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MarketScreener Homepage  >  Equities  >  Euronext Paris  >  Air Liquide    AI   FR0000120073


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Air Liquide : Q3 2020 Revenue -4-

10/23/2020 | 01:36am EST

Industrial and financial investment decisions totaled 719 million euros in the 3(rd) quarter of 2020, marking an increase compared with the 2(nd) quarter and taking the total since the beginning of the year to 2.1 billion euros. This does not include the takeover of 16 Air Separation Units in South Africa, which is currently being finalized, and compares with 2.7 billion euros at the end of September 2019 which included the acquisition of Tech Air in the United States for more than 350 million euros.

Industrial investment decisions reached 685 million euros during the 3(rd) quarter and close to 2 billion euros since the beginning of 2020 despite the public health crisis. Development was very active in Large Industries, notably with the signature of a takeover in Kazakhstan and a new Air Separation Unit in Poland. Investment decisions in Industrial Merchant included a new Air Separation Unit in a rapidly expanding basin in China to drive growth, a new nitrogen on-site generation unit associated with a long-term supply contract in Vietnam, and investments relating to the roll out of the Qlixbi offer in Europe for welding. Over the first nine months of 2020, almost 30% of industrial decisions were related to the energy transition and more than 13% contributed to improving margins (efficiencies).

Financial investment decisions totaled 34 million euros during the 3(rd) quarter, with several bolt-on acquisitions in Home Healthcare in Europe and South America, as well as in Industrial Merchant in the United States, Europe and China. These compared with a level of decisions of 36 million euros in the 3(rd) quarter of 2019.

The investment backlog was up by almost 200 million euros compared with the end of 2019 and reached 3.0 billion euros. The Oil & Gas market represented less than 15% of the investment backlog. These investments should lead to a future contribution to annual sales of approximately 0.9 billion euros per year after the full ramp-up.

Investment Air Liquide has now entered into a business purchase agreement with 
Sasol for Air Liquide to acquire the biggest oxygen production site in the 
world located in Secunda, South Africa. In addition to the benefits this would 
bring in terms of safety, reliability and efficiency, the solution provided by 
Air Liquide would allow, in coordination with Sasol, a targeted reduction of 
30% to 40% in CO(2) emissions arising from the oxygen production by 2030.The 
amount of the initial investment would be approximately 8.5 billion South 
African Rand (circa 440 million euros). 


Four units started up during the 3(rd) quarter of 2020. These included new units for Electronics in Asia, the takeover of an Air Separation Unit in China for Large Industries, and a nitrous oxide production plant to meet the needs of Industrial Merchant and Healthcare in the United States.

In the 4(th) quarter, the Group will start up 2 new units that align with the core of its strategy regarding energy transition. The first one is a 20 megawatt electrolyzer using Proton Exchange Membrane (PEM) technology to produce renewable hydrogen from hydroelectricity in Bécancour, Québec, to supply demand in mobility and the industry. The second one is a hydrogen production unit using Air Liquide's SMR-X(TM) technology allowing to decrease CO(2) emissions by -5% thanks to heat recovery. In the port of Antwerp, Belgium, this unit will supply a customer in the Chemicals sector who will use part of the CO(2) emissions as feedstock, in a circular economy model. In this same basin, the Group is a stakeholder in the Antwerp@c consortium, aiming to develop infrastructure for CO(2) capture and sequestration at large scale.

The additional contribution to sales of unit start-ups and ramp-ups totaled 53 million euros over the 3(rd) quarter of 2020, and 133 million euros over the nine first months of the year. This should reach 180 million euros for 2020 as a whole, at the high end of the estimate range communicated previously.

For 2021, the estimated additional contribution to sales is reforecast upwards in the range of 320 to 350 million euros despite the postponement of some start-ups and after taking into account the sales contribution from the 16 Air Separation Units that are currently being taken over in South Africa. The latter is estimated at approximately 100 million euros in 2021 as Air Liquide will not initially be responsible for managing the energy. Sales should exceed 400 million euros per year during a second phase, when energy management will be fully integrated, without significant impact on operating income.


In a context where our customers are refocusing on growing markets, the 12-month portfolio of investment opportunities continued to improve and reached 3.0 billion euros. This amount excludes the on-going takeover of the 16 Air Separation Units in South Africa. The change in the portfolio confirms the Group's future growth outlook, including new opportunities which exceed investment decisions and the removal from the portfolio of several projects that were either postponed beyond 12 months or awarded to the competition.

Asia became the leading region within the portfolio with more than one third of opportunities, closely followed by Europe, then the Americas and the Middle East & Africa with similar levels of opportunities.

Investment opportunities mainly came from Large Industries and included several takeover projects that may have a faster contribution to growth. Electronics was also very active, with an increasing number of new opportunities, particularly in Asia. Developments relating to the energy transition, such as hydrogen projects for industry and biomethane for clean mobility, remained dynamic.

Seven projects have an investment amount of more than 100 million euros and almost a quarter of the opportunities correspond to projects supporting the Climate objectives.

Operating Performance

Efficiencies amounted to 311 million euros over the nine first months of the year, a slight increase of +0.6% compared with 2019 despite a decline in volumes, and in line with the annual objective fixed at more than 400 million euros. These efficiencies represent cost savings of 2.6%. Industrial efficiencies accounted for close to 50% of total efficiencies and were notably the result of supply chain optimisation projects in Industrial Merchant and Healthcare, as well as energy efficiency and maintenance optimisation in Large Industries. The implementation of digital tools continued, notably with the acceleration of the roll-out of remote operation centers for Large Industries production units (Smart Innovative Operations, SIO) and digital platforms for Healthcare. Since the start of the performance improvement program in 2017, 1.4 billion euros of cumulated efficiencies have been generated.

Moreover, exceptional cost reductions under the public health crisis response plan continued but are not, due to their nature, sustainable over the long term.

Cash flow from operating activities amounted to 3,648 million euros at the end of september 2020, a sharp increase of +4.8% excluding currency impact, which demonstrates the resilience of the business model as well as the efficiency of structural performance improvement program and the cost reduction plan in response to the public health crisis. This corresponds to a high level of 23.9% of sales, a marked improvement of +240 basis points compared with the 3(rd) quarter of 2019(2) .

At the end of September 2020 and despite the public health crisis, gross industrial capital expenditure amounted to 1,933 million euros, an increase of +3.6% compared with 2019. They represented 12.7% of sales.

Portfolio management was quite active during the 3(rd) quarter. It included 4 divestitures: schülke and a small dry ice business in Germany, CRYOPDP in France, as well as the reduction of the Group's participation in a reseller in Japan. In addition, 7 acquisitions were completed, including 3 in Industrial Merchant in Europe, the United States and China, 3 in Healthcare including 2 in Europe and one in South America, and one acquisition in extreme cryogenics for Global Markets & Technologies.

Net debt totaled 11,745 million euros, a strong decrease compared with 13,176 million euros at June 30, 2020, benefiting from high cash flow from operating activities and proceeds from the disposal of activities. The net debt-to-equity ratio, adjusted for the seasonal effect of the dividend payment, reached 58.3% representing a significant decrease compared with December 31, 2019 (64.0%).

Operating Performance Air Liquide signed a long-term power purchase agreement 
(PPA) to source renewable electricity equivalent to 15% of the Group's current 
consumption for its activities in Spain. This contract is the first PPA for 
renewable energy in Europe and illustrates Air Liquide's commitment to lower 
its carbon footprint, in line with the Group's Climate Objectives to increase 
purchase of renewable electricity by nearly 70% by 2025 (in comparison with 
2015). In accordance with the agreement initially announced on March 2, 2020, 
Air Liquide has closed the sale of its subsidiary CRYOPDP to French private 
equity firm Hivest Capital Partners. This decision illustrates Air Liquide's 
strategy to regularly review its asset portfolio in order to focus on key 
businesses and geographies so as to maximize its performances. Air Liquide has 
closed the sale of its subsidiary schülke to EQT, a global investment 
organization. The total value of the transaction, which is subject to an 
earn-out provision, is between 925 million euros and 1.0 billion euros 
excluding debt. 


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Sales 2020 20 612 M 24 577 M 24 577 M
Net income 2020 2 342 M 2 792 M 2 792 M
Net Debt 2020 12 283 M 14 647 M 14 647 M
P/E ratio 2020 27,7x
Yield 2020 2,03%
Capitalization 64 123 M 76 364 M 76 460 M
EV / Sales 2020 3,71x
EV / Sales 2021 3,48x
Nbr of Employees 67 000
Free-Float 97,1%
Duration : Period :
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Technical analysis trends AIR LIQUIDE
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 26
Average target price 149,09 €
Last Close Price 135,90 €
Spread / Highest target 37,6%
Spread / Average Target 9,71%
Spread / Lowest Target -8,02%
EPS Revisions
Benot Potier Chairman & Chief Executive Officer
Fabienne Lecorvaisier Chief Financial Officer & Executive Vice President
Thierry Peugeot Director
Jean-Paul Agon Lead Independent Director
Sin Herbert-Jones Independent Director
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