Air Liquide has reported “solid” first-half 2018 results with group revenue totalling €10.2bn ($11.9bn).
The French company cited higher sales in Gas & Services, as well as in Engineering & Construction and Global Markets & Technologies, as driving growth in this period.
The start-up of the world’s largest air gas production unit in South Africa for Sasol, the commissioning of four new biogas production units, acquisitions in Home Healthcare and the first meeting of the Hydrogen Council in China were just some of the 2018 highlights for the Tier One corporation.
Benoît Potier, Chairman and CEO, said, “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 €1bn ($1.2bn), rose by more than 12.1%.”
“Cash flows from operations increased significantly, up 11.1%. The Group’s balance sheet is solid.”
At the heart of Air Liquide’s strong first half were Gas & Services sales of €9.8bn ($11.4bn), up 5% on a comparable basis, with a strong contribution from developing economies (12.3%).
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 penalised 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 second quarter.
Engineering & Construction revenue totalled €180m ($210m), up 29.8% compared to the first half of 2017, benefiting from the gradual improvement in order intake seen in 2017.
Global Markets & Technologies sales were up 29.2% at €213m ($248.6m). These were particularly dynamic in the biogas sector, which benefited from the start-up of a major landfill biogas purification unit in the US and three small farm waste biogas purification units in France and in the United Kingdom.
Efficiencies amounted to €174m ($203m) during the first six months of the year, ahead of the annual target of over €300m ($350m) from the NEOS program. They include a contribution of €14m ($16m) from Airgas for the first time.
Airgas synergies represented a cumulated $260m since the acquisition of Airgas in May 2016 and $45m over the first six months of 2018. The $300m target will be reached in H1 2019, 12 months earlier than initially forecasted.
Air Liquide’s operating income recurring (OIR) reached €1.6bn ($1.9bn) in the first 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 first 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 first 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 first half 2017.
Potier concluded, “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 exceptionals.”