Air Liquide (Paris:AI):
2020/2019 as 2020/2019
Key Figures (in millions of euros) H1 2020 published comparable (a)
Group Revenue 10,273 -6.2% -3.2%
of which Gas & Services 9,920 -5.8% -2.7%
Operating Income Recurring (OIR) 1,813 0.0% +0.2%
Group OIR Margin 17.6% +100 bps
Variation excluding energy +50 bps
Gas & Services OIR Margin 19.6% +120 bps
Variation excluding energy +60 bps
Net Profit (Group Share) 1,078 +1.8%
Net Profit Recurring (Group Share)
(b) 1,113 -1.1%
Earnings per Share (in euros) 2.29 +1.8%
Cash Flow before changes in working
capital requirements 2,371 +1.0%(c)
Net Debt EUR13.2 bn
Return on Capital Employed after 8.3% +20 bps
tax - ROCE
Recurring ROCE (d) 8.4% +10 bps
(a) Change excluding the currency, energy (natural gas and electricity) and significant scope impacts, see reconciliation in appendix. (b) Excluding exceptional and significant transactions that have no impact on the operating income recurring, see reconciliation in appendix. (c) Compared with restated 1(st) half 2019 following changes in 2019 annual financial statements: financial costs before taxes linked to IFRS 16 are reclassified in other financial expenses whereas they were included in net finance costs on 30 june 2019. A distinction is now made between other non-cash items under which the adjustment of this cost is recognized as well as income and expenses under IAS 19 and IFRS 2 and other cash items. (d) Based on the recurring net profit, see reconciliation in appendix.
Commenting on the 1(st) half of 2020, Benoît Potier, Chairman and CEO of Air Liquide, said:
"This exceptional first half of the year once again demonstrates the Group's resilience in the face of this unprecedented health crisis. Sales for the half year totaled more than 10 billion euros, marking a limited decline of -3.2% on a comparable basis. This reflects the solid performance of Gas & Services, which represent 96% of revenue, and of Global Markets & Technologies.
Within Gas & Services, Electronics sales increased; Healthcare, at the frontline of the pandemic, posted strong growth. Large Industries showed resilience, whereas Industrial Merchant was more impacted. Geographically speaking, activity levels reflect the evolution of the pandemic. China has returned to levels of solid growth, signs of a recovery are appearing in Europe, whereas the situation in the Americas remains contrasted.
The Group's operating margin has climbed a further +50 basis points, excluding the energy impact. This was driven by the ongoing efficiency programs in the amount of 200 million euros, in line with the annual objective of more than 400 million euros, and by an additional cost containment plan launched in response to the crisis. The margin was also supported by the strength of the price policy and of the portfolio management.
Net profit improved by +1.8%. The cash flow to sales ratio was particularly high at 23.1%. The debt-to-equity ratio was down compared with its level at June 30, 2019.
As 12-month investment opportunities remained dynamic, industrial investment decisions for the first half were high, at 1.3 billion euros. These decisions, a third of which are climate-related projects, include innovation investments and customer asset takeover opportunities, leading to greater industrial and environmental efficiency.
Air Liquide is a key player of the climate and the energy transition with oxygen and hydrogen. Thanks to its presence across all business sectors, the Group has a major role to play in the current economic and societal transformation.
In a context of limited local lockdowns and progressive recovery during the second half of 2020, Air Liquide is confident in its ability to further increase its operating margin and to deliver net profit close to preceding year level, at constant exchange rates (1) ."
(1) To be noted, 2020 net profit as published should increase provided that the schülke divestiture project is completed within the year. 2020 recurring net profit, meaning excluding the gain from schülke divestiture and exceptional and significant items that have no impact on the operating income recurring, should be close to 2019 recurring net profit at constant exchange rates.
1(st) half 2020 highlights -- Healthcare: Mobilization of Air Liquide
Healthcare teams across the world against Covid-19, in particular to supply
medical oxygen. Tripling of the production of intensive care ventilators in
France. Tripling of the production of CryopAL's medical oxygen tanks. Success
of the consortium of industrial companies led by Air Liquide to manufacture
10,000 ventilators in record time. In Home Healthcare, launch of offer to
support diabetic patients in Germany and the Benelux. -- Industry: Investment
of almost 200 million euros for the construction of production capacity in
Taiwan to enter two of the most cutting-edge semiconductor basins in the
world. Strengthening of the partnership with BASF in Antwerp, with the signing
of three new long-term contracts. Investment of 100 million euros for the
construction and management of an Air Separation Unit for NLMK in Russia.
Investment of 100 million dollars for the construction and management of an
Air Separation Unit for Steel Dynamics, Inc. in the United States. Signing of
25 new long-term Industrial Merchant contracts during the first half of the
year for the onsite supply of gas, following a record year in 2019 with 40
long-term contracts. -- Innovation: Further signature of new contracts for
cryogenic equipment based on Turbo-Brayton technology, bringing the total
number of contracts over two years to approximately 50. This Air Liquide
proprietary technology helps reduce the greenhouse gas emissions of tankers.
Renewal of the partnership with Solidia Technologies, which develops CO(2)
-based solutions that reduce the environmental footprint of precast concrete.
Equity investment by ALIAD, Air Liquide's venture capital investment arm, in
the Cathay Smart Energy Fund dedicated to energy transition start-ups in
China. -- Environment: Double "A" ranking for Air Liquide by the non-profit
organization CDP, for both the reporting of its sustainable water management
measures and for its action to fight against climate change. Publication of a
study of the competitiveness of hydrogen solutions by the Hydrogen Council,
which now counts more than 80 members. Projects supporting hydrogen mobility
for trucks: announcement of the construction of the first high-pressure
hydrogen refueling station in Europe, in Fos-sur-Mer in France, and launch of
an initiative with the Port of Rotterdam to develop infrastructure which will
allow 1,000 hydrogen-powered trucks to travel between the Netherlands, Belgium
and Western Germany by 2025. -- Corporate: Success of Air Liquide's first
fully digital General Meeting, with 10,000 views live or replay. Successful
launch of a double long-term bond issue for a total of 1 billion euros.
Disposal of Air Liquide entities in the Czech Republic and Slovakia to Messer.
Start of exclusive negotiations with EQT for the sale of schülke. Support
by the Air Liquide Foundation of 29 projects in the fight against Covid-19.
Group revenue for the 1(st) half of 2020 totaled 10,273 million euros. The limited decline in sales over the half year of -3.2% for the Group and -2.7% for Gas & Services underlined the resilience of the business model despite the COVID-19 pandemic which affected all activities and regions. Consolidated sales of Engineering & Construction (-41.3%) reflected the priority allocation of resources to internal projects as well as the impact of the pandemic which led to closure of the workshop in China for four weeks and to several projects being postponed by a few months. Global Markets & Technologies reduced the pace of its activity during the pandemic while pursuing its development with sales growth of +3.2% in the 1(st) half. The Group's published revenue was down -6.2% as the slightly positive currency impact +0.1% was not sufficient to offset the strong negative energy impact of -2.7% and the significant scope impact of -0.4%.
Gas & Services revenue for the 1(st) half of 2020 reached 9,920 million euros. Sales as published were down -5.8%, negatively affected by unfavorable energy (-2.8%) and significant scope (-0.4%) impacts, despite the slightly positive currency impact (+0.1%).
-- Gas & Services revenue in the Americas totaled 3,975 million euros in the
1st half, marking a decline of -5.1% on a comparable basis. North America
was affected by the pandemic as of the end of March and after showing
initial signs of a recovery in certain markets at the end of May, the
activity stabilized in June. Latin America, which was affected by the
virus later in the 2nd quarter, continues to fight against COVID-19.
Large Industries sales were down slightly over the half year (-1.3%).
With revenue down -8.3%, Industrial Merchant was the most affected by the
public health crisis and lockdown measures despite high price impacts at
+4.0%. Electronics posted strong growth of +5.1%. Healthcare remains
fully committed to the fight against the pandemic, notably through the
supply of medical oxygen and equipment, and posted sales growth of +5.4%,
with strong momentum in Latin America.
-- Revenue in Europe was stable over the half year (+0.2%), reaching 3,440
million euros. The region was particularly impacted by the public health
crisis as of mid-March, notably in Southern Europe, and activities have
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