Key Industry Performance Parameters

Index Q1 2005 = 100, Constant exchange rates
  • Revenue
  • EBIT
  • Capital Employed
,Revenue,EBIT,Capital Employed 2005 Q1,100.0,100.0,100.0 2005 Q2,103.2,103.3,101.1 2005 Q3,104.3,100.8,101.6 2005 Q4,110.2,111.3,105.1 2006 Q1,113.7,114.0,107.9 2006 Q2,113.1,119.3,106.0 2006 Q3,117.5,128.7,108.0 2006 Q4,120.3,113.1,114.3 2007 Q1,120.1,114.4,113.4 2007 Q2,123.0,122.7,116.9 2007 Q3,125.5,127.7,139.0 2007 Q4,130.1,135.6,140.5 2008 Q1,134.3,137.0,139.8 2008 Q2,139.2,143.3,141.9 2008 Q3,140.4,145.1,141.7 2008 Q4,131.1,132.3,141.2 2009 Q1,117.8,115.8,142.4 2009 Q2,113.7,118.8,147.3 2009 Q3,119.0,134.1,152.4 2009 Q4,122.5,135.6,155.7 2010 Q1,126.5,138.2,158.8 2010 Q2,132.8,151.4,164.7 2010 Q3,136.3,153.0,166.1 2010 Q4,138.2,155.1,167.9 2011 Q1,142.5,159.6,167.9 2011 Q2,146.0,161.6,167.9 2011 Q3,148.4,169.6,168.7 2011 Q4,145.3,163.5,177.0 2012 Q1,150.3,169.3,179.1 2012 Q2,149.4,171.1,180.5 2012 Q3,157.5,175.0,195.5 2012 Q4,159.4,178.7,199.6 2013 Q1,156.9,174.8,203.6 2013 Q2,162.0,181.6,202.8 2013 Q3,161.3,190.5,202.1 2013 Q4,161.0,183.9,203.0 2014 Q1,160.6,178.9,206.6 2014 Q2,162.4,184.2,208.2 2014 Q3,165.9,192.4,209.6 2014 Q4,165.1,187.4,209.8 2015 Q1,163.3,184.8,214.6 2015 Q2,166.3,195.7,214.7 2015 Q3,166.3,195.2,209.9 2015 Q4,164.0,196.6,213.5 2016 Q1,158.2,182.6,212.0 2016 Q2,160.8,194.6,212.1 2016 Q3,162.5,192.0,234.0 2016 Q4,166.4,197.6,240.8 2017 Q1,170.1,192.7,249.4 2017 Q2,170.0,198.0,239.2 2017 Q3,169.3,207.0,244.8 2017 Q4,173.5,207.0,237.7 2018 Q1,171.0,206.4,235.4 2018 Q2,174.2,215.5,235.4 2018 Q3,177.7,215.9,236.7 2018 Q4,182.6,219.0,241.7 2019 Q1,171.4,214.7,316.0 2019 Q2,172.5,224.5,309.2 2019 Q3,171.6,231.9,308.4 2019 Q4,170.5,233.4,309.7
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Total reported gas revenue of the four leading industrial gas companies remained just below $16Bn in Q4 following the downward adjustment around late 2018 due to divestments – this represents a decline of nearly -6% vs late 2018

EBIT at over $3.2Bn in Q4 reached a new record – driven by volume growth leverage, efficiency programmes and price gains continue to offset cost pressures

Capital employed increased sharply in 2018/9 reflecting increased goodwill from acquisitions and substantial cash accumulated by business disposals. These compounded the long term trend increase in capital intensity across the industry due to the relative growth of the onsites business



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Revenue Trends

% change YoY
  • Total
  • Underlying
,Total,Underlying 2013 Q1,4.4%,0.9% 2013 Q2,8.1%,2.7% 2013 Q3,2.3%,3.3% 2013 Q4,0.6%,3.0% 2014 Q1,1.8%,3.8% 2014 Q2,0.2%,3.0% 2014 Q3,2.7%,3.8% 2014 Q4,2.8%,3.0% 2015 Q1,2.0%,2.1% 2015 Q2,2.8%,1.9% 2015 Q3,0.3%,1.7% 2015 Q4,-0.6%,1.4% 2016 Q1,-3.1%,1.5% 2016 Q2,-3.8%,0.9% 2016 Q3,-2.0%,0.0% 2016 Q4,1.1%,1.5% 2017 Q1,6.8%,2.8% 2017 Q2,5.6%,3.2% 2017 Q3,4.3%,4.5% 2017 Q4,4.0%,5.3% 2018 Q1,1.2%,5.3% 2018 Q2,3.3%,5.9% 2018 Q3,5.5%,6.3% 2018 Q4,6.0%,4.7% 2019 Q1,0.4%,5.0% 2019 Q2,-0.7%,4.5% 2019 Q3,-2.8%,3.6% 2019 Q4,-6.0%,2.1%
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Reported gases revenue for the four major gas companies were down by -6% YoY in Q4

Net revenue impact of acquisitions and divestments was again a negative -5%, significantly driven by Linde/Praxair divestments in Americas, India and Korea (sales to TNS remain within the Tier 1 gas company total)

Energy cost pass-through also continued to have a negative impact on gases revenues in Q4 at –2½% reflecting weakness in global energy prices 

Currency had a smaller overall negative impact (around –½%) but mixed across all majors depending on reporting currency and geographic profile



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Underlying Revenue Drivers

% change YoY
  • Volume
  • Price
,Volume,Price 2013 Q1,-0.6%,1.6% 2013 Q2,1.4%,1.3% 2013 Q3,2.1%,1.2% 2013 Q4,2.0%,1.1% 2014 Q1,2.7%,1.0% 2014 Q2,2.1%,0.9% 2014 Q3,2.4%,1.3% 2014 Q4,2.1%,0.8% 2015 Q1,1.8%,0.3% 2015 Q2,1.3%,0.6% 2015 Q3,1.2%,0.5% 2015 Q4,0.9%,0.5% 2016 Q1,1.2%,0.3% 2016 Q2,0.9%,0.0% 2016 Q3,0.0%,0.0% 2016 Q4,1.4%,0.1% 2017 Q1,2.8%,0.0% 2017 Q2,3.3%,-0.1% 2017 Q3,4.3%,0.2% 2017 Q4,4.9%,0.4% 2018 Q1,4.4%,0.9% 2018 Q2,4.7%,1.2% 2018 Q3,4.9%,1.4% 2018 Q4,3.5%,1.3% 2019 Q1,3.3%,1.7% 2019 Q2,2.1%,2.4% 2019 Q3,1.6%,2.0% 2019 Q4,0.3%,1.8%
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Underlying revenue growth slipped further towards +2% YoY in Q4, its slowest growth since mid-2016 – principally driven by the impact of pricing (albeit slowing to under +2%) while the contribution from volume growth slows to virtually be flat YoY 

Gases volume growth broadly reflects the slowing global real industrial growth while gases price inflation has remained close to the rate of global macro-economic inflation

Onsites growth appeared solid with new project start-ups contributing significantly and offsetting merchant weakness. Liquid volume developments appear mixed but in total seemed to show little growth while packaged gases showed significant weakness mainly driven by the negative impact of welding equipment and consumables



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Majors' Underlying Growth by Geography

% change YoY
  • Americas
  • Europe
  • Asia Pacific
,Americas,Europe,Asia Pacific 2014 Q1,5.2%,0.2%,8.8% 2014 Q2,4.9%,-0.7%,7.2% 2014 Q3,5.0%,0.2%,7.6% 2014 Q4,5.2%,-0.9%,4.4% 2015 Q1,2.6%,0.0%,3.9% 2015 Q2,2.5%,1.0%,3.3% 2015 Q3,1.6%,1.9%,3.9% 2015 Q4,0.2%,2.3%,5.9% 2016 Q1,-0.5%,0.9%,7.2% 2016 Q2,0.3%,1.0%,3.4% 2016 Q3,-0.3%,-1.0%,1.9% 2016 Q4,1.6%,2.5%,2.4% 2017 Q1,2.9%,3.4%,2.7% 2017 Q2,1.5%,2.4%,8.0% 2017 Q3,3.4%,3.7%,10.0% 2017 Q4,3.9%,1.8%,9.9% 2018 Q1,4.3%,3.9%,8.1% 2018 Q2,5.4%,3.8%,8.1% 2018 Q3,6.2%,3.2%,9.1% 2018 Q4,4.8%,1.5%,9.1% 2019 Q1,4.7%,2.1%,8.9% 2019 Q2,4.8%,4.1%,7.2% 2019 Q3,5.1%,3.7%,4.7% 2019 Q4,2.9%,3.3%,4.2%
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The range of growth performance across the major global regions for gas majors narrowed significantly in Q4, primarily due to the slowdown in the Asia Pacific region 

Asia growth strongest for AP followed by AL whereas Linde plc and TNS were both flat or lower in Q4

Slowing growth in Americas in all majors with Linde plc and AP highest

AL, Linde plc and AL all showed similar underlying growth performance in Europe while TNS was flat YoY (on a pro forma basis vs acquired Praxair business) in Q4 



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Majors' Price Impact by Geography

% change YoY
  • Americas
  • Europe
  • Asia Pacific
,Americas,Europe,Asia Pacific 2014 Q1,2.8%,-0.1%,1.0% 2014 Q2,2.7%,0.7%,-0.1% 2014 Q3,3.3%,0.6%,-0.2% 2014 Q4,3.1%,-0.2%,-0.1% 2015 Q1,2.4%,0.5%,-1.5% 2015 Q2,2.3%,0.3%,-1.0% 2015 Q3,2.2%,0.2%,-1.2% 2015 Q4,1.5%,0.5%,-1.4% 2016 Q1,1.3%,0.5%,-0.9% 2016 Q2,1.8%,0.4%,-1.3% 2016 Q3,1.2%,-0.3%,-0.5% 2016 Q4,1.3%,-0.2%,-0.4% 2017 Q1,1.3%,0.0%,-0.3% 2017 Q2,1.1%,0.0%,1.3% 2017 Q3,0.7%,0.4%,3.3% 2017 Q4,1.0%,0.1%,4.3% 2018 Q1,1.5%,0.9%,2.5% 2018 Q2,1.1%,2.4%,3.0% 2018 Q3,2.2%,1.8%,2.4% 2018 Q4,2.5%,1.9%,0.7% 2019 Q1,2.6%,2.4%,1.5% 2019 Q2,3.6%,3.3%,2.8% 2019 Q3,3.9%,3.1%,2.1% 2019 Q4,3.0%,2.8%,2.1%
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Gases pricing gains YoY have slowed marginally across key geographies with all 3 major regions within a narrow range but close to recent highs in Q4

Americas again showed the highest impact amongst major regions at +3% in Q4

Europe remained close to its recent peak impact of around +3%, significantly greater than its performance in recent years

Asia Pacific continues to show a significant impact in 2019 at over +2% in Q4 although still below the peak impact during 2017 (when it was boosted by pricing recovery in China)

Globally pricing trends also include reducing impact of downward pressure on healthcare costs in several regions and recovering energy markets impacting on LPG prices, particularly for TNS and Linde



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Key Industry Profitability Trends

  • OROS
  • ROCE
,OROS,ROCE 2005 Q1,14.8%,12.8% 2005 Q2,14.8%,13.1% 2005 Q3,14.3%,12.6% 2005 Q4,14.9%,13.7% 2006 Q1,14.8%,13.6% 2006 Q2,15.6%,14.2% 2006 Q3,16.2%,15.3% 2006 Q4,13.9%,12.9% 2007 Q1,14.1%,12.8% 2007 Q2,14.7%,13.5% 2007 Q3,15.0%,12.7% 2007 Q4,15.4%,12.3% 2008 Q1,15.1%,12.4% 2008 Q2,15.2%,12.9% 2008 Q3,15.3%,13.0% 2008 Q4,14.9%,11.9% 2009 Q1,14.5%,10.4% 2009 Q2,15.4%,10.4% 2009 Q3,16.6%,11.4% 2009 Q4,16.3%,11.2% 2010 Q1,16.1%,11.2% 2010 Q2,16.8%,11.9% 2010 Q3,16.6%,11.8% 2010 Q4,16.6%,11.8% 2011 Q1,16.5%,12.1% 2011 Q2,16.3%,12.2% 2011 Q3,16.9%,12.8% 2011 Q4,16.6%,12.0% 2012 Q1,16.6%,12.1% 2012 Q2,16.9%,12.1% 2012 Q3,16.4%,11.8% 2012 Q4,16.6%,11.5% 2013 Q1,16.5%,11.0% 2013 Q2,16.6%,11.4% 2013 Q3,17.4%,12.0% 2013 Q4,16.9%,11.5% 2014 Q1,16.5%,11.1% 2014 Q2,16.8%,11.3% 2014 Q3,17.1%,11.7% 2014 Q4,16.8%,11.4% 2015 Q1,16.7%,11.1% 2015 Q2,17.4%,11.6% 2015 Q3,17.3%,11.7% 2015 Q4,17.7%,11.8% 2016 Q1,17.0%,10.9% 2016 Q2,17.9%,11.7% 2016 Q3,17.5%,10.9% 2016 Q4,17.5%,10.6% 2017 Q1,16.7%,10.0% 2017 Q2,17.2%,10.3% 2017 Q3,18.1%,10.9% 2017 Q4,17.6%,10.9% 2018 Q1,17.8%,11.1% 2018 Q2,18.3%,11.6% 2018 Q3,17.9%,11.6% 2018 Q4,17.7%,11.6% 2019 Q1,18.5%,9.8% 2019 Q2,19.2%,9.1% 2019 Q3,20.0%,9.5% 2019 Q4,20.2%,9.6%
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Record EBIT in Q4 generated operating margins averaging 20% across the majors, again a record and continuing the historic upward trend and remains significantly above pre-recession levels

Average ROCE has recovered from its early 2019 low point back to over 9½% but the trend of recent years has been downwards driven by the rising capital intensity of the business

AP was the highest performing major in terms of operating margin at over 25% in Q4 while TNS were lowest at close to 10%



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Operating Margin by Geography

% of Sales
  • EMEA
  • Americas
  • Asia/Pacific
,EMEA,Americas,Asia/Pacific 2014 Q1,18.8%,16.6%,14.1% 2014 Q2,19.2%,17.2%,13.8% 2014 Q3,19.1%,18.7%,13.0% 2014 Q4,18.2%,18.2%,14.7% 2015 Q1,18.7%,16.8%,15.4% 2015 Q2,19.4%,17.7%,15.8% 2015 Q3,18.7%,18.1%,17.0% 2015 Q4,18.9%,18.5%,16.9% 2016 Q1,19.3%,17.2%,15.3% 2016 Q2,20.0%,18.2%,16.5% 2016 Q3,19.9%,17.9%,15.7% 2016 Q4,19.5%,17.8%,18.1% 2017 Q1,20.2%,17.1%,15.9% 2017 Q2,19.2%,17.8%,16.5% 2017 Q3,20.2%,19.4%,16.3% 2017 Q4,20.0%,18.4%,16.6% 2018 Q1,20.1%,19.4%,16.7% 2018 Q2,19.5%,20.1%,17.9% 2018 Q3,19.0%,20.8%,17.0% 2018 Q4,18.5%,20.1%,17.2% 2019 Q1,19.4%,20.8%,18.5% 2019 Q2,19.3%,21.5%,18.6% 2019 Q3,19.9%,22.1%,19.3% 2019 Q4,20.9%,22.9%,19.9%
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All 3 major regions show improving trend in recent years for combined profitability of gas majors in terms of Operating Margin

Americas has been on a strong rising profitability trend over the last two years and is more than 200bp above the previous high

Europe margin appears to have risen to a new peak at the end of 2019

Asia Pacific has shown the biggest improvement on margins in recent years and is now only marginally below Europe and Americas

AP appears to show the highest operating margin of the majors in all three regions while AL and Linde were both around or above 20% in each case  



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Industry Majors' Capex

Index Q1 2005 = 100, Constant exchange rates
  • 4 qtr average capex
,4 qtr average capex 2005 Q1,100.0 2005 Q2,106.0 2005 Q3,117.2 2005 Q4,127.5 2006 Q1,137.8 2006 Q2,143.2 2006 Q3,147.4 2006 Q4,150.5 2007 Q1,145.5 2007 Q2,146.1 2007 Q3,149.4 2007 Q4,152.2 2008 Q1,159.7 2008 Q2,168.2 2008 Q3,177.0 2008 Q4,196.1 2009 Q1,199.2 2009 Q2,195.3 2009 Q3,180.9 2009 Q4,162.9 2010 Q1,154.5 2010 Q2,150.9 2010 Q3,153.4 2010 Q4,160.0 2011 Q1,164.9 2011 Q2,176.2 2011 Q3,189.0 2011 Q4,196.7 2012 Q1,206.6 2012 Q2,218.5 2012 Q3,226.8 2012 Q4,234.8 2013 Q1,239.0 2013 Q2,237.9 2013 Q3,241.5 2013 Q4,243.1 2014 Q1,239.8 2014 Q2,234.3 2014 Q3,225.1 2014 Q4,221.2 2015 Q1,219.8 2015 Q2,221.3 2015 Q3,219.1 2015 Q4,221.2 2016 Q1,216.8 2016 Q2,213.5 2016 Q3,211.1 2016 Q4,204.9 2017 Q1,210.1 2017 Q2,208.0 2017 Q3,206.2 2017 Q4,206.3 2018 Q1,208.0 2018 Q2,220.8 2018 Q3,230.1 2018 Q4,238.0 2019 Q1,251.4 2019 Q2,255.0 2019 Q3,263.2 2019 Q4,263.1
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Capital expenditure by gas majors remained close to $2.3bn in Q4 and showed a marginal increase YoY of +2%. Capex/Sales ratio was also maintained at over 14% similar to highest trend levels and compared to recent troughs down towards 10%

AP continues to show the highest capex/sales ratio at over 20% while TNS and AL are both closer to 10%. 

Linde plc, combining much of the former Linde and Praxair businesses, has now emerged as the highest absolute investor with nearly $1Bn quarterly capex accounting for nearly 40% of majors’ combined investment compared with 30% in AL

Continued significant differences are seen in the geographic pattern of capital expenditure between major competitors with Americas and Asia Pacific each around 40% of majors’ capex vs around 20% in Europe/M.East/Africa. Asia Pacific and Americas represent the largest portion of capex for Linde and AP, while AL regional profile indicates Americas and Europe significantly higher than Asia Pacific



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