 3,3 % Americas
833 918 + 10,2 % + 0,4 % Asia-Pacific
821 968 + 17,9 % + 5,0 % Middle-East and
Africa 92 128 + 39,1 % + 23,7 %
Gas
and Services Revenues 3,391 3,708
+ 9,3 % + 3,5 % Engineering &
Technology 230 259 + 12,8 % + 6,0 %
Other Activities 151 154 + 2,2 % - 3,0
%
Group revenue 3,772 4,121
+ 9,3 % + 3,4 %
By World business line
Revenues In millions of euros
Q2 2014
Q2 2015
PublishedChange
Comparable change (a) Large industries
1,208 1,301 + 7.7 % + 5.0 % Industrial
Merchant 1,251 1,333 + 6.6 % - 1.6 %
Electronics 295 377 + 27.7 % + 11.9 %
Healthcare 637 697 + 9.3 % + 6.9 %
Gas and Services Revenues 3,391
3,708 + 9.3 % + 3.5 %
(a) Excluding currency, energy and significant scope
impacts.
Currency, energy and significant scope impacts
In addition to the comparison of published figures, financial
information for second quarter 2015 is provided before currency,
energy price fluctuations and significant scope impacts. As of
January 1st 2015, the energy impact includes impacts of natural gas
and electricity. In the future, it may also include other energy
Large Industries feedstocks.
Since gases for industry and health 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 and electricity prices are passed on to
customers through price indexation clauses.
Consolidated 2015 second quarter revenue includes the following
impact:
In millions ofeuros
RevenueQ2 2015
Q22015/2014change
Currency
Naturalgas
Electricity
Significantscope
Q2 2015/2014
comparablechange(a)
Group
4,121 + 9.3 % 315 (77)
(17) 0 + 3.4 % Gas &
Services
3,708 + 9.3 % 291 (77)
(17) 0 + 3.5 %
(a) E xcluding currency, energy (natural gas and electricity)
and significant scope impacts.
For the Group,
- The currency impact was +8.4%.
- The impact of natural gas price
fluctuations was -2.1%.
- The impact of electricity price
fluctuations was -0.4%.
- There was no significant scope
impact.
For Gas & Services,
- The currency impact was +8.5%.
- The impact of natural gas price
fluctuations was -2.2%.
- The impact of electricity price
fluctuations was -0.5%.
- There was no significant scope
impact.
Segment information
H1 2014 H1 2015
(in millions of euros and %)
Revenue Operatingincomerecurring OIRmargin
Revenue Operatingincomerecurring OIRmargin
Europe 3,346 665 19.9 % 3,390
669 19.7 % Americas 1,647 327 19.9 %
1,813 385 21.2 % Asia-Pacific 1,637
275 16.8 % 1,914 335 17.5 %
Middle-East and Africa 177 27 15.3 %
223 43 19.5 %
Gas and Services
6,807 1,294 19.0 %
7,340 1,432 19.5 % Engineering
& Technology 405 28 6.9 % 477
34 7.0 % Other activities 294 16
5.6 % 298 23 7.6 % Reconciliation -
(84) - - (80) -
Total
Group 7,506 1,254 16.7
% 8,115 1,409 17.4 %
Consolidated income statement
(in millions of euros)
H1 2014 H1
2015
Change15/14
Revenue 7,505.5 8,114.6 + 8.1
% Other income 89.0 78.8 Purchases
(2,920.0) (3,040.9) Personnel expenses
(1,369.8) (1,521.0) + 11.0 % Other expenses (1,432.9)
(1,529.2)
Operating income recurring before
depreciation and amortization 1,871.8
2,102.3 + 12.3 % Depreciation and amortization
expense (617.8) (693.6) + 12.3 %
Operating income
recurring 1,254.0 1,408.7 + 12.3
% Other non-recurring operating income 2.2 (2.1)
Other non-recurring operating expenses (7.9)
(4.3)
Operating income 1,248.3
1,402.3 + 12.3 % Net finance costs (111.1)
(121.7) + 9.5 % Other financial income 5.4 5.0
Other financial expenses (40.3) (40.7)
Income taxes (322.6) (362.8) Share of profit
of associates 3.7 6.5
Profit for the
period 783.4 888.6 + 13.4 %
- Minority interests 28.2 39.2 - Net profit
(Group share) 755.2 849.4 + 12.5 %
Basic earnings per share (in
euros)
2.20
2.48
+ 12.7 %
Diluted earnings per share (in
euros)
2.19
2.47
+ 12.8 %
Consolidated balance sheet
ASSETS (in millions of euros)
December 31,
2014 June 30, 2015 Goodwill 5,258.6
5,566.3 Other intangible assets 764.5 809.9 Property,
plant and equipment 14,554.0 15,597.3
Non-current
assets 20,577.1 21,973.5
Non-current financial assets 447.0 485.5 Investments
in associates 100.4 111.7 Deferred tax assets
245.5 267.8 Fair value of non-current derivatives (assets)
68.9 90.1
Other non-current assets
861.8 955.1 TOTAL NON-CURRENT ASSETS
21,438.9 22,928.6 Inventories and
work-in-progress 876.2 978.5 Trade receivables
2,879.8 3,096.0 Other current assets 468.7
638.8 Current tax assets 92.7 56.2 Fair value of
current derivatives (assets) 58.5 71.0 Cash and cash
equivalents 910.1 693.5
TOTAL CURRENT ASSETS
5,286.0 5,534.0 TOTAL ASSETS
26,724.9 28,462.6
EQUITY AND LIABILITIES (in millions of euros)
December 31, 2014 June 30, 2015 Share capital
1,896.8 1,892.1 Additional paid-in capital
25.7 7.2 Retained earnings 8,049.7 9,169.8
Treasury shares (100.7) (125.3) Net profit (Group
share) 1,665.0 849.4
Shareholders' equity
11,536.5 11,793.2 Minority
interests 290.4 357.6 TOTAL
EQUITY 11,826.9 12,150.8
Provisions, pensions and other employee benefits 2,169.3
2,072.5 Deferred tax liabilities 1,187.7
1,328.1 Non-current borrowings 5,883.8 6,716.0 Other
non-current liabilities 232.2 246.7 Fair value of
non-current derivatives (liabilities) 73.0 219.7
TOTAL NON-CURRENT LIABILITIES 9,546.0
10,583.0 Provisions, pensions and other employee benefits
293.6 282.2 Trade payables 2,183.7
2,113.6 Other current liabilities 1,223.3 1,182.3
Current tax payables 221.4 179.2 Current borrowings
1,332.6 1,904.1 Fair value of current derivatives
(liabilities) 97.4 67.4
TOTAL CURRENT
LIABILITIES 5,352.0 5,728.8
TOTAL EQUITY AND LIABILITIES 26,724.9
28,462.6
Consolidated cash flows statement
(in millions of euros)
H1 2014 H1 2015
Operating activities Net
profit (Group share) 755.2 849.4
Minority interests 28.2 39.2
Adjustments: • Depreciation and
amortization 617.8 693.6 • Changes in deferred taxes
34.5 43.2 • Increase (decrease) in provisions
(59.2) (41.7) • Share of profit of associates (less
dividends received) 3.4 1.4 • Profit/loss on disposal
of assets 13.7 (9.9)
Cash flows from operating
activities before changes in working capital
1,393.6 1,575.2 Changes in working capital
(232.4) (578.3) Other (14.6) (31.9)
Net cash flows from operating activities
1,146.6 965.0 Investing activities
Purchase of property. plant and
equipmentand intangible assets (934.4) (1,005.6)
Acquisition of subsidiaries and financial assets (57.6)
(197.8) Proceeds from sale of property. plant and equipment
and intangible assets 138.7 27.2 Proceeds from sale
of financial assets 0.3
Net cash flows used
in investing activities (853.3)
(1,175.9) Financing activities
Dividends paid • L'Air Liquide
S.A. (837.9) (924.1) • Minority interests
(27.6) (19.9) Proceeds from issues of share capital
35.9 74.4 Purchase of treasury shares (117.9)
(177.8) Increase (decrease) in borrowings 426.5
1,077.6 Transactions with minority shareholders (89.2)
(11.6)
Net cash flows from (used in) financing
activities (610.2) 18.6 Effect of
exchange rate changes and change in scope of consolidation
0.5 (67.7)
Net increase (decrease) in net cash and cash
equivalents (316.4) (260.0) NET
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD
853.0 854.9 NET CASH AND CASH EQUIVALENTS
AT THE END OF THE PERIOD 536.6
594.9
The analysis of net cash and cash equivalents at the end of
period as follows:
(in millions of euros)
June 30, 2014 June
30, 2015 Cash and cash equivalents 567.0 693.5
Bank overdrafts (included in current borrowings) (30.4)
(98.6)
Net cash and cash equivalents
536.6 594.9
Net indebtedness calculation
(in millions of euros)
June 30, 2014 June
30, 2015 Non-current borrowings (long-term debt)
(6,333.6) (6,716.0) Current borrowings (short-term debt)
(1,030.6) (1,904.1)
TOTAL GROSS INDEBTEDNESS
(7,364.2) (8,620.1) Cash and cash
equivalents 567.0 693.5 TOTAL
NET INDEBTEDNESS AT THE END OF THE PERIOD
(6,797.2) (7,926.6)
Statement of changes in net indebtedness
(in millions of euros)
H1 2014 H2 2015
Net indebtedness at the beginning of the period
(6,061.9) (6,306.3) Net cash flows from
operating activities 1,146.6 965.0 Net cash flows
used in investing activities (853.3) (1,175.9) Net
cash flows used in financing activities excluding increase
(decrease) in borrowings (1,036.7) (1,059.0)
Total
net cash flows (743.4) (1,269.9)
Effect of exchange rate changes, opening net indebtedness of newly
acquired companies and others 8.1 (350.4)
Change
in net indebtedness (735.3)
(1,620.3) NET INDEBTEDNESS AT THE END OF THE PERIOD
(6,797.2) (7,926.6)
a The impact of energy on the margin is explained in note (a) of
the 2014 Key Figures table on page 32 of the 2014 Reference
Document.
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Corporate CommunicationsAnnie Fournier+ 33 (0)1 40 62 51
31Anne Michaud+ 33 (0)1 40 62 50 59orInvestor RelationsAude
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