gasworld Business Intelligence provides you with the latest analysis of Air Liquide’s Q1 2017 earnings report.

Headlines

  • Reported corporate sales growth increased by more than 38% YoY in Q1 2017 to €5.18bn. This was substantially driven by the full consolidation of the acquired Airgas business.
  • The Gases & Services sector accounted for over 95% of corporate sales, post-Airgas. Engineering & Construction sales and the Global Markets & Technologies units both accounted for under 2% of corporate sales.
  • Reported sales in Gases & Services were up by more than 42% in Q1. However, Engineering & Construction sales declined by 57% YoY (with order intake down sequentially, but up 46% YoY in Q1). Global Markets & Technologies increased again by nearly 20%, but with order intake down sequentially and YoY.
Air Liquide Group Performance
  • Total Sales
  • Total Operating Income (Estimated)
,Total Sales,Total Operating Income (Estimated) 2012 Q1,6.7%,5.3% 2012 Q2,5.1%,3.6% 2012 Q3,5.7%,7.6% 2012 Q4,6.6%,8.6% 2013 Q1,-2.1%,-1.4% 2013 Q2,2.9%,3.0% 2013 Q3,-1.0%,1.3% 2013 Q4,-2.3%,0.2% 2014 Q1,1.0%,1.7% 2014 Q2,-2.4%,-1.6% 2014 Q3,1.0%,-0.3% 2014 Q4,3.9%,0.0% 2015 Q1,6.9%,10.8% 2015 Q2,9.3%,13.8% 2015 Q3,7.8%,12.4% 2015 Q4,2.9%,9.7% 2016 Q1,-3.0%,-7.5% 2016 Q2,7.3%,3.5% 2016 Q3,23.9%,12.2% 2016 Q4,18.6%,14.4% 2017 Q1,33.7%,33.9%
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  • On the basis of business mix, corporate operating income is estimated to have risen in line with sales, despite the lower profitability of the acquired Airgas business. Cash flow was up by one third, with gearing decreasing.
  • Targeting ROCE over 10% in 5-6 years vs 7% in 2016.
  • Impact of cost savings and efficiency measures continue to rise YoY, with efficiency gains of over €65m in Q1, excluding Airgas. Operations and supply chain were the main contributors, along with higher savings from reorganisations
  • The Airgas integration is on track with $45m synergies in Q1, with a further $300M+ synergies scheduled to be completed by end-2018.
  • During Q1, Air Liquide entered into exclusive negotiations with Lincoln for sale of the company’s welding business.
Group Operating Margin
  • Operating Margin (Estimate)
,Operating Margin (Estimate) 2012 Q1,16.6% 2012 Q2,16.5% 2012 Q3,17.0% 2012 Q4,16.8% 2013 Q1,16.7% 2013 Q2,16.5% 2013 Q3,17.4% 2013 Q4,17.2% 2014 Q1,16.8% 2014 Q2,16.6% 2014 Q3,17.1% 2014 Q4,16.6% 2015 Q1,17.4% 2015 Q2,17.3% 2015 Q3,17.9% 2015 Q4,17.7% 2016 Q1,16.6% 2016 Q2,16.7% 2016 Q3,16.2% 2016 Q4,17.1% 2017 Q1,16.6%
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  • Reported gases growth accelerated to over 40% in Q1. This rate of growth was largely driven by the major positive impact of the Airgas acquisition. Currency and energy cost pass-through both had a positive impact of around 3% in Q1, the most significant positive impact in two years. The energy cost pass-through impact was primarily driven by natural gas, with small positive impact also from power.
  • Underlying growth improved to nearly 4% in Q1. This was almost entirely driven by an acceleration in volume growth, which is estimated to have been at its highest level in four quarters. Price impact also rose slightly, although remaining modest, being driven by merchant pricing, but with negative impact from neon YoY in electronics.
  • Nearly half of underlying growth was driven by the Industrial Merchant sector, with one third from the Large Industries sector.
  • Two thirds of underlying growth was driven by increases in base business, with one third by start-ups and ramp-ups etc.
  • The underlying growth trend of recent years is above Air Liquide’s industry peers, with growth largely due to a significantly higher volume impact. On the other hand, price impact has been lower than the peer group average.
Air Liquide Underlying Growth Revenue Drivers
  • Total Underlying Growth
  • Volume
  • Price
,Total Underlying Growth,Volume,Price 2011 Q1,11.4%,10.4%,1.0% 2011 Q2,9.6%,8.1%,1.5% 2011 Q3,7.7%,6.7%,1.0% 2011 Q4,2.0%,1.1%,0.9% 2012 Q1,4.0%,3.0%,1.0% 2012 Q2,0.9%,0.4%,0.5% 2012 Q3,1.6%,1.2%,0.4% 2012 Q4,4.5%,4.0%,0.5% 2013 Q1,0.0%,-0.5%,0.5% 2013 Q2,4.0%,3.0%,1.0% 2013 Q3,3.9%,3.0%,0.9% 2013 Q4,3.9%,3.0%,0.9% 2014 Q1,5.7%,5.1%,0.6% 2014 Q2,3.7%,3.2%,0.5% 2014 Q3,3.6%,3.1%,0.5% 2014 Q4,3.0%,2.7%,0.4% 2015 Q1,2.5%,2.1%,0.4% 2015 Q2,3.4%,2.9%,0.5% 2015 Q3,3.8%,3.5%,0.3% 2015 Q4,3.8%,3.8%,0.0% 2016 Q1,4.2%,4.0%,0.2% 2016 Q2,3.0%,2.8%,0.2% 2016 Q3,2.0%,1.9%,0.1% 2016 Q4,1.6%,1.5%,0.2% 2017 Q1,3.8%,3.0%,0.7%
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Air Liquide Business Performance

  • The Industrial Merchant sector was Air Liquide’s largest Gases & Services business, post-Airgas, representing nearly half of sales. Large Industries accounted for just over a quarter of sales with Healthcare representing 17% and Electronics 8%.
  • Industrial Merchant sales showed the highest YoY growth in Q1 reported sales, due to the Airgas acquisition nearly doubling sales.
  • The Large Industries sector accelerated again in Q1 to achieve its highest growth rate of recent years.
  • Healthcare growth remained in double digits at over 20%, with growth being aided by the additonal revenue gained from the Airgas acquisition.
  • Electronics growth continued to be weak in Q1, showing only modest growth YoY.
Air Liquide Reported Growth by Business
  • Large Industries
  • Industrial Merchant
  • Electronics
  • Healthcare
,Large Industries,Industrial Merchant,Electronics,Healthcare 2012 Q1,11.4%,6.8%,-12.0%,6.1% 2012 Q2,7.4%,7.0%,-8.1%,3.2% 2012 Q3,8.3%,6.8%,-3.1%,7.7% 2012 Q4,10.4%,4.1%,4.6%,14.3% 2013 Q1,-3.0%,-2.1%,-11.3%,10.1% 2013 Q2,2.7%,0.1%,-11.0%,14.4% 2013 Q3,-2.7%,-3.7%,-7.5%,9.7% 2013 Q4,-2.7%,-2.9%,-1.2%,0.1% 2014 Q1,4.9%,-2.0%,3.2%,-5.0% 2014 Q2,-2.6%,-2.3%,7.4%,-6.9% 2014 Q3,-0.1%,0.2%,10.6%,-4.3% 2014 Q4,0.8%,4.5%,15.8%,-1.4% 2015 Q1,-1.7%,8.0%,29.0%,9.4% 2015 Q2,7.7%,6.6%,27.7%,9.3% 2015 Q3,7.8%,2.8%,22.3%,8.5% 2015 Q4,4.2%,0.7%,16.5%,8.3% 2016 Q1,-4.5%,-5.4%,14.4%,1.4% 2016 Q2,-9.2%,31.3%,8.1%,8.5% 2016 Q3,-3.9%,78.6%,3.7%,17.7% 2016 Q4,4.8%,74.5%,-0.5%,16.7% 2017 Q1,15.3%,92.6%,3.1%,22.4%
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  • Healthcare again showed the highest growth on a comparable basis in Q1, at over 5%. This was similar to the trend of recent years.
  • The company experienced an increase in Homecare patient numbers, as well as strong Hygiene and Specialty Ingredients sectors.
  • Large Industries growth slowed slightly towards 2.5% YoY (ex acquisitions, currency, energy pass-through).
  • The Industrial Merchant sector returned to a growth rate of 2.5% for the first time since late 2014, with further growth in most end markets.
  • Bulk volumes were better in Europe, Asia and US. Furthermore, volumes in Food were up with Manufacturing stabilising and Construction down.
  • Electronics growth remained negative YoY. Lower E&I and neon prices vs high 2016 but double digit Advanced Materials and solid carrier gases.
Comparable Growth by Business
  • Large Industries
  • Industrial Merchant
  • Electronics
  • Healthcare
,Large Industries,Industrial Merchant,Electronics,Healthcare 2012 Q1,7.3%,4.4%,-10.8%,5.5% 2012 Q2,2.9%,1.9%,-11.5%,1.9% 2012 Q3,4.2%,1.4%,-12.0%,4.6% 2012 Q4,7.7%,2.2%,1.7%,5.0% 2013 Q1,3.4%,0.5%,-6.3%,3.4% 2013 Q2,4.8%,3.8%,-4.0%,6.8% 2013 Q3,2.7%,3.8%,4.2%,6.5% 2013 Q4,3.3%,4.1%,9.3%,5.1% 2014 Q1,6.2%,4.4%,10.3%,5.3% 2014 Q2,3.4%,2.7%,13.0%,2.6% 2014 Q3,3.6%,1.8%,11.7%,3.5% 2014 Q4,1.2%,3.1%,12.9%,3.3% 2015 Q1,0.2%,0.3%,14.4%,6.8% 2015 Q2,5.0%,-1.6%,11.9%,6.9% 2015 Q3,6.5%,-1.2%,12.8%,8.0% 2015 Q4,9.3%,-2.1%,7.5%,8.3% 2016 Q1,8.6%,-2.6%,13.4%,4.1% 2016 Q2,4.0%,-0.6%,9.0%,5.4% 2016 Q3,5.0%,-2.0%,-0.5%,5.2% 2016 Q4,4.2%,-1.1%,-3.5%,4.8% 2017 Q1,2.7%,2.6%,-0.4%,5.5%
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  • The Americas became the largest geographic region for Air Liquide, post-Airgas, accounting for over 40% of gases sales (36% USA). Europe now represents one third of sales, with Asia Pacific over 20% and the Middle East & Africa accounting for around 3% of revenue.
  • Reported sales more than doubled in the Americas in Q1, due to the Airgas acquisition.
  • European reported revenue growth accelerated again to nearly 6%, its highest rate since late 2012.
  • Asia Pacific reported growth also accelerated again to 6%, its highest growth since late 2015.
  • The small Middle East & Africa business recovered to show growth YoY in Q1, albeit below major regions.
Reported Growth by Region
  • Europe
  • Americas
  • Asia Pacific
  • Middle East & Africa
,Europe,Americas,Asia Pacific,Middle East & Africa 2012 Q1,2.7%,8.9%,10.6%,19.0% 2012 Q2,0.5%,6.7%,11.8%,20.4% 2012 Q3,3.2%,8.9%,10.3%,16.1% 2012 Q4,6.2%,10.3%,10.4%,11.1% 2013 Q1,1.2%,-0.8%,-7.2%,8.9% 2013 Q2,3.1%,10.5%,-6.3%,6.4% 2013 Q3,1.0%,2.5%,-8.7%,-6.9% 2013 Q4,-3.1%,3.1%,-4.9%,0.5% 2014 Q1,-3.8%,6.2%,4.6%,-6.9% 2014 Q2,-7.4%,1.1%,4.9%,-3.8% 2014 Q3,-8.3%,6.3%,11.7%,2.0% 2014 Q4,-4.2%,10.1%,11.2%,5.6% 2015 Q1,-0.3%,9.9%,16.0%,12.1% 2015 Q2,3.0%,10.2%,17.9%,39.1% 2015 Q3,5.0%,4.8%,9.3%,55.7% 2015 Q4,1.9%,0.5%,10.0%,43.1% 2016 Q1,-4.2%,-7.2%,3.2%,36.6% 2016 Q2,-4.3%,49.4%,-0.2%,3.3% 2016 Q3,-4.1%,127.6%,3.6%,-6.4% 2016 Q4,3.2%,122.9%,2.4%,-12.1% 2017 Q1,5.9%,160.0%,6.1%,17.9%
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  • Americas growth, on a comparable basis, accelerated to over 3.5% in Q1, its highest growth for the last 2 years.
  • Europe’s YoY growth slowed in Q1 towards 2.5%, close to its average of the last 2 years.
  • Asia Pacific growth on a comparable basis slowed significantly again in Q4 and, at close to flat, was its slowest performance since mid-2012.
  • The small Middle East & Africa region recovered to show growth of 2.5% YoY. Egypt growth was dynamic in Merchant and Large Industries with strong Healthcare in South Africa.
  • Air Liquide’s new plant at Yanbu reached full loading in March.
Comparable Growth by Region
  • Europe
  • Americas
  • Asia Pacific
  • Middle East & Africa
,Europe,Americas,Asia Pacific,Middle East & Africa 2012 Q1,1.4%,10.1%,2.7%,21.3% 2012 Q2,-0.5%,3.7%,-0.3%,18.5% 2012 Q3,1.0%,3.4%,-0.1%,14.2% 2012 Q4,2.3%,7.6%,6.2%,11.2% 2013 Q1,0.2%,3.2%,1.0%,16.8% 2013 Q2,2.2%,8.4%,2.2%,16.3% 2013 Q3,1.5%,9.1%,4.0%,5.3% 2013 Q4,0.1%,10.8%,6.9%,9.6% 2014 Q1,-0.2%,11.6%,13.5%,2.9% 2014 Q2,-1.8%,8.4%,11.2%,5.0% 2014 Q3,-2.4%,7.3%,12.5%,6.6% 2014 Q4,-0.1%,4.5%,9.3%,3.7% 2015 Q1,1.3%,1.1%,6.9%,1.4% 2015 Q2,3.3%,0.4%,5.0%,23.7% 2015 Q3,5.1%,-0.6%,4.5%,42.5% 2015 Q4,4.6%,0.0%,6.0%,35.0% 2016 Q1,1.6%,1.1%,7.1%,44.7% 2016 Q2,1.7%,3.0%,5.7%,3.2% 2016 Q3,0.5%,3.2%,3.5%,2.0% 2016 Q4,4.2%,-0.2%,0.5%,-7.6% 2017 Q1,2.6%,3.7%,1.6%,2.7%
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  • Just over 40% of Air Liquide’s Large Industries sales were located in Europe with around 30% in the Asia Pacific and the Americas respectively.
  • Europe slipped back into negative territory in Q1 for the first time since early 2015.
  • The Asia Pacific region recovered from the flat previous quarter to show growth of 4.5% YoY, although this was still one of the weakest performances of recent years.
  • Americas growth remained solid and accelerated to 9%, due to high US sales, with limited customer turn rounds.
  • Future growth is expected, with most start-ups and ramp-ups to come in Q2 and Q3.
Large Industries Growth by Region
  • Europe
  • Americas
  • Asia Pacific
,Europe,Americas,Asia Pacific 2012 Q1,1.6%,12.4%,16.6% 2012 Q2,2.3%,2.2%,3.0% 2012 Q3,2.3%,4.4%,7.8% 2012 Q4,3.7%,12.0%,16.1% 2013 Q1,1.0%,7.0%,5.1% 2013 Q2,0.8%,16.8%,4.7% 2013 Q3,-0.3%,9.0%,3.9% 2013 Q4,-2.1%,7.3%,12.5% 2014 Q1,-2.7%,13.1%,26.1% 2014 Q2,-4.7%,4.7%,20.5% 2014 Q3,-5.2%,2.7%,23.7% 2014 Q4,-3.2%,-1.2%,11.3% 2015 Q1,-3.5%,-1.5%,8.7% 2015 Q2,1.8%,2.5%,5.8% 2015 Q3,3.9%,4.7%,1.7% 2015 Q4,5.9%,4.6%,7.3% 2016 Q1,3.0%,7.5%,6.4% 2016 Q2,-0.2%,8.8%,5.1% 2016 Q3,-0.2%,7.1%,9.5% 2016 Q4,8.0%,6.1%,0.6% 2017 Q1,-2.2%,9.1%,4.5%
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  • Nearly two-thirds of Air Liquide’s Industrial Merchant sales were within the Americas, post Airgas. Europe accounted for just over 20%, with around 15% in the Asia Pacific.
  • Americas sales were flat YoY on a comparable basis in Q1, but better than recent quarters.
  • Europe growth accelerated sharply and, at 4% in Q1, was at its highest level for over five years, helped by higher working days.
  • Asia Pacific returned to a slightly negative YoY growth in Q1, despite solid growth in China.
Industrial Merchant Growth by Region
  • Europe
  • Americas
  • Asia Pacific
,Europe,Americas,Asia Pacific 2012 Q1,0.5%,8.6%,4.1% 2012 Q2,-2.2%,6.1%,2.4% 2012 Q3,-0.2%,3.9%,-1.0% 2012 Q4,-0.2%,4.6%,0.5% 2013 Q1,-1.0%,4.5%,-3.9% 2013 Q2,2.0%,6.7%,0.4% 2013 Q3,0.8%,8.8%,2.9% 2013 Q4,-0.7%,8.0%,5.6% 2014 Q1,-0.8%,6.7%,11.5% 2014 Q2,-1.4%,5.5%,6.3% 2014 Q3,-2.2%,5.8%,3.5% 2014 Q4,0.1%,7.5%,3.9% 2015 Q1,0.0%,1.0%,0.2% 2015 Q2,-0.6%,-3.5%,-0.7% 2015 Q3,0.6%,-5.0%,0.1% 2015 Q4,0.4%,-6.9%,0.7% 2016 Q1,-1.3%,-6.3%,-1.2% 2016 Q2,2.7%,-4.5%,-1.0% 2016 Q3,-1.1%,-3.0%,-0.8% 2016 Q4,-0.5%,-2.8%,0.1% 2017 Q1,4.3%,0.0%,-0.5%
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  • Overall Merchant pricing growth improved slightly to over 1%, its highest rate since mid-2014. However, this was still less than half of 2012/13 rates.
  • Gains amongst major regions slowed in both the Americas and Asia Pacific, with the former close to 2% and the latter was unchanged YoY.
  • However, overall performance benefitted from Europe showing its smallest decline since mid-2014.
  • These changes indicate merchant volumes were solidly up YoY in Q1 in Europe and the Americas, but marginally down in Asia Pacific.
Merchant Pricing by Region
  • Total
  • Europe
  • Americas
  • Asia Pacific
  • Middle East & Africa
,Total,Europe,Americas,Asia Pacific,Middle East & Africa 2012 Q1,2.1%,1.0%,4.3%,0.4%,8.6% 2012 Q2,1.5%,1.0%,2.9%,0.4%,5.0% 2012 Q3,1.4%,0.8%,2.0%,0.8%,6.0% 2012 Q4,2.4%,0.8%,4.3%,2.4%,5.9% 2013 Q1,1.5%,0.5%,2.9%,1.1%,4.7% 2013 Q2,2.0%,0.5%,4.0%,1.1%,8.0% 2013 Q3,1.6%,0.5%,3.8%,0.6%,2.3% 2013 Q4,1.9%,0.7%,3.6%,1.5%,3.9% 2014 Q1,1.5%,-0.2%,4.4%,0.0%,5.2% 2014 Q2,1.0%,0.2%,3.3%,-0.3%,0.4% 2014 Q3,1.4%,-0.1%,5.1%,-0.6%,1.7% 2014 Q4,1.0%,-0.6%,4.8%,-0.4%,-0.8% 2015 Q1,1.1%,-0.4%,5.2%,-1.6%,1.4% 2015 Q2,0.9%,-0.2%,3.7%,-1.1%,2.4% 2015 Q3,0.6%,-0.5%,4.3%,-2.7%,1.0% 2015 Q4,0.0%,-0.5%,2.6%,-2.2%,1.6% 2016 Q1,0.5%,-0.6%,2.7%,-0.6%,1.0% 2016 Q2,0.3%,-0.8%,2.9%,-1.0%,0.3% 2016 Q3,0.2%,-0.8%,1.6%,-0.4%,1.4% 2016 Q4,0.9%,-0.7%,2.6%,0.9%,3.7% 2017 Q1,1.2%,-0.1%,1.8%,0.0%,2.9%
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  • The Asia Pacific accounts for around two thirds of electronics sales, with 20% in Americas and Europe closer to 10%.
  • Asia Pacific growth in Electronics slipped further to be marginally lower YoY in Q1, its weakest rate since mid-2012. Impacted by high E&I sales and neon prices in prior year.
  • Americas electronics growth also remained flat vs prior year in Q1.
  • Europe is now responsible for over 70% of Air Liquide’s Healthcare business, with the Americas representing most of the remainder. Asia Pacific accounts for around two thirds of electronics sales, the Americas 20% with Europe closer to 10%.
  • Asia Pacific growth in Electronics slipped further to be flat YoY, its lowest rate since 2013. Americas electronics growth also slipped significantly to be down 15% YoY. Carrier gases growth was up and advanced materials was again up 20%.
  • Growth in the large Europe Healthcare business was again just under 5% in Q4, but the Americas performance slipped back to be similar to European performance. Home healthcare up over 5%, hospital gases flat, dynamic hygiene and specialty ingredients.
Electronics & Healthcare Growth by Region
  • Americas Electronics
  • Asia Pacific Electronics
  • Europe Healthcare
  • Americas Healthcare
,Americas Electronics,Asia Pacific Electronics,Europe Healthcare,Americas Healthcare 2012 Q1,12.5%,-15.6%,4.6%,7.2% 2012 Q2,-13.8%,-9.2%,-0.1%,12.9% 2012 Q3,-16.6%,-9.1%,3.0%,13.4% 2012 Q4,0.4%,2.2%,3.3%,11.7% 2013 Q1,-24.6%,2.2%,2.1%,8.1% 2013 Q2,-13.5%,0.1%,5.7%,9.7% 2013 Q3,11.9%,4.2%,14.1%,9.0% 2013 Q4,52.0%,0.7%,3.9%,9.4% 2014 Q1,42.6%,5.2%,4.0%,10.6% 2014 Q2,51.8%,5.2%,1.2%,7.7% 2014 Q3,32.2%,9.0%,1.0%,12.8% 2014 Q4,7.5%,13.7%,1.4%,11.5% 2015 Q1,10.7%,15.7%,7.7%,3.9% 2015 Q2,-0.1%,13.3%,6.9%,10.3% 2015 Q3,-6.8%,18.0%,9.6%,6.2% 2015 Q4,7.0%,13.4%,9.5%,8.0% 2016 Q1,0.5%,20.3%,2.7%,13.5% 2016 Q2,5.8%,15.2%,4.0%,12.4% 2016 Q3,4.5%,0.8%,4.3%,13.8% 2016 Q4,-14.9%,0.0%,4.7%,5.2% 2017 Q1,0.3%,-1.0%,5.4%,4.8%
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  • Air Liquide’s Europe business was equally balanced between Large Industries, Industrial Merchant and Healthcare (each accounting for around one third of sales) with Electronics only worth 3% of sales.
  • Large Industries slowed sharply to be down YoY for the first time since early 2015. There were mixed YoY volume comparisons between countries, good in Ukraine stoppage.
  • Industrial Merchant growth accelerated to show its highest growth in recent years at 4%. Growth in all end markets were up, helped by working days, bulk and cylinder volumes, with East Europe dynamic.
  • Healthcare growth remained solid at over 5%, although below recent peaks. Organic volume growth in homecare and hospitals, strong hygiene and specialty ingredients.
Europe Growth by Business
  • Large Industries
  • Industrial Merchant
  • Healthcare
,Large Industries,Industrial Merchant,Healthcare 2012 Q1,1.6%,0.5%,4.6% 2012 Q2,2.3%,-2.2%,-0.1% 2012 Q3,2.3%,-0.2%,3.0% 2012 Q4,3.7%,-0.2%,3.3% 2013 Q1,1.0%,-1.0%,2.1% 2013 Q2,0.8%,2.0%,5.7% 2013 Q3,-0.3%,0.8%,14.1% 2013 Q4,-2.1%,-0.7%,3.9% 2014 Q1,-2.7%,-0.8%,4.0% 2014 Q2,-4.7%,-1.4%,1.2% 2014 Q3,-5.2%,-2.2%,1.0% 2014 Q4,-3.2%,0.1%,1.4% 2015 Q1,-3.5%,0.0%,7.7% 2015 Q2,1.8%,-0.6%,6.9% 2015 Q3,3.9%,0.6%,9.6% 2015 Q4,5.9%,0.4%,9.5% 2016 Q1,3.0%,-1.3%,2.7% 2016 Q2,-0.2%,2.7%,4.0% 2016 Q3,-0.2%,-1.1%,4.3% 2016 Q4,8.0%,-0.5%,4.7% 2017 Q1,-2.2%,4.3%,5.4%
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  • The Americas business is dominated by Industrial Merchant (70% of sales post Airgas) and Large Industries (under 20%), with Healthcare and Electronics at 9% and 5% respectively.
  • Underlying Industrial Merchant growth returned to 2.5%, its highest performance since late 2014. There was a pick-up in most North American end markets, with bulk and cylinder volumes up.
  • Large Industries growth continued the solid growth seen over the last year at 9% YoY in Q1. This was due to high hydrogen and air gas sales in US, limited customer turnrounds and continued ramp-ups.
  • Healthcare growth remained close to 5%, close to its lowest performance of recent years. There was dynamic growth in South America and Canada (including acquisition).
  • Electronics growth was flat YoY, but better than the previous quarter’s performance. There was dynamic growth in advanced materials and lower E&I sales again.
Americas Growth by Business
  • Large Industries
  • Industrial Customers
  • Healthcare
  • Electronics
,Large Industries,Industrial Customers,Healthcare,Electronics 2012 Q1,12.4%,8.6%,7.2%,12.5% 2012 Q2,2.2%,6.1%,12.9%,-13.8% 2012 Q3,4.4%,3.9%,13.4%,-16.6% 2012 Q4,12.0%,4.6%,11.7%,0.4% 2013 Q1,7.0%,4.5%,8.1%,-24.6% 2013 Q2,16.8%,6.7%,9.7%,-13.5% 2013 Q3,9.0%,8.8%,9.0%,11.9% 2013 Q4,7.3%,8.0%,9.4%,52.0% 2014 Q1,13.1%,6.7%,10.6%,42.6% 2014 Q2,4.7%,5.5%,7.7%,51.8% 2014 Q3,2.7%,5.8%,12.8%,32.2% 2014 Q4,-1.2%,7.5%,11.5%,7.5% 2015 Q1,-1.5%,1.0%,3.9%,10.7% 2015 Q2,2.5%,-3.5%,10.3%,-0.1% 2015 Q3,4.7%,-5.0%,6.2%,-6.8% 2015 Q4,4.6%,-6.9%,8.0%,7.0% 2016 Q1,7.5%,-6.3%,13.5%,0.5% 2016 Q2,8.8%,-4.5%,12.4%,5.8% 2016 Q3,7.1%,-3.0%,13.8%,4.5% 2016 Q4,6.1%,-2.8%,5.2%,-14.9% 2017 Q1,9.1%,2.6%,4.8%,0.3%
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  • The Asia Pacific business was dominated by Large Industries (37%) and Industrial Merchant (31%). The Electronics business was also important (27%), but Healthcare remained relatively small (4%).
  • The Industrial Merchant sector’s weak growth trend of last two years continued, with comparable sales slightly down YoY in Q1. Japanese growth was lower due to equipment, despite bulk volumes increasing. China bulk and cylinder growth was solid.
  • Large Industries growth accelerated again to 4.5% YoY, but below the trend of recent years. There was hydrogen growth in Singapore refining, as well as oxygen for Japanese steel. Australia experienced growth due to a start up, with China slower because of no new start-ups.
  • Electronics growth in the region slipped again to be slightly lower YoY, in Q1. This is in comparison to high growth in 2016 Q1, due to high neon price, dynamic advanced materials, robust carrier gases (ramp-ups in China, Singapore).
  • Overall performance in the region was boosted by growth of over 9% in the small Healthcare business.
Asia Pacific Growth by Business
  • Large Industries
  • Industrial Customers
  • Healthcare
  • Electronics
,Large Industries,Industrial Customers,Healthcare,Electronics 2012 Q1,16.6%,4.1%,0.0%,-15.6% 2012 Q2,3.0%,2.4%,0.0%,-9.2% 2012 Q3,7.8%,-1.0%,0.0%,-9.1% 2012 Q4,16.1%,0.5%,0.0%,2.2% 2013 Q1,5.1%,-3.9%,0.0%,2.2% 2013 Q2,4.7%,0.4%,0.0%,0.1% 2013 Q3,3.9%,2.9%,0.0%,4.2% 2013 Q4,12.5%,5.6%,0.0%,0.7% 2014 Q1,26.1%,11.5%,0.0%,5.2% 2014 Q2,20.5%,6.3%,0.0%,5.2% 2014 Q3,23.7%,3.5%,0.0%,9.0% 2014 Q4,11.3%,3.9%,0.0%,13.7% 2015 Q1,8.7%,0.2%,0.0%,15.7% 2015 Q2,5.8%,-0.7%,0.0%,13.3% 2015 Q3,1.7%,0.1%,0.0%,18.0% 2015 Q4,7.3%,0.7%,0.0%,13.4% 2016 Q1,6.4%,-1.2%,0.0%,20.3% 2016 Q2,5.1%,-1.0%,0.0%,15.2% 2016 Q3,9.5%,-0.8%,0.0%,0.8% 2016 Q4,0.6%,0.1%,5.7%,0.0% 2017 Q1,4.5%,-0.5%,9.3%,-1.0%
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  • Operating Margin continues to trend upwards in Europe and Asia Pacific. However, the Americas slipped significantly to be the lowest performing region, due to consolidation of low margin Airgas business. Middle East & Africa improved sharply, partly due to exceptional income.
  • Excluding energy impact, Europe was slightly down in 2016 while Asia Pacific was flat.
  • The company remain committed to target synergies from Airgas acquisition of $130m in 2017 (vs $45m in 2016) and $60-65m in following two years. This is initially as cost synergies but later growing revenue synergies.
  • Also, re-emphasising transition to NEOS, increased annual efficiency target from €250 to €300m p.a. which is equivalent to over 2.5% of cost base.
Operating Margin by Region
  • Operating Margin (Estimate)
,Operating Margin (Estimate) 2012 Q1,16.6% 2012 Q2,16.5% 2012 Q3,17.0% 2012 Q4,16.8% 2013 Q1,16.7% 2013 Q2,16.5% 2013 Q3,17.4% 2013 Q4,17.2% 2014 Q1,16.8% 2014 Q2,16.6% 2014 Q3,17.1% 2014 Q4,16.6% 2015 Q1,17.4% 2015 Q2,17.3% 2015 Q3,17.9% 2015 Q4,17.7% 2016 Q1,16.6% 2016 Q2,16.7% 2016 Q3,16.2% 2016 Q4,17.1% 2017 Q1,16.6%
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  • Air Liquide gases investment appears to be continuing to trend lower in Q1, towards its lowest level in recent years, both in absolute terms and relative to sales. This was after adjustments for the addition of capex in the acquired Airgas business
  • Acquisition spend for the company in Q1 stood at €70m, including Airgas bolt-ons.
  • Investment backlog was €2.0bn in Q1, down slightly vs end-2016 and sharply down vs end-2014. This reflects project start-ups, which more than offset €0.5bn new decisions – half of which were in Americas.
  • Portfolio of opportunities within 12 months down slightly at €2.1bn in Q1, mainly small/medium projects as large projects slower.