- Strong sales growth, all activities
and geographies up
- Solid performance and active
business development
- Airgas synergies ahead, to be
reached in H1 2019
Regulatory News:
Air Liquide (Paris:AI):
Key Figures (in millions of euros) H1 2018
2018/2017 as published 2018/2017
comparable (1) Group Revenue 10,162
-1.3% +5.8% Gas & Services Revenue
9,769 -2.1% +5.0%
Operating Income
Recurring 1,617 -2.3%
+6.2% Group OIR Margin 15.9%
Variation excluding energy -10bps
Gas & Services OIR Margin 17.8%
Variation excluding energy +30bps
Net Profit (Group Share) 1,040
+12.1% Net Cash Flow from Operating Activities
(2) 1,770 +11.1% Net Debt on 06/30/2018
14,217
(1) Comparable growth excluding the currency, energy (natural
gas and electricity), and significant scope impacts; see
reconciliation in appendix.(2) Cash flow from operating activities
after changes in working capital requirements and other
elements.
Commenting on the first six months of 2018, Air Liquide Chairman
and CEO Benoît Potier said:
“The positive dynamic observed during the 1st
quarter of 2018 was further confirmed in the 2nd
quarter, in the context of a customer centric strategy and a
globally more supportive economic environment. This is reflected in
sustained growth in Group revenue, which came to 10.2 billion euros
for the 1st half of this year, driven by higher sales
in Gas & Services, as well as in
Engineering & Construction, and Global
Markets & Technologies.
“All Gas & Services activities grew significantly, in
particular Industrial Merchant, Electronics, and Healthcare.
Geographically, our activities progressed in every region in the
world, and more particularly in Asia, the Americas, and in the
Middle East & Africa.
“Along with global sales growth, Group performance benefited
from an increased operating margin in Gas & Services, excluding
energy impact. The Group is performing well in terms of operational
efficiency gains and will reach Airgas synergies one year ahead of
plan. The Group’s net profit, which exceeded 1 billion euros, rose
by more than +12.1%.
“Cash flows from operations increased significantly, up
+11.1%. The Group’s balance sheet is solid.
“Investment opportunities 12 months out are at their highest
level in the last three years. The dynamic accelerated over the
course of the 1st half of this year. Decisions
are up +30%, to 1.4 billion euros. Investment backlog stood at
2.3 billion euros as of June 30, 2018, and will contribute to
future growth.
“We are in line with the objectives set forth in the NEOS
2016-2020 strategic plan. Accordingly, assuming a comparable
environment, Air Liquide is confident in its ability to deliver net
profit growth in 2018, calculated at constant exchange rate and
excluding 2017 exceptionals1.”
1 2017 exceptionals: exceptional non-cash items having a net
positive impact on 2017 net profit.
2018 Highlights
- Start-up of the world’s largest
air gas production unit, in South Africa for Sasol (€200M) and
commissioning of 4 new biogas production units, in the United
States, in France, and in the United Kingdom.
- Signature of new long-term
contracts: construction of hydrogen units for KMCI (€100M) in
South Korea and for Covestro (€80M) in Belgium, and of 2 air gas
units for Evraz (€130M) in Russia; oxygen supply to LyondellBasell
from our network in the United States.
- Multiyear contracts for the
supply of xenon and krypton for the aerospace and electronics
industries (€50M).
- Acquisitions in Home Healthcare
in Saudi Arabia. Investment in EOVE, a French start-up that
specializes in connected portable ventilators.
- Digital transformation of our assets
to increase operational efficiency: inauguration of a remote
operation center in Malaysia, optimizing the production of 18 of
Air Liquide’s Large Industries production units in Southeast
Asia.
- Hydrogen energy: first meeting
of the Hydrogen Council in China. Equity stake acquired in a
Chinese start-up, participation in the creation of a new consortium
in Japan bringing together the major players in hydrogen for
mobility. In France, inauguration of a hydrogen charging station in
Paris-Saclay.
- First bond issue on the Chinese
domestic market (“Panda”) for around €280M.
The half year benefited from strong growth in markets globally
well oriented. Group revenue totaled 10,162 million
euros in the 1st half of 2018, up +5.8% on a comparable
basis, and close to the high end of the NEOS target range. This was
supported by high Gas & Services sales, an improvement in
Engineering & Construction and the strong growth of Global
Markets & Technologies. The currency impact was strongly
negative over the half year at -6.8%, mainly due to the
appreciation of the euro against the US dollar, but eased slightly
during the 2nd quarter. The energy impact was slightly positive at
+0.4%. The sale of the Airgas Refrigerants business at the end of
2017 led to a significant scope impact of -0.7%. Published Group
revenue variation was therefore down -1.3% over the half year.
Gas & Services revenue reached
9,769 million euros during the 1st half, up
+5.0% on a comparable basis, with a strong contribution from
developing economies (+12.3%).
- Gas & Services revenue in the
Americas zone stood at 3,874 million euros over
the half year, up +4.6%. This reflects a high level of
activity in Industrial Merchant (+4.5%), in particular in the
United States. Large Industries posted solid growth (+3.1%)
despite customer maintenance turnarounds during the
2nd quarter. Healthcare sales were up markedly (+8.9%) across
the zone.
- Revenue in the Europe zone
totaled 3,464 million euros in the 1st half, up
+2.3%. Growth stabilized at a solid level in Industrial
Merchant (+2.6%). Large Industries posted higher sales over the
half year (+2.2%) despite several customer maintenance turnarounds
during the 2nd quarter. Healthcare continued its steady growth
(+4.5%) marked by stronger growth in the 2nd quarter and despite a
limited contribution from bolt-on acquisitions.
- Revenue in the Asia-Pacific
zone totaled 2,107 million euros in the 1st
half. This represented an increase of +8.8%, driven notably
by strong momentum in China (>+10%). All business lines posted
strong growth in the zone and accelerated in the 2nd quarter
(+10.8%). In Large Industries, higher sales (+6.4%) were due to the
ramp-up of units started up in the 3rd quarter of 2017 coupled with
strong demand. Industrial Merchant was up markedly in the zone
(+6.8%), with very strong growth in China. Double-digit Electronics
sales growth (+14.1%) benefited from thriving demand for new
molecules and exceptionally high sales of
Equipment & Installation.
- Revenue in the Middle East and
Africa zone amounted to 324 million euros, up
+16.6%. Sales benefited from the start-up at the end of 2017
of the largest air separation unit in the world in South Africa,
favorable business momentum in Egypt, and the launch of the
Home Healthcare activity in Saudi Arabia through an
acquisition.
All business lines contributed to growth over the half year. In
Industrial Merchant, sales growth was robust (+4.3%),
supported in particular by the manufacturing sector, metal
fabrication and construction. The price impact stood at +1.9%.
Large Industries (+5.2%) benefited from the ramp-up of
units, including a major unit in South Africa. Air gases volumes
were up markedly, driven by the chemicals sector, whereas hydrogen
volumes were penalized by a higher number of customer maintenance
turnarounds compared to last year. In Healthcare, growth was
dynamic (+5.9%) in particular in Home Healthcare where the number
of diabetic patients and patients treated for sleep apnea continued
to increase. Demand was also very dynamic in Electronics,
with revenue up +6.7%, driven by Carrier Gases, new molecules and
exceptionally high Equipment & Installation sales during the
2nd quarter.
Engineering & Construction revenue totaled
180 million euros, up +29.8% compared to the 1st
half of 2017, benefiting from the gradual improvement in order
intake seen in 2017.
Global Markets & Technologies sales were up
+29.2% at 213 million euros. These were
particularly dynamic in the biogas sector, which benefited from the
start-up of a major landfill biogas purification unit in the United
States and three small farm waste biogas purification units in
France and in the United Kingdom.
Efficiencies amounted to 174 million euros during
the first six months of the year, ahead of the annual target of
over 300 million euros from the NEOS program. They include a
contribution of 14 million euros from Airgas for the first
time.
Airgas synergies represented a cumulated
260 million US dollars since the acquisition of Airgas
in May 2016 and 45 million US dollars over the first six
months of 2018. The 300 million US dollar target will be
reached in H1 2019, i.e., 12 months earlier than initially
forecasted.
The Group’s operating income recurring (OIR) reached
1,617 million euros in the 1st half of 2018, down -2.3%
as published, but up +4.8% excluding the currency impact and
+6.2% on a comparable basis over the 1st half of 2017. The
operating margin (OIR to revenue) stood at 15.9% and
16.0% excluding the energy impact, which corresponds to a
slight decrease of -10 basis points compared with the 1st half of
2017. This was mainly due to the negative operating income
recurring generated by Engineering & Construction still under
loaded. Moreover, the disposal of the Airgas Refrigerants business
had a dilutive impact on the margin; excluding the disposal, the
operating margin would have been stable.
The Gas & Services operating margin stood
at 17.8%, up + 30 basis points excluding energy
compared with the 1st half 2017.
Net profit (Group share) amounted to
1,040 million euros in the 1st half of 2018, an
increase of +12.1% or more than +20% excluding the currency
impact.
Net cash after changes in working capital requirement (and
other items) was 1,770 million euros, an increase
of +11.1% compared with the 1st half of 2017, largely
exceeding the change in sales (published change of -1.3%).
Net indebtedness at June 30, 2018 reached
14,217 million euros.
The 12-month portfolio of opportunities totaled
2.5 billion euros at the end of June 2018, up
200 million euros compared with March 2018. Industrial
and financial investment decisions reached 1.4 billion
euros in the 1st half of 2018, up more than +30% compared
with the 1st half of 2017. Net capital expenditure
totaled 1,133 million euros and represented 11.1% of
sales, in line with the NEOS strategic plan.
The Air Liquide Board of Directors met on July 27, 2018.
During this meeting, the Board reviewed the consolidated financial
statements for the first half ending June 30, 2018. 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.
Table of
contents of the activity report
H1 2018 PERFORMANCE 6
Key Figures
6
Income Statement
6
Change in Net Indebtedness
14
INVESTMENT CYCLE 15 RISK FACTORS 17 2018
OUTLOOK 17 APPENDIX 17
Currency, energy and significant scope
impacts (Semester)
18
Currency, energy and significant scope
impacts (Quarter)
19
2nd quarter 2018 revenue
20
Geographic and segment information
20
Consolidated income statement
21
Consolidated balance sheet
22
Consolidated cash flow statement
23
Return on Capital Employed – ROCE
25
H1 2018 PERFORMANCE
Except where indicated, all revenue and
operating income recurring growth discussed below are made on a
comparable basis, excluding the currency, energy and
significant scope impacts. The reference to Airgas
corresponds to the Group’s Industrial Merchant and Healthcare
activities in the United States.
Key Figures
(in
millions of euros)
H1 2017 H1 2018
2018/2017 published change 2018/2017
comparable change
Total Revenue 10,293
10,162 -1.3% +5.8% Of
which Gas & Services 9,978 9,769 -2.1%
+5.0% Operating income recurring 1,656 1,617
-2.3% +6.2% Operating income recurring (as % of
revenue) 16.1% 15.9%
Variation excluding energy - 10 bps
Other non-recurring operating income and
expenses (2) (30) Net
profit (Group share) 928 1,040 +12.1%
Adjusted earnings per share (in euros) (a)
2.18 2.44 +12.1%
Net cash flows from operating activities (b) 1,593
1,770 +11.1% Net capital expenditure
(c) 1,162 1,133 Net debt
15,610 14,217
Debt-to-equity ratio (d) 90.0% 78.6%
Return On Capital Employed – ROCE after tax
(e) 7.4 % 8.5 %
Recurring ROCE (f) 7.4 %
8.0 % + 60bps
(a) 2017 figure restated for the impact of the free share
attribution on October 4, 2017.(b) Cash flow after changes in
working capital requirements and other items.(c) Net cash flows
used in investing activities 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: see
definition and reconciliation in appendix(f) Excluding 2017
exceptional items and the impact of the US tax reform that had no
impact on cash flow.
Income Statement
REVENUE
Half-Year Revenue
(in millions of euros)
H1 2017 H1 2018 2018/2017
published change 2018/2017 comparable change
Gas & Services 9,978 9,769 -2.1%
+5.0% Engineering & Construction 146 180
+23.6% +29.8% Global Markets & Technologies
169 213 +26.3% +29.2%
TOTAL
REVENUE 10,293 10,162
-1.3% +5.8% Revenue by quarter
(in millions of euros)
Q1 2018 Q2 2018
Gas & Services 4,831 4,938
Engineering & Construction 85 95 Global Markets
& Technologies 94 119
TOTAL REVENUE
5,010 5,152 2018/2017 Group published
change -3.2% +0.7% 2018/2017
Group comparable change +6.0% +5.6%
2018/2017 Gas & Services comparable change
+5.0% +5.1%
Group
The half year benefited from strong growth in markets globally
well oriented. Group revenue totaled 10,162 million
euros in the 1st half of 2018, up +5.8% on a comparable
basis, and close to the high end of the NEOS target range. This was
supported by high Gas & Services sales, an improvement in
Engineering & Construction and the strong growth of Global
Markets & Technologies. The currency impact was strongly
negative over the half year at -6.8%, mainly due to the
appreciation of the euro against the US dollar, but eased slightly
during the 2nd quarter. The energy impact was slightly positive at
+0.4%. The sale of the Airgas Refrigerants business at the end of
2017 led to a significant scope impact of -0.7%. Published Group
revenue variation was therefore down -1.3% over the half year.
Gas & Services
Gas & Services revenue reached 9,769 million
euros during the 1st half, up +5.0% on a comparable
basis. This was driven by a strong contribution from all business
lines and a sustained increase in base business. Industrial
Merchant growth was robust (+4.3%), in particular in Asia and the
Americas. Large Industries (+5.2%) benefited from a major start-up
in South Africa at the end of the 4th quarter of 2017, but growth
was penalized by customer maintenance turnarounds in Europe and the
Americas in the 2nd quarter of 2018. Growth in Healthcare was
dynamic (+5.9%) despite a limited contribution from bolt-on
acquisitions. Demand remained very dynamic in Electronics, with
revenue up +6.7%, driven in particular by high
Equipment & Installation sales. Published sales were
down -2.1% due to unfavorable currency and scope impacts (at -6.8%
and -0.7% respectively), which were only partially offset by a
positive energy impact of +0.4%.
Revenue by geography and business line
(in millions of euros)
H1 2017 H1 2018 2018/2017
published change 2018/2017 comparable change
Americas 4,251 3,874 -8.9% +4.6%
Europe 3,371 3,464 +2.8% +2.3%
Asia-Pacific 2,032 2,107 +3.7% +8.8%
Middle East & Africa 324 324 +0.0%
+16.6%
GAS & SERVICES REVENUE 9,978
9,769 -2.1% +5.0% Large
Industries 2,694 2,718 +0.9% +5.2%
Industrial Merchant 4,757 4,501 -5.4%
+4.3% Healthcare 1,690 1,714 +1.4%
+5.9% Electronics 837 836 -0.2% +6.7%
Americas
Gas & Services revenue in the Americas zone stood at
3,874 million euros over the half year, up
+4.6%. This reflects a high level of activity in Industrial
Merchant (+4.5%), in particular in the United States. Large
Industries posted solid growth (+3.1%) despite customer maintenance
turnarounds during the 2nd quarter. Healthcare sales were up
markedly (+8.9%) across the zone.
- Large Industries posted revenue
growth of +3.1%. It benefited from strong air gases sales
growth, driven by the start-up and ramp-up of units in
Latin America and by high prices in North America following
the storms at the beginning of the year. Growth was penalized in
the 2nd quarter by several customer maintenance turnarounds which
impacted cogeneration and hydrogen sales in the United States.
- Industrial Merchant sales were
up +4.5%. Growth was strong in the United States and
increased in the 2nd quarter driven by very solid cylinder gas and
hardgoods sales which benefited from higher demand in all end
markets, in particular manufacturing, metal fabrication and
construction. In Canada, cylinder gas and hardgoods sales were up
and offset weaker liquid nitrogen volumes, in particular in the oil
extraction sector. Growth in South America remained dynamic,
despite the impact of strikes in Brazil during part of the
2nd quarter. The price impact in the zone was
+2.2%.
- Healthcare revenue was up
+8.9%, with limited contribution from bolt-on acquisitions.
Growth was strong in Medical Gases in the United States and in Home
Healthcare in Canada, more specifically in sleep apnea. Activity
maintained its strong momentum in Latin America.
- Electronics revenue was up
+1.9%, with a decrease in the 1st quarter but a +5.0%
increase in the 2nd quarter, due notably to high
Equipment & Installation sales.
Europe
Revenue in the Europe zone totaled 3,464 million
euros in the 1st half, up +2.3%. Growth stabilized at a
solid level in Industrial Merchant (+2.6%). Large Industries posted
higher sales over the half year (+2.2%) despite several customer
maintenance turnarounds during the 2nd quarter. Healthcare
continued its steady growth (+4.5%) marked by stronger growth in
the 2nd quarter and despite a limited contribution from bolt-on
acquisitions.
- Large Industries revenue was up
+2.2% in the 1st half of 2018, following a year in decline
in 2017. Growth in the 1st quarter was driven by a marked increase
in hydrogen volumes due to good activity levels at refineries in
the Benelux and Germany. However, it was impacted during the 2nd
quarter by a high number of customer maintenance turnarounds in
hydrogen. Half-year growth was dynamic in Eastern Europe and
Turkey.
- Industrial Merchant sales were
up +2.6% over the half year, slightly impacted in the 2nd
quarter by a shortage of CO2 due to stoppages at several sources,
in particular in France and the Benelux. Liquid gas sales were up
markedly in Germany during the 2nd quarter and Italy confirmed
a high level of cylinder gas and liquid gas activity. Growth
continued at a fast pace in Eastern Europe, in particular in
Poland, Russia, and in Turkey. In the Europe zone, sales of liquid
gas increased twice as fast as those of cylinder gas in the
1st half. The manufacturing and small craftsmen sectors were
the most dynamic. The price impact continued to strengthen and
reached +1.0%.
- Healthcare pursued its steady
development posting sales growth of +4.5%; the growth was
stronger in the 2nd quarter compared to the 1st (+5.5% vs.
+3.4%) and marked by a limited contribution from bolt-on
acquisitions. Home Healthcare momentum was positive and the number
of diabetic patients and patients treated for sleep apnea continued
to increase, in particular in Northern Europe. Sales in
Specialty Ingredients grew significantly, in particular in
cosmetics and adjuvants for vaccines.
Asia-Pacific
Revenue in the Asia-Pacific zone totaled 2,107 million
euros in the 1st half. This represented an increase of
+8.8%, driven notably by strong momentum in China
(>+10%). All business lines posted strong growth in the zone and
accelerated in the 2nd quarter (+10.8%). In Large Industries,
higher sales (+6.4%) were due to the ramp-up of units started up in
the 3rd quarter of 2017 coupled with strong demand. Industrial
Merchant was up markedly in the zone (+6.8%), with very strong
growth in China. Double-digit Electronics sales growth (+14.1%)
benefited from thriving demand for new molecules and exceptionally
high sales of Equipment & Installation.
- Large Industries sales were up
+6.4% over the half year, driven by the ramp-up of units
started up in the 3rd quarter of 2017 in China. These additional
sales largely offset the loss of revenue from three isolated units
in Northern China which were sold at the end of 2017. Customer
demand was very high, in particular in China in chemicals and
steel, and in South Korea and Singapore in refining.
- Industrial Merchant sales were
up +6.8%, with performances varying greatly by country. In
China, growth continued to exceed +15%, driven in particular by a
strong increase in cylinder gas and liquid argon volumes as well as
by higher prices. Revenue in Japan was down due to high equipment
sales in 2017, in particular during the 1st quarter. Business
in Australia continued to improve. Price impacts stood at
+1.9% for the zone and remained high in China.
- Electronics revenue was up by a
high +14.1%. It benefited from the dynamic demand for new
molecules, in particular in Taiwan and South Korea, ramp-ups in
Carrier Gases, as well as exceptionally high
Equipment & Installation sales, which were up by more
than +50%.
Middle East and Africa
Revenue in the Middle East and Africa zone amounted to 324
million euros, up +16.6%. Large Industries sales
benefited from the start-up at the end of 2017 of the largest air
separation unit in the world in South Africa. Business momentum
remained favorable in Egypt, with the start-up of an air separation
unit during the 1st quarter and growing volumes in Industrial
Merchant. Healthcare continued to develop steadily, in particular
in South Africa and Saudi Arabia, where a recent bolt-on
acquisition led to the launch of the Home Healthcare
activity.
Engineering & Construction
Engineering & Construction revenue totaled
180 million euros, up +29.8% compared to the 1st
half of 2017, benefiting from the gradual improvement in order
intake seen in 2017.
Order intake reached 445 million euros, an increase
compared with 329 million euros in the 1st half of 2017. Air
separation units accounted for around 60% of orders. These included
Group projects and third-party customer orders, in particular in
Asia and Eastern Europe.
Global Markets & Technologies
Global Markets & Technologies sales were up +29.2% at
213 million euros. These were particularly dynamic in
the biogas sector, which benefited from the start-up of a major
landfill biogas purification unit in the United States and
three small farm waste biogas purification units in France and
in the United Kingdom.
Order intake was up compared with the 1st half of 2017 and
reached 227 million euros.
Focus
- Air Liquide and 10 large Japanese
companies, representing several industries and finance, announced
the creation in March of the “Japan H2 Mobility” consortium
for the purpose of accelerating the deployment in Japan of hydrogen
stations and fuel cell electric vehicles. The 11 founding companies
will contribute to the development of a large-scale hydrogen
infrastructure in order to build a network of 320 stations by 2025,
and 900 by 2030. Today, there are about 100 stations already in
operation in Japan. For its part, Air Liquide will install and
operate some 20 stations by 2021.
- In March, Air Liquide inaugurated a new
hydrogen station near Versailles in France. This station
will fuel two hydrogen-powered buses, scheduled for rollout
in 2019, and supplement the Paris hydrogen taxi fleet “Hype” which
is developing rapidly with 75 hydrogen-powered vehicles and plans
to deploy a total of 200 by the end of 2018. This is the third
station that has been installed by Air Liquide in the Greater Paris
Area.
- Air Liquide has commissioned three
new biomethane production units, in the United States, in France,
and in the United Kingdom in the 1st quarter 2018, doubling its
biomethane production capacity, which now stands at 60 MW, the
equivalent of 500 GWh for a full year of production. Over the
course of the last four years, the Group has decided around 100
million euros in investments in biomethane production. The
Group operates 10 production units around the world, designed to
purify biogas in order to transform it into biomethane and inject
it into the natural gas network.
OPERATING INCOME RECURRING
Operating income recurring before depreciation and
amortization totaled 2,496 million euros, down
-2.4% as published compared to the 1st half of 2017 due to a
highly negative currency impact over the half year.
Purchases were up +1.1%, in particular those of materials
and equipment, more specifically for the
Equipment & Installation business in Electronics and
for Engineering & Construction with projects moving
forward. Moreover, attention paid to costs helped decrease
personnel costs and other expenses and income at a
faster pace than sales (-2.7% and -3.1% respectively, compared with
as published sales down -1.3%).
Depreciation and amortization reached 879 million
euros, down -2.4% due to the currency impact. Excluding the
currency impact, depreciation and amortization growth nevertheless
remained lower than revenue growth despite the impact of start-ups
and ramp-ups.
Efficiencies amounted to 174 million euros during
the first six months of the year, ahead of the annual target of
over 300 million euros from the NEOS program. They include a
contribution of 14 million euros from Airgas for the first time.
Excluding Airgas, they represent savings on cost base of 2.9%.
Almost 50% of these efficiencies related to industrial projects
targeting in particular a decrease in logistic costs and the
optimization of the operation of production units, for example with
a step up in the roll-out of remote operation centers (Smart
Innovative Operations, SIO). Almost one third of efficiencies
related to purchasing gains, principally for the purchase of
molecules in Electronics, equipment in Home Healthcare, and energy
in Large Industries. The remaining efficiencies mainly related
to administrative efficiencies and realignment plans in several
countries and business lines, notably Engineering &
Construction.
Focus
- One year after the launch of the first remote operation
center in France, Air Liquide inaugurated in January in
Malaysia its Smart Innovative Operations (SIO) Center for
the Southeast Asia Pacific region. The SIO Center enables the
remote management of production for 18 Air Liquide Large
Industries production units spanning eight countries across the
region, as well as optimizing energy consumption and improving
reliability at these sites. Air Liquide invested 20 million
euros in this project.
Airgas synergies represented a cumulated
260 million US dollars since the acquisition of Airgas
in May 2016 and 45 million US dollars over the first six
months of 2018. The share of growth synergies continued to
rise and now represents more than 40% of the half year’s synergies.
These come from the roll-out of cross-selling offers in the United
States, such as small onsite generators using Air Liquide
technology offered to Airgas customers and cylinder gases and
hardgoods now available to Air Liquide customers. They also come
from accompanying Airgas customers in their expansion in Canada and
Mexico. At the end of the 1st half, cumulated cost synergies
stood at around 215 million US dollars. In total, cumulated
synergies at end-2018 will exceed 280 million
US dollars and the 300 million US dollar target
will be reached in H1 2019, i.e., 12 months earlier than initially
forecasted.
The Group’s operating income recurring (OIR) reached
1,617 million euros in the 1st half of 2018, down -2.3%
as published, but up +4.8% excluding the currency impact and +6.2%
on a comparable basis over the 1st half of 2017. The operating
margin (OIR to revenue) stood at 15.9% and 16.0% excluding
the energy impact, which corresponds to a slight decrease of
-10 basis points compared with the 1st half of 2017. This was
mainly due to the negative operating income recurring generated by
Engineering & Construction still under loaded. Moreover, the
disposal of the Airgas Refrigerants business had a dilutive impact
on the margin; excluding the disposal, the operating margin would
have been stable.
Gas & Services
Gas & Services operating income recurring totaled
1,741 million euros, down -1.1% as published compared
with the 1st half of 2017 due to a negative currency impact. The
operating margin as published was 17.8%. Excluding the
energy impact, it stood at 17.9%, representing a +30 basis
point increase compared with the 1st half of 2017.
In a context of limited global inflation, selling prices were up
+1.2% over the half year, due in particular to Industrial Merchant
(+1.9%). Prices were down slightly in Electronics and almost
flat in Healthcare.
Gas & Services efficiencies totaled
155 million euros in the 1st half of 2018.
Gas & Services Operating margin (a)
H1
2017 H1 2018
Americas 15.8% 16.4% Europe 18.9%
18.8% Asia-Pacific 19.7% 19.3% Middle-East
& Africa 16.4% 14.3%
TOTAL
17.6% 17.8%
(a) Operating income recurring/revenue, as published
figures.
Operating income recurring for the Americas zone stood at
636 million euros in the 1st half of 2018, down
-5.2% as published due to the appreciation of the euro
against the US dollar. Excluding the energy impact, the operating
margin stood at 16.4%, representing a +60 basis point
increase compared with the 1st half of 2017. This was driven by the
high level of activity in Industrial Merchant and the Airgas
synergies. In Large Industries, the positive impact on the margin
of high prices in the United States following the storms at the
beginning of the year was partially offset by customer maintenance
turnarounds in the 2nd quarter. Finally, the high level of
Equipment & Installation sales in Electronics had a
dilutive effect on the margin.
Operating income recurring in the Europe zone reached
651 million euros, an increase of +2.3%.
Excluding the energy impact, the operating margin was 19.1%, up
+20 basis points. Despite a large number of customer
maintenance turnarounds in hydrogen and an unfavorable mix in
Industrial Merchant, the operating margin improved thanks to
stronger price effects in Industrial Merchant and efficiencies
generated across all business lines in the zone.
Operating income recurring in the Asia-Pacific zone stood
at 407 million euros, an increase of +1.6%. Excluding
the energy impact, the operating margin was 19.5%, down -20
basis points. In Electronics, the exceptionally high level of
Equipment & Installation sales and, in Large
Industries, temporary shutdowns of units in Japan and the ramp-up
of units in China, had a dilutive impact on the margin. The
Industrial Merchant operating margin improved thanks to
efficiencies and price impacts.
Operating income recurring for the Middle East and Africa
zone amounted to 46 million euros, a decrease of
-12.5% compared with the 1st half of 2017. Excluding the
energy impact, the operating margin was 13.4%, down
-300 basis points. After a transitional period in
relatively exceptional operating conditions, the hydrogen
production units in Yanbu, Saudi Arabia, have now reached their
nominal operating mode marked by a structural adjustment of the
operating margin.
Engineering & Construction
Operating income recurring for Engineering & Construction
stood at -15 million euros, penalized by a still
insufficient activity level. Nonetheless, increased order intake
throughout 2017 should allow a gradual return to the Group’s
mid-term target of maintaining a margin between 5% and 10%.
Global Markets & Technologies
Operating income recurring for Global Markets & Technology
amounted to 18 million euros. The operating margin, at
8.6%, was down compared with the 1st half of 2017 (10.6%) due
notably to the dilutive impact on the margin of biogas production
unit start-ups. Moreover, part of Global Markets & Technologies
activities is currently being launched and the level of margin,
which depends on the nature of projects carried out during the
period, can vary significantly.
Research & Development and Corporate costs
Research & Development expenses and Corporate costs totaled
127 million euros, up +8.6% compared with the
1st half of 2017 due to the development of research and the
Group’s growing digital transformation.
NET PROFIT
Other operating income and expenses showed a net
balance of -30 million euros. This was mainly related to
costs for realignment plans in various countries and business
lines, in particular in Engineering & Construction,
and Airgas integration costs.
The financial result of -145 million euros was down
compared with the 1st half 2017 (-259 million euros). Net
finance costs, at -122 million euros, were down -45.2%, mainly
due to a non-recurring gain of around 55 million euros
generated by the unwinding of hedging instruments relating to the
debt reorganization in the United States. Excluding this impact,
the average cost of net indebtedness, at 3.0%, was
slightly down by -10 basis points compared with end-June 2017
(3.1%).
Income tax expense stood at 360 million euros, a
decrease of -29 million euros compared with the 1st half of
2017, i.e., an effective tax rate of 24.9%, which represents
a 300 basis point improvement. This decrease was mainly due to the
US tax reform which was enacted at the end of 2017. Over
2018, the US tax reform should decrease the Group’s income tax
expense by between 50 and 70 million US dollars
corresponding to a reduction of the Group’s effective tax rate by
around 200 recurrent basis points.
The share of profit of associates was 3 million
euros compared with 1 million euros in the 1st half of
2017. Minority interests in net profit totaled
46 million euros, a decrease of -6.4% due mainly to a
negative currency impact.
For the record, net profit from discontinued operations
for the 1st half of 2017 (-30 million euros) reflected the
impact of the disposal of Air Liquide Welding.
Net profit (Group share) amounted to
1,040 million euros in the 1st half of 2018, an
increase of +12.1% and of more than +20% excluding the
currency impact.
Published net earnings per share, at 2.44 euros,
were up +12.1% compared with the 1st half of 2017, in line
with the increase in net profit (Group share). The average number
of outstanding shares used for the calculation of net earnings per
share as of June 30, 2018 was 426,482,436.
Change in the number of shares
H1 2017 H1 2018
Average number of outstanding shares (a)
426,503,349 426,482,436
(a) Restated in 2017 for the impact of the free share
attribution on October 4, 2017.
Change in Net
Indebtedness
Cash flow from operating activities before changes in working
capital totaled 2,000 million euros. This amount
corresponded to a high level of 19.7% of sales.
Net cash after changes in working capital requirement (and
other items) was 1,770 million euros, an increase
of +11.1% compared with the 1st half of 2017, largely
exceeding the change in sales (published change of -1.3%).
The increase in working capital requirement (WCR) was
limited to 196 million euros, compared with
317 million euros in the 1st half of 2017. The WCR to sales
ratio, excluding taxes, decreased to 8.3% compared with 9.0%
at June 30, 2017. The Gas & Services WCR to sales
ratio was down as well, from 9.1% on June 30, 2017 to
8.0% at the end of the 1st half 2018. This improvement
came primarily from the Americas zone where inventory and trade
receivables decreased, mainly through a reduction in payment delays
of certain customers and factoring measures.
Gross industrial capital expenditure reached
1,096 million euros, down -1.0% due to the
currency impact. Financial investments totaled 75 million
euros, slightly lower than the 86 million euros made in the
1st half of 2017. Gross capital expenditure in the 1st half of 2018
amounted to 1,171 million euros. Net cash flow used
in investing activities including transactions with minority
shareholders totaled 1,133 million euros and represented
11.1% of sales, in line with the NEOS strategic plan.
Net indebtedness at June 30, 2018 reached
14,217 million euros, a significant decrease of
-1,393 million euros compared with June 30, 2017. The
robustness of cash flow allowed the financing of capital
expenditures and increased dividends linked with the free share
attribution of October 2017. The debt-to-equity ratio,
adjusted for the seasonal effect of the dividend payment, stood at
78.6%, down slightly compared with end-December 2017
(80.0%).
Focus
- In March, Air Liquide successfully completed a first bond
issuance on the Chinese mainland market (“Panda”) for an
aggregate nominal amount of 2.2 billion Renminbi
(approximatively 280 million euros), becoming one of the first
European companies to issue on this market. This transaction bears
coupons of 5.95% and 6.40% for a 3-year and a 5-year
maturity respectively. The 5-year issuance, the longest
maturity ever achieved by a European company on the Panda market,
reflects the long-term dimension of the Group’s activities. The
proceeds of this issue will be used to finance new investments in
China and to refinance debt related to previous investments in
China.
The return on capital employed after tax (ROCE) stood at
8.0% in the 1st half of 2018, up +30 basis points
compared with the recurring level of end-2017 (7.7%). The
improvement excluding the currency impact was +60 basis
points.
INVESTMENT CYCLE
The upturn in activity witnessed in investment projects in
recent months continued and was reflected at the end of June 2018
by another increase in the main indicators described below, in
particular the 12-month portfolio of opportunities, investment
decisions and the investment backlog.
PORTFOLIO OF OPPORTUNITIES
The 12-month portfolio of opportunities totaled
2.5 billion euros at the end of June 2018, up
+ 200 million euros compared with March 2018, with
new projects in the portfolio being higher than those signed by the
Group, awarded to the competition or delayed. This second
consecutive increase brought the portfolio of opportunities back to
a level that has not been reached since the end of 2015.
The share of developing economies in the 12-month portfolio of
opportunities was around 40%, down compared with
March 31, 2018 due mainly to strong activities in the Americas
zone, which remains the leading region within the portfolio.
Almost half of the portfolio of opportunities corresponded to
projects with investments below 50 million euros and only a
few projects were greater than 100 million euros. The
portfolio of opportunities included a few takeovers that have a
faster contribution to growth.
INVESTMENT DECISIONS AND INVESTMENT BACKLOG
Industrial and financial investment decisions reached
1.4 billion euros in the 1st half of 2018, up more
than + 30% compared with the 1st half of 2017.
Industrial decisions accounted for more than 90% of this
amount and included in particular five major contracts in Large
Industries, in Benelux, Eastern Europe and on the Gulf Coast of the
United States, as well as three ultra-pure nitrogen supply
contracts for Electronics in Asia.
Focus
- Air Liquide announced in April having signed a new long-term
contract with Covestro, a world-leading supplier of high-tech
polymer materials, for the supply of hydrogen to their new
production site in the port area of Antwerp. Air Liquide will
invest 80 million euros in the construction of a hydrogen
production unit fitted with a new proprietary technology that
improves energy efficiency and the overall environmental
footprint of the production process. By capturing carbon and
upgrading the recovered CO2, this model is part of a
circular economy system. The hydrogen produced will also enable
Air Liquide to supply customers in this industrial basin in
Europe.
- Air Liquide and Evraz, a world major steel producer, have
signed a long-term contract for the supply of oxygen,
nitrogen and argon in Novokuznetsk, Russian Federation. Air
Liquide will invest around 130 million euros for the
construction of two state-of-the-art Air Separation Units of
1,500 ton per day of oxygen each. These plants will improve
energy efficiency and the overall environmental footprint of the
production process.
- In April, Air Liquide announced having signed a new
long-term contract in the United States with LyondellBasell
to supply oxygen to their new petrochemical plant in Texas,
expected to be completed in 2021. This new propylene oxide/tertiary
butyl alcohol plant (PO/TBA) is expected to be the largest in the
world upon construction. The oxygen will be sourced from Air
Liquide’s pipeline system which spans more than 2,000 miles along
the coasts of Texas and Louisiana, part of the largest pipeline
system in the world.
Financial investment decisions reached some
100 million euros in the 1st half.
Focus
- With the acquisition of the respiratory division of
Thimar Al Jazirah Company (TAC) in Saudi Arabia, in
early January, Air Liquide enters the Home Healthcare market in
Saudi Arabia, where the Group already supplies medical gases to
hospitals. This division is specialized in the distribution of
respiratory equipment and related services. TAC is the main player
in this field, serving over 1,400 patients at home
throughout the country. In 2016, the Home Healthcare
division of TAC generated a revenue of over 5.5 million
euros.
- Air Liquide extends its service offering of Home Healthcare
activity via the acquisition at the beginning of April of the
start-up EOVE, a French company specialized in the design
and manufacture of ventilators for home-based patients
suffering from chronic respiratory failure. EOVE developed an
innovative solution: a connected portable ventilator that takes
into account the mobility needs of patients and facilitates the
practice of doctors.
- Airgas announced, in May, the acquisition of the assets and
operations of Weiler Welding Company, a full-service industrial
gas, beverage and gas welding supply business, based in Moraine,
Ohio. This transaction marks the 500th acquisition
in Airgas’ 36-year company history.
- In June 2018, Air Liquide announced the acquirement of a
minority stake of around 10 million euros in the Chinese startup
STNE (Shanghai Sinotran New Energy Automobile Operation CO.,
LTD) to accelerate the rollout of hydrogen-powered electric
truck fleets in China. This agreement fits in the Chinese
government’s 13th five-year-plan, which aims notably to support the
development and sale of hydrogen-powered electric vehicles serving
clean mobility.
The total investment backlog amounted to
2.3 billion euros, an increase of almost
+ 100 million euros compared with the end of March 2018.
The investment backlog should represent a future contribution to
annual sales of approximately 0.9 billion euros per year after
a full ramp-up of the units.
START-UPS
Seven new units started up during the 1st half of 2018.
These include three Large Industries sites in Colombia, Egypt and
the United States, two Global Markets & Technologies units (one
of which is a landfill biogas purification unit in the United
States), one ultra-pure nitrogen unit in Asia and one CO2
purification unit in Canada. The start-up of the OCI unit in the
United States at the end of the 2nd quarter will start contributing
to sales in the 3rd quarter 2018.
Over the half-year, the contribution to sales of unit
start-ups and ramp-ups totaled 136 million euros. This
mainly included the start-up of a major air separation unit in
South Africa at the end of December 2017 and the ramp-up of several
units which started up in China during the 3rd quarter of 2017. The
contribution of unit ramp-ups and start-ups to 2018 sales is still
estimated at between 250 and 300 million euros and will depend on
the commercial start-up date of the contract with Fujian Shenyuan
in China. The Air Liquide units have started-up and are in testing
period but discussions are still ongoing with the customer on the
date of the commercial start-up.
Focus
- Air Liquide has recently started-up the world’s largest
oxygen production unit for Sasol, an international
integrated energy and chemicals company. Air Liquide invested
around 200 million euros for the construction of this unit,
with a total production capacity of 5,000 tonnes of oxygen per
day in Secunda (around 140 km East of Johannesburg). Owned and
operated by Air Liquide, it is the first time that Sasol has chosen
to outsource its oxygen needs to a specialist of industrial gas
production at this site.
- The start-up of this major unit in South Africa is also a new
source of rare gases. Since the beginning of 2018, several new
multi-year contracts worth a total of more than 50 million euros
supplying xenon and krypton have been signed by Air Liquide and
the semiconductor and the satellite industries in three
geographies: Europe, U.S. and Asia. The semiconductor
industry uses xenon or krypton in its new processes to produce
high-end flash memories at a lower cost. The all-electric
propulsion satellites also use xenon, enabling significant
launching costs reduction.
RISK FACTORS
There was no change in risk factors during the first half. Risk
factors are described in the 2017 Reference Document on pages 26 to
30.
2018 OUTLOOK
The positive dynamic observed during the 1st quarter of 2018 was
further confirmed in the 2nd quarter, in the context of a customer
centric strategy and a globally more supportive economic
environment. This is reflected in sustained growth in Group
revenue, which came to 10.2 billion euros for the 1st half of this
year, driven by higher sales in Gas & Services, as
well as in Engineering & Construction, and Global
Markets & Technologies.
All Gas & Services activities grew significantly, in
particular Industrial Merchant, Electronics, and Healthcare.
Geographically, activities progressed in every region in the world,
and more particularly in Asia, the Americas, and in the Middle East
& Africa.
Along with global sales growth, Group performance benefited from
an increased operating margin in Gas & Services, excluding
energy impact. The Group is performing well in terms of operational
efficiency gains and will reach Airgas synergies one year ahead of
plan. The Group’s net profit, which exceeded 1 billion euros, rose
by more than +12.1%.
Cash flows from operations increased significantly, up +11.1%.
The Group’s balance sheet is solid.
Investment opportunities 12 months out are at their highest
level in the last three years. The dynamic accelerated over the
course of the 1st half of this year. Decisions are up +30%, to
1.4 billion euros. Investment backlog stood at
2.3 billion euros as of June 30, 2018, and will contribute to
future growth.
The Group is in line with the objectives set forth in the NEOS
2016-2020 strategic plan. Accordingly, assuming a comparable
environment, Air Liquide is confident in its ability to deliver net
profit growth in 2018, calculated at constant exchange rate and
excluding 2017 exceptionals1.
1 2017 exceptionals: exceptional non-cash items having a net
positive impact on 2017 net profit.
APPENDIX
Currency, energy and significant scope
impacts (Semester)
Applied method
In addition to the comparison of published figures, financial
information is given excluding currency, 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. The currency effect is calculated
based on the aggregates for the period converted at the exchange
rate for the previous period.
- In addition, the Group passes on
variations in the cost of energy (electricity and natural gas) to
its customers via indexed invoicing integrated into their medium
and long-term contracts. This indexing can lead to significant
variations in sales (mainly in the Large Industries Business Line)
from one period to another depending on fluctuations in prices on
the energy market.
An energy impact is calculated based on the sales of each
of the main subsidiaries in Large Industries. Their consolidation
allows the determination of the energy impact for the Group as a
whole. The foreign exchange rate used is the average annual
exchange rate for the year N-1.
Thus, at the subsidiary level, the following formula provides
the energy impact, calculated for natural gas and electricity
respectively:
Energy impact = Share of sales index to energy year (N-1) x
(Average energy price over the year (N) - Average energy price over
the year (N-1))
This indexation effect of electricity and natural gas does not
impact the operating income recurring.
- The significant scope effect
corresponds to the impact on sales of all acquisitions or disposals
of a significant size for the Group. These changes in scope of
consolidation are determined:
- for acquisitions during the period, by
deducting from the aggregates for the period the contribution of
the acquisition,
- for acquisitions during the previous
period, by deducting from the aggregates for the period the
contribution of the acquisition between January 1 of the
current period and the anniversary date of the acquisition,
- for disposals during the period, by
deducting from the aggregates for the previous period the
contribution of the disposed entity as of the anniversary date of
the disposal,
- for disposals during the previous
period, by deducting from the aggregates for the previous period
the contribution of the disposed entity.
(in millions of euros)
H1 2018 H1 2018/2017
Published Growth Currency impact
Natural gas impact Electricity impact
Significant scope impact H1 2018/2017 Comparable
Growth Revenue
Group
10,162 -1.3% (685) 16 19
(71) +5.8% Impacts in %
-6.8% +0.2% +0.2% -0.7% Gas
& Services 9,769 -2.1% (671) 16
19 (71) +5.0% Impacts in %
-6.8% +0.2% +0.2% -0.7%
Operating Income Recurring
Group 1,617 - 2.3 % (118)
- - (22) + 6.2 % Impacts in %
-7.1%
-1.4% Gas & Services 1,741 -
1.1 % (117) - - (22) + 6.8 %
Impacts in % -6.7%
-1.2%
The operational margin excluding energy impact corresponds to
the operating income recurring on sales excluding energy. For the
1st semester and at Group level it stands at 16.0% = 1,617 /
(10,162 – 16 –19).
The sale of the Airgas refrigerants business, effective
in October 2017 generated a significant scope impact on 2018
revenue, the details of which is broken down per quarter below
(in millions of euros)
Q1 2018 Q2 2018
Q3 2018 Q4 2018
Airgas
refrigerants (35) (36) (26) (1) Impacts
in % -0.7% -0.7% -0.5% -0.0%
Currency, energy and significant scope
impacts (Quarter)
Consolidated 2018 2nd quarter revenue includes the following
impact:
(in millions of euros)
Q2 2018 Q2 2018/2017
Published Growth Currency impact
Natural gas impact Electricity impact
Significant scope impact Q2 2018/2017 Comparable
Growth Revenue
Group
5,152 +0.7% (263) 30 21
(36) +5.6% Impacts in %
-5.2% +0.6% +0.4% -0.7% Gas
& Services 4,938 +0.1% (258) 30
21 (36) +5.1% Impacts in %
-5.3% +0.6% +0.4% -0.7%
2nd quarter 2018
revenue
BY GEOGRAPHY
Revenue
(in millions of euros)
Q2 2017 Q2 2018 Published
change Comparable change
Americas
2,109 1,973 -6.5% +4.6% Europe 1,661
1,711 +3.0% +1.2% Asia-Pacific 1,008
1,091 +8.3% +10.8% Middle-East & Africa
154 163 +5.9% +16.3%
Gas &
Services Revenue 4,932 4,938
+0.1% +5.1% Engineering & Construction
93 95 +1.4% +4.3% Global Markets &
Technologies 92 119 +30.5% +33.2%
GROUP REVENUE 5,117 5,152
+0.7% +5.6%
BY WORLD BUSINESS LINE
Revenue
(in millions of euros)
Q2 2017 Q2 2018 Published
change Comparable change
Large industries
1,302 1,353 +4.0% +4.3% Industrial
Merchant 2,373 2,293 -3.4% +4.5%
Healthcare 840 864 +2.9% +6.9%
Electronics 417 428 +2.7% +7.6%
GAS
& SERVICES REVENUE 4,932 4,938
+0.1% +5.1%
Geographic and segment information
H1 2017
H1 2018 (in millions of euros and %)
Revenue
Operating income recurring OIR margin
Revenue Operating income recurring
OIR margin
Americas
4,250.7 670.3 15.8% 3,873.6 635.7
16.4% Europe 3,371.2 636.5 18.9%
3,464.4 651.4 18.8% Asia-Pacific 2,032.6
400.9 19.7% 2,107.5 407.2 19.3%
Middle-East and Africa 323.8 53.1 16.4%
323.7 46.4 14.3%
Gas and Services
9,978.3 1,760.8 17.6%
9,769.2 1,740.7 17.8%
Engineering and Construction 145.8 (5.6) -3.9%
180.1 (14.7) -8.2% Global Markets &
Technologies 168.6 17.9 10.6% 213.1
18.4 8.6% Reconciliation - (117.0)
- - (127.1) -
TOTAL GROUP
10,292.7 1,656.1 16.1%
10,162.4 1,617.3 15.9%
The OIR margin stood at 15.9% and 16.0% excluding the
energy impact, which corresponds to a slight decrease of -10
basis points compared with the 1st half of 2017. This was mainly
due to the negative operating income recurring generated by
Engineering & Construction. Moreover, the disposal of the
Airgas Refrigerants business had a dilutive impact on the margin;
excluding the disposal, the OIR margin would have been stable.
Consolidated income
statement
Considering the disposals of Aqua Lung and
Air Liquide Welding completed at the end of December 2016
and at the end of July 2017 respectively, “Other activities” have
been reallocated to “Net Profit from Discontinued Operations” in
the 2017 Income Statement, in accordance with IFRS 5.
(in millions of euros)
H1 2017 H1 2018
Revenue 10,292.7 10,162.4 Other
income 58.6 74.3 Purchases (3,907.9)
(3,949.0) Personnel expenses (2,098.4) (2,041.7)
Other expenses (1,788.5) (1,750.1)
Operating
income recurring before depreciation and amortization
2,556.5 2,495.9 Depreciation and amortization
expense (900.4) (878.6)
Operating income
recurring 1,656.1 1,617.3 Other
non-recurring operating income (0.3) 2.1 Other
non-recurring operating expenses (1.4) (32.5)
Operating income 1,654.4 1,586.9
Net finance costs (222.9) (122.2) Other financial
income 11.3 10.5 Other financial expenses
(47.7) (32.9) Income taxes (388.8) (359.6)
Share of profit of associates 0.6 3.1 NET PROFIT FROM
CONTINUING OPERATIONS 1,006.9 1,085.8 NET PROFIT FROM
DISCONTINUED OPERATIONS (30.4) - PROFIT FOR THE
PERIOD 976.5 1,085.8 - Minority interests 48.7
45.6 - Net profit (Group share) 927.8 1,040.2
Basic earnings per share (in
euros) 2.18 2.44 Diluted
earnings per share (in euros) 2.17
2.43 Basic earnings
per share from continuing operations (in euros)
2.25 2.44 Diluted earnings per share from
continuing operations (in euros) 2.24
2.43 Basic earnings
per share from discontinued operations (in euros)
(0.07) - Diluted earnings per share from
discontinued operations (in euros) (0.07)
-
Consolidated balance sheet
ASSETS (in millions of
euros) December 31, 2017 June 30,
2018
Goodwill 12,840.4 13,138.9 Other intangible assets
1,611.1 1,589.3 Property, plant and equipment
18,525.9 18,801.9
Non-current assets
32,977.4 33,530.1 Non-current financial assets
541.6 560.7 Investments in associates 128.2
138.9 Deferred tax assets 258.4 298.1 Fair
value of non-current derivatives (assets) 130.5 91.9
Other non-current assets 1,058.7
1,089.6 TOTAL NON-CURRENT ASSETS
34,036.1 34,619.7 Inventories and
work-in-progress 1,333.7 1,466.3 Trade receivables
2,900.0 3,066.9 Other current assets 863.5
790.9 Current tax assets 199.5 80.0 Fair value
of current derivatives (assets) 38.4 56.5 Cash and
cash equivalents 1,656.1 1,189.2
TOTAL CURRENT
ASSETS 6,991.2 6,649.8 TOTAL
ASSETS 41,027.3 41,269.5
EQUITY AND LIABILITIES (in millions of euros)
December 31, 2017 June 30, 2018
Share capital 2,356.2 2,355.5 Additional paid-in
capital 2,821.3 2,792.7 Retained earnings
9,077.3 10,320.6 Treasury shares (136.5)
(136.4) Net profit (Group share) 2,199.6 1,040.2
Shareholders' equity 16,317.9
16,372.6 Minority interests 400.5
396.8 TOTAL EQUITY 16,718.4
16,769.4 Provisions, pensions and other employee
benefits 2,593.3 2,493.7 Deferred tax liabilities
1,807.7 1,882.2 Non-current borrowings
12,522.4 12,520.7 Other non-current liabilities 238.5
242.0 Fair value of non-current derivatives (liabilities)
2.3 13.7
TOTAL NON-CURRENT LIABILITIES
17,164.2 17,152.3 Provisions, pensions and
other employee benefits 332.7 331.8 Trade payables
2,446.4 2,433.7 Other current liabilities
1,623.9 1,510.5 Current tax payables 194.2
145.0 Current borrowings 2,504.6 2,885.8 Fair value
of current derivatives (liabilities) 42.9 41.0
TOTAL CURRENT LIABILITIES 7,144.7
7,347.8 TOTAL EQUITY AND LIABILITIES
41,027.3 41,269.5
Consolidated cash flow statement
H1 2017
H1 2018 (in millions of euros)
Operating activities
Net profit (Group share) 927.8
1,040.2 Minority interests 48.7
45.6 Adjustments: • Depreciation
and amortization 903.9 878.6 • Changes in deferred
taxes(a) 71.3 20.1 • Changes in provisions
(79.3) (53.5) • Share of profit of associates 2.4
(3.1) • Profit/loss on disposal of assets 19.9
(11.5) • Net finance costs(b) 52.5 83.7
Cash flows
from operating activities before changes in working capital
1,947.2 2,000.1 Changes in working
capital (316.5) (196.0) Others (37.2)
(34.4)
Net cash flows from operating activities
1,593.5 1,769.7 Investing activities
Purchase of property, plant and
equipment and intangible assets (1,107.8) (1,096.4)
Acquisition of consolidated companies and financial assets
(85.8) (74.5) Proceeds from sale of property, plant and
equipment and intangible assets 32.9 35.0 Proceeds
from sale of financial assets 3.0 0.2 Dividends
received from equity affiliates - 3.0
Net cash
flows used in investing activities (1,157.7)
(1,132.7) Financing activities
Dividends paid • L'Air
Liquide S.A. (1,061.7) (1,158.5) • Minority interests
(41.2) (54.2) Proceeds from issues of share capital
26.9 36.4 Purchase of treasury shares (158.4)
(63.5) Net financial interests paid - (78.7)
Increase (decrease) in borrowings (b) 138.5 220.3
Transactions with minority shareholders (4.4) (0.4)
Net cash flows from (used in) financing activities
(1,100.3) (1,098.6) Effect of exchange rate
changes and change in scope of consolidation (23.1)
30.0
Net increase (decrease) in net cash and cash
equivalents (687.6) (431.6) NET
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD
1,430.5 1,515.7 NET CASH AND CASH
EQUIVALENTS AT THE END OF THE PERIOD 742.9
1,084.1 (a) Changes in deferred taxes reported in the
consolidated cash flow statement do not include changes in deferred
taxes relating to disposals of assets. (b) The net finance costs of
the 1st half of 2017 only included the amount related to the
acquisition of Airgas.
The analysis of net cash and cash equivalents at the end of
the period is as follows:
(in millions of euros)
June 30,
2017
December 31,
2017
June 30,
2018
Cash and
cash equivalents 895.0 1,656.1 1,189.2 Bank
overdrafts (included in current borrowings) (152.1)
(140.4) (105.1)
NET CASH AND CASH EQUIVALENTS
742.9 1,515.7 1,084.1
Net indebtedness calculation
(in millions of euros)
June 30,
2017
December 31,
2017
June 30,
2018
Non-current
borrowings (13,914.6) (12,522.4) (12,520.7)
Current borrowings (2,590.5) (2,504.6)
(2,885.8)
TOTAL GROSS INDEBTEDNESS (16,505.1)
(15,027.0) (15,406.5) Cash and cash
equivalents 895.0 1,656.1 1,189.2
NET
INDEBTEDNESS AT THE END OF THE PERIOD (15,610.1)
(13,370.9) (14,217.3)
Statement of changes in net indebtedness
(in millions of euros)
June 30,
2017
December 31,
2017
June 30,
2018
Net
indebtedness at the beginning of the period
(15,368.1) (15,368.1) (13,370.9)
Net cash flows from operating activities 1,593.5
4,254.0 1,769.7 Net cash flows used in investing activities
(1,157.7) (1,845.7) (1,132.7) Net cash flows
used in financing activities excluding changes in borrowings
(1,238.8) (1,191.6) (1,240.2)
Total net cash
flows (803.0) 1,216.7
(603.2) Effect of exchange rate changes, opening net
indebtedness of newly acquired companies and others 613.5
886.2 (159.5) Restatement of net finance costs
(52.5) (105.7) (83.7)
Change in net
indebtedness (242.0)
1,997.2
(846.4) TOTAL NET INDEBTEDNESS AT THE END OF THE
PERIOD (15,610.1) (13,370.9)
(14,217.3)
Return on Capital Employed –
ROCE
Applied method
Return on capital employed after tax is calculated based on the
Group’s consolidated financial statements, by applying the
following ratio for the period in question:
For the numerator: net profit - net finance costs after taxes
for the period in question.
For the denominator: the average of (total shareholders' equity
+ net indebtedness) at the end of the past three half-years.
ROCE H1 2018 H1 2017 2017
H1 2018 ROCE
Calculation
(in millions of euros)
(a) (b)
(c) Numerator
((b)-(a))+(c)
Net profit after tax before deduction of minority interests
976.5 2,291.6 1,085.8 2,400.9 Net
finance costs -222.9 -421.9 -122.2
-321.2 Group effective tax rate(a) 27.9% 29.4%
25.2% - Net financial costs after tax -160.8
-297.9 -91.4 -228.5
Net profit after tax
before deduction of minority interests - Net financial costs after
tax 1,137.3 2,589.5 1,177.2
2,629.4 Denominator
((a)+(b)+(c))/3
Total equity 16,049.0 16,718.4 16,769.4
16,512.3 Net indebtedness 15,610.1 13,370.9
14,217.3 14,399.4
Average of (total equity + net
indebtedness)
30,911.7 Published ROCE
8.5% ROCE excluding the non-cash impacts of
the 2017 exceptional items
8.0%
(a) Group effective tax rate excluding
significant events.
ROCE H1 2017 H1 2016 2016 H1 2017
ROCE
Calculation
(in millions of euros)
(a) (b)
(c) Numerator
((b)-(a))+(c)
Net profit after tax before deduction of minority interests
853.0 1,926.7 976.5 2,050.2 Net finance costs
-151.7 -389.1 -222.9 -460.3 Group
effective tax rate(a) 23.8% 28.2% 27.9%
- Net financial costs after tax -115.7 -279.4
-160.8 -324.5
Net profit after tax before
deduction of minority interests - Net financial costs after tax
968.7 2,206.1 1,137.3
2,374.7
Denominator
((a)+(b)+(c))/3
Total equity 12,329.7 17,125.0 16,049.0
15,167.9 Net indebtedness 19,859.8 15,368.1
15,610.1 16,946.0
Average of (total equity + net
indebtedness)
32,113.9 ROCE
7.4%
The return on capital employed after tax (ROCE) stood at
8.0% in the 1st half of 2018, up +30 basis points
compared with the recurring level of end-2017 (7.7%). The
improvement excluding the currency impact was +60 basis points.
The slideshow that accompanies this release
is available as of 8:45 am (Paris time) at
www.airliquide.com.
Throughout the year, follow Air Liquide on
Twitter: @AirLiquideGroup.
UPCOMING EVENTS
2018 Third Quarter Revenue:October 24,
2018
Salon Actionaria, Paris, France:November
22-23, 2018
The world leader in gases, technologies
and services for Industry and Health, Air Liquide is present in 80
countries with approximately 65,000 employees and serves more than
3.5 million customers and patients. Oxygen, nitrogen and hydrogen
are essential small molecules for life, matter and energy. They
embody Air Liquide’s scientific territory and have been at the core
of the company’s activities since its creation in 1902.
Air Liquide’s ambition is to lead its
industry, deliver long term performance and contribute to
sustainability. The company’s customer-centric transformation
strategy aims at profitable growth over the long term. It relies on
operational excellence, selective investments, open innovation and
a network organization implemented by the Group worldwide. Through
the commitment and inventiveness of its people, Air Liquide
leverages energy and environment transition, changes in healthcare
and digitization, and delivers greater value to all its
stakeholders.
Air Liquide’s revenue amounted to 20.3
billion euros in 2017 and its solutions that protect life and the
environment represented more than 40% of sales. Air Liquide is
listed on the Euronext Paris stock exchange (compartment A) and
belongs to the CAC 40, EURO STOXX 50 and FTSE4Good indexes.
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