Air Liquide has released solid financials in its latest results after Airgas operations contributed to the group’s performance over a full quarter for the first time, resulting in a total revenue upswing of 23.9%.
As a result of consolidated sales, which officially merged as of 1st October, total group revenue reached €5.1bn ($5.5bn) in the industrial gas giant’s third quarter 2016 results.
Benoît Potier, Chairman and CEO, credited the company’s robust results in the third quarter to the successful refinancing of its $13.4bn takeover of fellow Tier One player Airgas. He stated, “This quarter has been characterised by the successful refinancing of the Airgas acquisition, the disposal of certain assets in the US executed under excellent conditions, and the operational merger of Airgas since 1st October.”
However, excluding Airgas and the currency and energy impact, group revenue actually fell slightly by 1.1%, which the company attributes to slower sales in its Engineering & Construction division.
In the context of continued moderate global growth, sales in its Gas & Services unit posted solid growth, primarily driven by ramp-ups of its Large Industries plants, the strength of its Healthcare business and by developing economies, such as in China.
Most notably, Industrial Merchant sales skyrocketed by nearly 80% during the quarter following the acquisition of Airgas. Yet, excluding Airgas, revenue actually fell by 2% on a comparable basis.
Overall, the French corporation continued to see bulk volumes progress in Europe whilst the cylinder business remained weak during the quarter. In North America, the pharmaceutical sector continued to show promise whilst markets related to energy and metal fabrication were generally down over the quarter. In Asia Pacific, growth for Air Liquide over the quarter was driven by higher volumes in China and Japan.
“Today, a new phase begins. This quarter has been characterised by the successful refinancing of the Airgas acquisition”
Benoît Potier, Chairman and CEO
Sales in its Gas & Services division, which were essentially driven by Large Industries and Healthcare segments, soared 29.9% on a reported basis, reaching €4.8bn ($5.2bn). Excluding Airgas, comparable growth was 2%.
Air Liquide’s Large Industries unit posted a growth of 5%, benefitting from added capacities and developments in Europe and South America. Earlier this month, the company announced plans to build a new hydrogen (H2) production plant in Argentina as well as commissioning the world’s first helium (He) storage facility in Germany back in July. In addition, Large Industries sales progressed in China by almost 10%, as well as revenue growth in the Middle East and Africa remaining solid.
Air Liquide’s Electronics segment, excluding decreased equipment and installations sales, grew by 3%, marked by stable sales of specialty gases after a period of strong increase. The company particularly highlighted the dynamic demand for advanced materials in Asia, demonstrating growth of more than 30%.
Overall, 2016 Q3 revenue in Air Liquide’s Healthcare division climbed by 19.1% including the contribution of Airgas via its sales of medical gases to hospitals in the US. The company explained that its robust growth was boosted by accelerated demand for home healthcare services.
Despite its string of strong results this quarter, Air Liquide posted a sharp reduction in Engineering & Construction revenue, totalling €105m ($163m). This was a result of large-scale projects related to energy slowing down and the stunted number of new projects, according to the company.
On the whole, Potier enthused, “Today, a new phase begins. Priorities include delivering Airgas synergies in accordance with our plan and continued implementation of NEOS, our corporate programme. The investment backlog, amounting to €2.2bn ($2.4bn), and innovations aimed at enriching the customer experience, will contribute to growth in the coming years.”
“Following the completion of the acquisition of Airgas, Air Liquide is confident in its ability to generate growth in 2016, both in net profit and net earnings per share, including the effect of the capital increase finalised in early October.”
The full Airgas cost synergies are expected to be delivered by the end of 2018 – earlier than initially anticipated.