Business Intelligence Financial – Air Liquide – Q4 2014


gasworld’s Business Intelligence provides you with the latest analysis of Air Liquide’s Q4 2014 earnings reports.


  • Corporate sales up +4% YoY in Q4 to €4.05bn  – highest growth since late 2012. However, on comparable basis just below 2014 average of +4.5%.
  • Gases and Services account for 90% of corporate sales with Engineering & Technology 6% and Other businesses 4%.
  • Developing economies growth in 2014 at +14% on comparable basis with advanced economies up only +1%. Continued progress in the Americas and Asia while W. Europe impacted by economic slowdown.
  • Corporate Operating Income up +5% – again highest growth in two years.
  • Operating Margin trending upwards at around 17.5%.
  • Cost savings and efficiency measures generated high level of benefits of €320m in 2014 and raised Operating Margin by 20 b.p.
  • Cash flow to sales within target range (18-20%).
  • Return on Capital slipped vs 2013 due to currency impact.
  • Net Income impacted by sale of 40% in Korean JV – up +4% ex currency and divestiture impact.
  • Gases growth +3% despite negative impact of natural gas/energy pass-through (-1.2%) and divestments (-0.9% net) partly offset by positive contribution from currency (+1.8%). Largest negative impact from energy pass-through for several quarters.
  • Underlying growth still over +3% – similar to trend of recent quarters – substantially driven by volume growth (over +2%) with continued solid price impact but less than +1%.

Air Liquide Business Performance

  • Industrial Merchant and Large Industries are Air Liquide’s largest gases & services businesses accounting for 37% and 36% of sales respectively with Healthcare representing 19% and Electronics 9%.
  • Electronics continued to show highest reported sales growth in Q4 at +16% – highest rate for several years.
  • Industrial Merchant and Large Industries both showed modest growth of +1% and +4.5% respectively – first growth for two years in Merchant and Large Industries up despite negative energy cost pass-through being concentrated in this business.
  • Healthcare sales again down YoY as they have been through 2014.
  • Electronics business also showed highest growth on comparable basis (excluding currency etc) – maintained double digit performance of recent quarters.
  • Electronic Gases up +15% vs Equipment up +6%.
  • Other businesses all showed modest growth in +1-3% range – continues trend of recent quarters. Large Industries at lowest growth rate for several years.
  • Continuing trend towards larger projects in Large Industries – due to energy conversion projects.
  • Europe accounts for nearly half of gases sales (48%) with Americas and Asia Pacific both around 25% while M. East & Africa accounts for 3%.
  • Asia Pacific continued to show highest reported growth at +11%.
  • Americas accelerated to +10% growth – highest rate for 18 months.
  • Europe reported revenues continued to fall YoY as they have done since mid-2013.
  • Small M. East & Africa business accelerated growth after several quarters of decline through 2013/4 helped by S. Africa developments in contrasts with challenges in M. East.
  • Asia Pacific continued to showed highest growth on a comparable basis but at +9% was the lowest in 2014. Recovering Japan remained positive in Q4.
  • Americas also showed slower YoY growth at +4.5% – lowest since early 2013. S.America growth outperformed N. America – boosted by Large Industries ramp-ups and Healthcare.
  • Europe comparable performance improved slightly from the rest of 2014, but remained marginally negative.
  • Around half of Large Industries sales are in Europe, with under a quarter in each of Americas and Asia Pacific.
  • Comparable growth for Europe Large Industries remained negative – albeit smaller decline than last two quarters.
  • Americas Large Industries also slipped into negative growth for first time for several years – impact of lower electricity prices.
  • Asia Pacific continued to show substantial positive growth of over +10% although significantly down on recent growth performance. Increased length of project decision process times by Chinese customers.
  • Under half of Industrial Merchant sales are in Europe with around 30%  in Americas and over 20% in Asia Pacific.
  • Sales to Industrial Merchant customers in Europe were virtually flat YoY in Q4 representing a stabilisation after recent declines.
  • Americas and Asia Pacific both maintained the previous quarters strong growth at +7.5% and +4% respectively. N. America up +6%.
  • Improved capacity loading in Americas and Asia.
  • Sales in developing countries up +9%.
  • Merchant pricing was up +1% globally for Air Liquide in Q4, driven by Americas which was again up around +5% – includes inflationary impact in S. American economies.
  • All other regions showed declines in pricing in Q4 – representing a major swing in Africa/M. East. Asia Pacific developments driven by weakness in Australia pricing.
  • These pricing changes indicate continued significant merchant volume growth in Asia Pacific but modest growth in Americas and Europe remaining relatively flat.
  • Europe represents over 80% of Healthcare business for AL with Americas representing most of the remainder.  Asia Pacific accounts for over 60% of electronics sales, with over 20% in Americas with Europe closer to 10%.
  • Significant change in relative performance of Electronics in Asia Pacific and Americas with former accelerating to +14% while latter eased back to +12% as the positive YoY impact of the Voltaix acquisition drops out.
  • The large Europe Healthcare business continues to show only modest growth while Americas again shows double digit growth.
  • Europe business equally balanced between Large Industries (35%), Industrial Merchant (32%) and Healthcare (31%) with Electronics only 2% of sales.
  • Q4 saw continued modest growth in Healthcare (+1.4%), return to modest growth in Industrial Merchant (+0.1%) after four negative quarters but Large Industries continued the negative performance of the last 18 months and was down -3% in Q4.
  • Large Industries performance in 2014 adversely impacted by disposal of cogeneration plants at end 2013.
  • Increasing liquid volumes in Q4.
  • Renewed growth in E. Europe.
  • Strong homecare sales offset by difficult hospital market. Healthcare pricing down -2% in 2014.
  • Americas business dominated by Industrial Merchant (45%) and Large Industries (36%) with Healthcare and Electronics only 10% and 9% of sales respectively.
  • Industrial Merchant continued to show strong growth of recent years at +7.5% in Q4. Strong bulk sales but packaged gases weak.
  • Large Industries growth turned negative in Q4 – the first decline in several years – driven by Canada steel downturn, cogeneration sales and US unit turn-round.
  • Healthcare again showed double digit growth sustaining its leading growth rate in this region – helped by acquisitions during 2014.
  • Electronics growth slowed to +7.5% YoY as the impact of the Voltaix acquisition in 2013 dropped out of the YoY comparison.
  • Asia Pacific business dominated by Large Industries (39%) and Industrial Merchant (34%) with Electronics also important (22%) but Healthcare relatively small (5%).
  • Large Industries growth slowed significantly to +11% in Q4 after three quarters of growth over +20% driven by start-ups in China.
  • Industrial Merchant sales continues to show more modest growth at around +4% YoY with bulk sales solid driven by China growth.
  • Electronics growth in the region continued to accelerate to become the fastest growing business at +14% YoY.
  • Europe accounts for nearly half of gases operating income (49%) with Americas accounting for 28% and Asia Pacific 20% while M. East & Africa accounts for 3%.
  • Europe Operating Margin continued to edge upwards and was above 20% in the second half of 2014 – benefitted from cost actions taken in 2013.
  • N. America again reported significant seasonal swings but remains the highest performing region in the group.
  • Asia margins recovered significantly – helped by wide range of drivers including Japan actions taken in 2013 –  but remained the lowest performing of the three major regions in the second half.
  • Air Liquide continues to invest in the $550-600m range per quarter although trending down slightly from its recent peak. Relative to sales, capex has slipped back towards 12%.
  • Europe has accounted for 40% of recent capex with Americas 34%, Asia Pacific down to 21% and M. East & Africa slipping to 5%.
  • Gases capex backlog reduced to €2.8bn – 80% in Large Industries.

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