gradually returning to normal. Home Healthcare remains strong, with a
marked increase in the number of patients treated in Scandinavia and
France in the 1st quarter, and the development of the activity in
Germany. At the peak of the pandemic in Europe, Home Healthcare
participated in the care of COVID-19 patients, but lockdown measures
limited the number of new homecare installations, notably for the
treatment of diabetes and sleep apnea.
Europe -- Air Liquide and BASF, a world-leading chemical company, have
signed in early February three new long-term contracts in the Antwerp basin
(Belgium). Air Liquide has been supplying BASF with gas for over 50 years in
this major industrial basin, and is currently operating five production plants
on site. These new contracts are coherent with a low carbon footprint
approach, in line with the Group's Climate objectives.
Revenue in Asia-Pacific reached 2,236 million euros in the 1(st) half, down -2.1%. China was the first country to suffer the effects of the COVID-19 pandemic, with a -2.5% decline in sales in the 1(st) quarter. The recovery in this country was also very fast, with revenue in China posting growth of +2.1% in the 2(nd) quarter, with positive growth in all industrial activities. Part of the region remains affected by the pandemic and lockdown measures. Large Industries (-2.0%) benefited from the resilience of its business model. Industrial Merchant (-5.8%) was the most impacted. Electronics (+1.5%) represents a third of the region's sales and posted a very dynamic growth in excess of +10% excluding Equipment & Installation sales.
Asia-Pacific Gas & Services H1 2020 Revenue
-- Large Industries sales were down -2.0% over the half year. Volumes were
weak in Japan, in particular in Steel, and in South-Eastern Asia, in
particular in Singapore in Refining. In China, recovery is underway
across all sectors, driven by domestic demand.
-- Industrial Merchant revenue was down -5.8% during the 1st half. The
public health crisis triggered a decline in activity in China during the
1st quarter. The country's rapid recovery during the 2nd quarter was not
enough to offset weaker 2nd quarter sales in the rest of the region,
which was impacted in turn by the pandemic. Liquid and cylinder gas
volumes therefore declined markedly in the 2nd quarter in Japan,
Australia and Singapore; helium sales slowed across the region. At the
same time, whereas almost all sectors saw a decline during the 2nd
quarter, Technology & Research, and fiber optics in particular, enjoyed
very solid growth. Finally, price impacts remained positive at +0.6%.
-- Electronics sales, which were up +1.5%, posted marked growth of +12.0%
excluding Equipment & Installation sales, which had been particularly
high during the 1st half of 2019. This growth was driven by Advanced
Materials and Carrier Gases with, in particular, the ramp-up of an
Advanced Materials supply contract in South Korea and of Carrier Gases
production units in China, Japan, Taiwan and Singapore.
Middle East and Africa
Revenue in the Middle East and Africa amounted to 269 million euros, down -7.3% over the 1(st) half of the year. Industrial Merchant sales were very weak during the 2(nd) quarter following the introduction of lockdown measures across the region. Large Industries demonstrated its strong resilience despite a major customer maintenance turnaround during the 1(st) quarter, with the two major units in the region -- in Saudi Arabia and South Africa -- continuing to operate at a good level during the 2(nd) quarter. Healthcare, which played a major role in the fight against COVID-19, posted strong growth, notably in Saudi Arabia.
Engineering & Construction
Engineering & Construction consolidated revenue stood at 104 million euros in the 1(st) half, impacted by the COVID-19 pandemic that led in particular to the four-weeks closure of the Chinese manufacturing workshop and to several projects being postponed by a few months. Sales to third-party customers were down -41% compared with the 1(st) half of 2019, but total sales declined by a more modest -20%, with resources mainly allocated to internal projects for Large Industries and Electronics.
Order intake, which was much higher in the 2(nd) quarter than the 1(st) quarter, reached 311 million euros over the half year, with almost 60% coming from Asia. This mainly related to Air Separation Units and ultra-pure nitrogen production units for the Group and third-party customers.
Global Markets & Technologies
Global Markets & Technologies revenue reached 249 million euros in the 1(st) half, up +3.2%. Equipment sales were up markedly during the 1(st) quarter and offset the weaker activity seen during the 2(nd) quarter, which was impacted by reduced production capacities due to the public health crisis. The biogas activity remained strong, with the start-up and ramp-up of production units in the United States and higher biomethane sales to transportation in Europe.
Order intake for Group projects and third-party customers totaled 382 million euros, enjoying a strong increase of +46.3% over the 1(st) half 2020. This included major contracts for helium cryogenic refrigerators, Turbo-Brayton LNG reliquefaction units and hydrogen stations for Japan and South Korea.
Global Markets & Technologies -- Early-July, Air Liquide announced the
installation of the first high-pressure hydrogen refueling station in Europe,
in the south of France, with capacity to serve the first fleet of long-haul
hydrogen trucks. This investment reflects the Group's strategy to accelerate
the deployment of hydrogen energy through large-scale projects, particularly
in the heavy vehicle segment. The project will contribute to reduce CO(2)
emissions by more than 1,500 metric tons of CO(2) per year. The station will
be commissioned early 2022. -- Air Liquide and the Port of Rotterdam Authority
announced in early-July the launch of a jointly created initiative, which aims
at enabling 1,000 hydrogen-powered zero-emission trucks on the roads
connecting the Netherlands, Belgium, and West Germany by 2025. Several
partners representing the whole supply chain, from truck manufacturers such as
VDL Groep, Iveco/Nikola to transport companies Vos Logistics, Jongeneel
Transport and HN Post, as well as leading fuel cell suppliers have already
agreed to join. This is one of the largest projects in Europe for the
development of hydrogen trucks and related infrastructure and will contribute
to improve air quality by reducing by an estimated amount of more than 100,000
tonnes CO(2) emissions per year, which is equivalent to 110 million kilometers
OPERATING INCOME RECURRING
Operating income recurring before depreciation and amortization totaled 2,897 million euros, up +0.7% as published compared with the 1(st) half of 2019. Personnel costs were stable, and down -1.1% excluding currency and scope impacts. Purchases were down -14.2%, notably with the reduction in energy purchases representing almost 50% of this decrease. Other operating expenses were down -7.2% and included a steep reduction in subcontracting costs and travel expenses. Operating costs relating to the COVID-19 pandemic and in particular idle-capacity costs, are included in operating expenses. Depreciation and amortization reached 1,084 million euros, marking a slight increase of +1.9%, with the 2019 sale of the Fujian Shenyuan units mostly offsetting the start-up of new units during the 1(st) half of 2020.
Ongoing efficiency programs and the exceptional cost containment plan launched by the Group in response to the COVID-19 crisis contributed significantly to improving performance despite a decline in activity. Group operating income recurring (OIR) amounted to 1,813 million euros in the 1(st) half of 2020, stable as published and up slightly +0.2% on a comparable basis versus 2019. The operating margin (OIR to revenue) stood at 17.6%, an improvement of +100 basis points compared with the 1(st) half of 2019, or +50 basis points excluding the energy impact.
Efficiencies amounted to 200 million euros over the first six months of the year, a slight increase of +1% compared with the 1(st) half of 2019 despite a decline in volumes, and in line with the annual objective now fixed at more than 400 million euros. These efficiencies represent cost savings of 2.5%. Industrial efficiencies accounted for close to 50% of total efficiencies and were the result of increased investment in efficiency projects, notably the optimization of the supply chain in Industrial Merchant, and energy efficiency in Large Industries. The implementation of digital tools aimed at the Group's transformation continued, with the acceleration of the roll-out of remote operation centers for Large Industries production units (Smart Innovative Operations, SIO), new optimization tools for delivery routes in Industrial Merchant and the introduction of a remote patient monitoring platform in Healthcare.
Moreover, exceptional cost reductions under the public health crisis response plan were to offset the low activity level and are not, due to their nature, sustainable over the long term.
Gas & Services
Gas & Services H1 2020 Operating Income Recurring
Gas & Services operating income recurring totaled 1,947 million euros, up +0.4% as published compared with the 1(st) half of 2019, and up +0.7% on a comparable basis, despite the decline in activity due to the public health crisis. The operating margin as published stood at 19.6%, an improvement of +120 basis points compared with the 1(st) half of 2019, or +60 basis points excluding the energy impact.
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