Air Liquide: H1 2024 Results: Strong Margin Improvement and Major Projects to Prepare the Future

PARIS–(BUSINESS WIRE)–Regulatory News:

Air Liquide (Paris:AI):

Key Figures (in millions of euros)	H1 2024	2024/2023 as published	2024/2023 comparable(a)
Group Revenue	13,379	-4.3%	+2.6%
of which Gas & Services	12,796	-4.5%	+2.6%
Operating Income Recurring (OIR)	2,601	+4.9%	+10.6%
Group OIR Margin	19.4%	+170 bps
Variation excluding energy(b)		+100 bps
Gas & Services OIR Margin	21.2%	+190 bps
Variation excluding energy(b)		+110 bps
Net Profit (Group Share)	1,681	-2.4%
Net Profit Recurring (Group Share)(c)	1,681	+3.3%
Earnings per Share (in euros)	2.92	-2.3%
Cash flow from operating activities before changes in working capital	3,155	-1.7%
Net Debt	€10.2 bn
Return on Capital Employed after tax – ROCE	9.8%	-20 bps
Recurring ROCE(d)	10.7%	+50 bps
(a) Change excluding the currency, energy and significant scope impacts, see reconciliation and impact of Argentina in appendix.
(b) See reconciliation in appendix.
(c) Excluding exceptional and significant transactions that have no impact on the operating income recurring, see reconciliation in appendix.
(d) Based on the recurring net profit, see reconciliation in appendix.

Commenting on the results in the first half of 2024, François Jackow, Chief Executive Officer of the Air Liquide Group, stated:

“Air Liquide once again delivered a very solid financial performance in the first half of 2024 with a significant increase in its operating margin, supported by the acceleration of structural efficiencies. In a persistently subdued market environment, our Group recorded growth in sales on a comparable basis, reflecting the solidity of our business model. We are successfully continuing the rollout of our ADVANCE strategic plan, for which we raised the margin ambition at the beginning of the year. At a time when our Group has never had so many opportunities related to the energy transition and the growth of digital and artificial intelligence, we are also preparing for the future, simplifying our organization to improve our performance and developing major projects that will strengthen our long-term growth momentum.”

In the first half of 2024, Group sales were up by +2.6% on a comparable basis⁽¹⁾, with a sequential improvement between the first and second quarters. On a published basis, sales were at -4.3%, due to negative currency impacts and lower energy prices – for which variations are contractually passed through to Large Industries customers. Gas & Services, which represent more than 95% of Group revenue, saw an increase of +2.6%⁽¹⁾ on a comparable basis in the first half of 2024, supported in particular by the dynamism of the Healthcare business and the Americas.

In line with its ADVANCE plan and raised performance ambition, Air Liquide achieved in the first half of 2024 a significant improvement of +100 basis points in its operating margin excluding the energy impact. Efficiencies have now reached 233 million euros, thanks to approximately 1,000 operational efficiency projects, to business portfolio management and to price adjustments in Industrial Merchant, based on the ability of the teams to create added value for our customers.

The Group’s net profit recurring⁽²⁾ excluding currency impact rose by +16%, and +5% excluding the contribution of Argentina in the first half of 2024. Our cash flow⁽³⁾ remained very strong with a ratio to sales of 24%, enabling financing of the investments needed for future growth. At 10.7% at the end of June, recurring ROCE⁽⁴⁾ has continued to improve, exceeding 10% in line with the ADVANCE objectives.

The investment backlog remains at a very high level of 4.1 billion euros, and is well diversified in terms of geographies. The portfolio of 12-month investment opportunities increased to 4 billion euros, mainly in the Americas and Europe. More than 40% of these are related to the energy transition. The Group is thus successfully pursuing the development of large-scale projects, in particular in the fields of decarbonization and semiconductors.

In 2024, Air Liquide is confident in its ability to further increase its operating margin and to deliver recurring net profit growth, at constant exchange rates⁽⁵⁾.

Highlights Corporate Governance changes within the Executive Committee Adam Peters, Chief Executive Officer of Air Liquide in North America, appointed member of the Group Executive Committee. As part of the simplification of the Group organization to meet growing needs of the market and increase its performance, an adjusted governance was announced with changes effective September 1, 2024. The divestiture of Air Liquide’s activities in 12 countries in Africa was finalized on July 22, 2024, in line with the agreement announced in March 2024, illustrating the Group’s strategy of regular review of its business portfolio. Industry and Decarbonization Air Liquide was selected for investment of up to 850 million US dollars in the largest low-carbon oxygen production in the Americas, as part of a long-term agreement with ExxonMobil for its low-carbon hydrogen project in Baytown, Texas. Support from the European Union for D’Artagnan through a grant of more than 160 million euros to enable Air Liquide and Dunkerque LNG to decarbonize the Dunkirk basin through a CO2 infrastructure project. Air Liquide’s innovative CO2 liquefaction technology, Cryocap™ LQ, was selected by Stockholm Exergi, an energy supplier in Sweden, to contribute to its bioenergy project. As part of the renewal of a long-term agreement with Dow, Air Liquide will invest nearly 40 million euros to increase the efficiency and reduce the CO2 emissions of its industrial gas production site in Stade, Germany. Electronics In the framework of a long-term contract, Air Liquide will invest more than 250 million US dollars to build a production unit in Idaho in the United States, which will supply Micron Technology, Inc with high purity industrial gases for the manufacture of memory chips, driven by the growth of Artificial Intelligence. Investment of more than 50 million euros to build an innovative nitrogen production unit in Singapore while transforming existing facilities in the United States to drive greater energy efficiency in the supply of ultra-pure gases to GlobalFoundries. Sustainable development 500 million euro green bond issue to finance projects in the energy transition, in line with Air Liquide’s ambition to combine growth and sustainable development. Announcement by Air Liquide and Sasol of long-term contracts (PPA) with Enel Green Power RSA for a total capacity of 110 MW of renewable electricity for the Sasol site in Secunda, South Africa. Continued expansion of Air Liquide’s biomethane production capacities in the United States, with the construction of two production units based on a circular economy approach. Announcement by Air Liquide and TotalEnergies of their TEAL Mobility joint venture to create the leader in hydrogen distribution with a network of 100 truck stations in Europe. Paris 2024 Olympic and Paralympic Games Announcement by Air Liquide, Official Hydrogen Supporter of Paris 2024, of the reopening of the hydrogen refueling station on Place de l’Alma in the heart of Paris, a showcase for a network of stations that will supply a fleet of 500 hydrogen vehicles. Group support for six athletes – three women and three men, representing five Olympic and Paralympic disciplines on three continents.

Group revenue totaled 13,379 million euros in the 1^st half of 2024, posting a growth of +2.6% on a comparable basis. The contribution of Argentina⁽⁶⁾ to the comparable growth is of +2.1%. The Group’s published sales were down -4.3% in the 1^st half of 2024, affected by unfavorable energy (-3.5%) and currency (-3.4%) impacts. There was no significant scope impact.

Gas & Services revenue reached 12,796 million euros in the 1^st half, up by +2.6% on a comparable basis (including a contribution of Argentina of +2.2%). As published revenue for Gas & Services were down -4.5% in the 1^st half of 2024, penalized by unfavorable energy (-3.7%) and currency (-3.4%) impacts. There was no significant scope impact in the 1^st half.

Growth⁽⁷⁾ in the Industrial Merchant business (+2.0%) continued in the 1^st half of 2024 with a price effect of +4.2% in addition to the sharp increase (+10.7%) in the 1^st half of 2023, and gas volumes down slightly. Revenue from Large Industries (+1.1%) benefited from the start-up of two large units in the 1^st quarter and stronger demand from Chemicals customers in Europe and the United States in the 2^nd quarter, but was impacted by the sale of a cogeneration unit in Europe and by customer turnarounds. The Healthcare business was the growth driver in the 1^st half-year, with an increase in sales of +9.1%, supported by the growth of all therapies in Home Healthcare and an increase in the price of medical gases in an inflationary environment. Finally, in Electronics (+0.3%), sales returned to growth in the 2^nd quarter and offset the decline observed in the 1^st quarter reflecting the high basis of comparison at the beginning of 2023.

• Gas & Services revenue in the Americas reached 5,175 million euros in the 1^st half of 2024 and increased by +7.9% (including the contribution of Argentina for +5.7%). All businesses grew in the region. Large Industries (+8.1%) benefited from the start-up of a production unit and demand that firmed up in the 2^nd quarter. In Industrial Merchant, revenue increased by +5.5%, supported by a price effect (+7.3%) that strengthened in the 2^nd quarter. The growth was very strong in Healthcare (+23.3%). In the Electronics business (+9.2%), sales of Carrier Gases and of Equipment & Installations posted double-digit growth.
• In Europe, sales were down slightly by -1.3% in the 1^st half of 2024 and reached 4,475 million euros. In Large Industries (-1.7%), excluding the sale of a cogeneration unit in the first quarter, revenue was up. In Industrial Merchant (-5.2%), volumes contracted but the price effect improved in the 2^nd quarter. The Healthcare business posted solid sales growth (+4.4%), supported by the development of Home Healthcare and Medical Gases.
• Revenue in the Asia Pacific region was nearly stable (-0.8%) in the 1^st half of 2024 and amounted to 2,593 million euros. In Large Industries (-0.9%), the start-up of a new unit in March partially offset customer turnarounds. Industrial Merchant’s sales (-0.6%) were impacted by the marked decline in helium sales, which was largely offset by the increase in volumes of other gases. Electronics revenue was also flattish (-0.6%), with growth in Carrier Gases and Advanced Materials sales offsetting the decline in Equipment & Installation sales.
• Revenue in the Middle East & Africa region increased sharply by +7.1% to 553 million euros in the 1^st half of 2024. All business lines grew.

Sales in the Global Markets & Technologies business amounted to 386 million euros in the 1^st half of 2024, a decrease of -2.0% due in particular to the divestiture of the technological activities for the Aeronautics sector. Order intake amounted to 416 million euros.

Consolidated revenue from Engineering & Construction totaled 197 million euros in the 1^st half of 2024, up +9.9% compared to the 1^st half of 2023. Order intake for the Group and third-party customers amounted to 557 million euros in the 1^st half.

The Group’s operating income recurring (OIR) reached 2,601 million euros in the 1^st half of 2024. It increased by +4.9% and by +10.6% on a comparable basis⁽⁸⁾, which is significantly higher than the comparable sales growth of +2.6%.

The operating margin (OIR to revenue) stood at 19.4%, a strong improvement of +100 basis points excluding the energy impact (no impact from Argentina).

Efficiencies⁽⁹⁾ contributed to this margin improvement and amounted to 233 million euros, up sharply by +13.1% compared to the 1^st half of 2023. Management of prices and of the portfolio of activities also contributed to the margin improvement.

Net profit (Group share) amounted to 1,681 million euros in the 1^st half of 2024, down -2.4% as published. In the absence of significant non-recurring items⁽⁹⁾ in the 1^st half of 2024, net profit recurring (Group share)⁽⁹⁾ was also 1,681 million euros, up +3.3% on a reported basis. Excluding currency impact, net profit recurring (Group share)⁽⁹⁾ was up by +16.0% and increased by +5.0% when excluding the contribution of Argentina. Net earnings per share amounted to 2.92 euros per share, a decline of -2.3% compared with the 1^st half of 2023, in line with the change in net profit (Group share) as published. Recurring net earnings per share were up +3.2%.

Cash flows from operating activities before changes in working capital amounted to 3,155 million euros during the 1^st half of 2024, down by -1.7%. This amounted to a high level of 23.6% of sales. Calculated from a net profit showing a change of -2.4% as published, the -1.7% decrease of the cash flows from activities before changes in working capital is mainly explained by higher current taxes in the 1^st half of 2024 compared with those of 2023 which benefited from favorable exceptional items.

Net debt at June 30, 2024 reached 10,156 million euros, a decrease of 394 million euros compared with June 30, 2023 and an increase of 935 million euros compared with December 31, 2023, following the payment of more than 1.7 billion euros in dividends in May. The net debt-to-equity ratio, adjusted for the seasonal effect of the dividend payment, reached 35.2%.

At 10.7%, recurring ROCE⁽⁹⁾ remained above the target of more than 10% in the Advance strategic plan, and was up sharply by +50 basis points compared to the 1^st half of 2023.

In the 1^st half-year, the Group continued to decarbonize its assets. In particular, Air Liquide announced long-term power purchase agreements (PPAs) for the supply of 500 GWh of renewable electricity per year and has decided on the electrification of a third Air Separation Unit in China. A Cryocap^TM carbon capture unit is under construction to decarbonize the Group’s largest hydrogen production unit in Europe. Furthermore, in the 1^st half-year, Air Liquide continued to develop projects that will significantly reduce the carbon footprint of its customers.

In the 1^st half of 2024, industrial and financial investment decisions amounted to 1,630 million euros.

The investment backlog maintained a very high level of 4.1 billion euros in the 1^st half of 2024, up compared to 3.5 billion euros in the 1^st half of 2023.

The additional contribution to sales of unit start-ups and ramp-ups totaled 108 million euros in the 1^st half of 2024.

The portfolio of 12-month investment opportunities reached a record level of 4.0 billion euros at the end of June 2024. This reflects the dynamism of project development, particularly in the energy transition which represents more than 40% of the portfolio, and in the Electronics activity.

The Air Liquide Board of Directors met on July 25, 2024. During this meeting, the Board reviewed the consolidated financial statements ending June 30, 2024. Limited review procedures were completed with respect to the consolidated interim financial statements, and an unqualified review report is in the process of being issued by the statutory auditors.

Table of Contents of the activity report

H1 2024 PERFORMANCE 7

Key Figures 7

Income Statement 8

Change in Net debt 18

Extra-financial performance 19

INVESTMENT CYCLE 20

RISK FACTORS 22

OUTLOOK 22

APPENDICES 23

Performance indicators 23

Calculation of performance indicators (Semester) 24

Calculation of performance indicators (Quarter) 27

2nd quarter 2024 revenue 27

Geographic and segment information 28

Consolidated income statement 29

Consolidated balance sheet 30

Consolidated cash flow statement 31

Sales, Operating Income Recurring and investments key figures synthesis 33

H1 2024 PERFORMANCE

Unless otherwise stated, all variations in revenue outlined below are on a comparable basis, excluding currency, energy (natural gas and electricity) and significant scope impacts.

Key Figures

(in millions of euros)	H1 2023		H1 2024	2024/2023 published change	2024/2023 comparable change(a)
Total Revenue	13,980		13,379	-4.3%	+2.6%
Of which Gas & Services	13,405		12,796	-4.5%	+2.6%
Operating Income Recurring (OIR)	2,481		2,601	+4.9%	+10.6%
Group OIR Margin	17.7%		19.4%	+170 bps
Variation excluding energy(b)				+100 bps
Other Non-Recurring Operating Income and Expenses	33		(87)
Net Profit (Group Share)	1,722		1,681	-2.4%
Net Profit Recurring (Group share)(c)	1,627		1,681	+3.3%
Net earnings per share (in euros)(d)	2.99		2.92	-2.3%
Cash flow from operating activities before changes in working capital	3,211		3,155	-1.7%
Net Capital Expenditure(e)	1,466		1,570
Net Debt	€10.6 bn		€10.2 bn
Net Debt to Equity ratio(f)	39.2%		35.2%
Return on Capital Employed after tax – ROCE	10.0%		9.8%	-20 bps
Recurring ROCE(g)	10.2%		10.7%	+50 bps
(a) Change excluding the currency, energy and significant scope impacts, see reconciliation and impact of Argentina in appendix.
(b) See reconciliation in appendix.
(c) Excluding exceptional and significant transactions that have no impact on the operating income recurring, see reconciliation in appendix.
(d) Adjusted following the free share attribution in June 2024.
(e) Including transactions with minority shareholders.
(f) Adjusted to spread the dividend payment in the 1st half out over the full year.
(g) Based on the recurring net profit, see reconciliation in appendix.

Income Statement

REVENUE

Revenue (in millions of euros)	H1 2023		H1 2024	2024/2023 published change	2024/2023 comparable change
Gas & Services	13,405		12,796	-4.5%	+2.6%
Engineering & Construction	180		197	+9.3%	+9.9%
Global Markets & Technologies	395		386	-2.3%	-2.0%
TOTAL REVENUE	13,980		13,379	-4.3%	+2.6%

Revenue by quarter (in millions of euros)	Q1 2024		Q2 2024
Gas & Services	6,358		6,438
Engineering & Construction	92		105
Global Markets & Technologies	200		186
TOTAL REVENUE	6,650		6,729
2024/2023 Group published change	-7.3%		-1.2%
2024/2023 Group comparable change	+2.1%		+3.1%
2024/2023 Gas & Services comparable change	+2.0%		+3.4%

Group

Group revenue totaled 13,379 million euros in the 1^st half of 2024, posting a growth of +2.6% on a comparable basis. The contribution of Argentina⁽¹⁰⁾ to the comparable growth is of +2.1%. Global Markets & Technologies sales were down by -2.0% due in particular to the divestiture of the technological activities for the Aeronautics sector. Engineering & Construction revenue from third party customers increased by +9.9%.

The Group’s published sales were down -4.3% in the 1^st half of 2024, affected by unfavorable energy (-3.5%) and currency (-3.4%) impacts. There was no significant scope impact.

Gas & Services

Gas & Services revenue reached 12,796 million euros in the 1st half, up by +2.6% on a comparable basis (including a contribution of Argentina of +2.2%).

Growth in the Industrial Merchant business (+2.0%) continued in the 1^st half of 2024 with a price effect of +4.2% in addition to the sharp increase (+10.7%) in the 1^st half of 2023, and gas volumes down slightly. Revenue from Large Industries (+1.1%) benefited from the start-up of two large units in the 1^st quarter and stronger demand from Chemicals customers in Europe and the United States in the 2^nd quarter, but was impacted by the sale of a cogeneration unit in Europe and by customer turnarounds. The Healthcare business was the growth driver in the 1^st half-year, with an increase in sales of +9.1%, supported by the growth of all therapies in Home Healthcare and an increase in the price of medical gases in an inflationary environment. Finally, in Electronics (+0.3%), sales returned to growth in the 2^nd quarter and offset the decline observed in the 1^st quarter reflecting the high basis of comparison at the beginning of 2023.

As published revenue for Gas & Services were down -4.5% in the 1^st half of 2024, penalized by unfavorable energy (-3.7%) and currency (-3.4%) impacts. There was no significant scope impact in the 1^st half.

Revenue by geography and business line (in millions of euros)	H1 2023		H1 2024	2024/2023 published change	2024/2023 comparable change
Americas	5,159		5,175	+0.3%	+7.9%
Europe	4,975		4,475	-10.1%	-1.3%
Asia Pacific	2,763		2,593	-6.1%	-0.8%
Middle East & Africa	508		553	+8.8%	+7.1%
GAS & SERVICES REVENUE	13,405		12,796	-4.5%	+2.6%
Large Industries	4,060		3,457	-14.9%	+1.1%
Industrial Merchant	6,050		5,999	-0.8%	+2.0%
Healthcare	2,034		2,121	+4.3%	+9.1%
Electronics	1,261		1,219	-3.4%	+0.3%

Americas

Gas & Services revenue in the Americas reached 5,175 million euros in the 1^st half of 2024 and increased by +7.9% (including the contribution of Argentina for +5.7%). All businesses grew in the region. Large Industries (+8.1%) benefited from the start-up of a production unit and demand that firmed up in the 2^nd quarter. In Industrial Merchant, revenue increased by +5.5%, supported by a price effect (+7.3%) that strengthened in the 2^nd quarter. The growth was very strong in Healthcare (+23.3%). In the Electronics business (+9.2%), sales of Carrier Gases and of Equipment & Installations posted double-digit growth.

• Large Industries saw revenue growth of +8.1% in the 1^st half-year 2024. In the United States, air gas volumes benefited from the start-up of a major new unit in the 1^st quarter. In the 2^nd quarter, demand for hydrogen strengthened in the Chemicals sector and there were fewer customer maintenance turnarounds than at the beginning of the year. In Latin America, hydrogen volumes were down due to the nationalization of a production unit in Mexico at the end of 2023.
• Sales in the Industrial Merchant business posted an increase of +5.5%. The price effect (+7.3%) increased over the half-year, from +6.5% in the 1^st quarter to +8.1% in the 2^nd quarter. It benefited from proactive price campaigns, particularly in the United States (50% of the +8.1% increase in the 2^nd quarter) and in Argentina to counter hyperinflation (40% of the +8.1% increase). Gas volumes (excluding hardgoods) remained resilient. In the United States, the trend is improving in most industrial markets, which remain price-driven. Gas volumes were up mainly in the Aeronautics and Research sectors.
• In the Healthcare business, sales rose sharply by +23.3% in the 1^st half-year 2024, driven by the strong increase in prices in the United-States (+5.8%) in Proximity care and in Argentina in a context of hyperinflation. In the 1^st semester, medical gas volumes were slightly up in the United-States and the number of new Home Healthcare patients increased in Canada and in Latin America.
• Electronics posted a sharp increase in revenue of +9.2% in the 1^st half-year. Carrier gas sales saw a double-digit increase, supported by the ramp-up of new units and the increase in helium volumes. Sales of Equipment & Installations reached a historically high level in the 1^st half-year 2024, while sales of materials remained down.

Americas Air Liquide plans to invest up to 850 million dollars to build, own and operate four Large Modular Air separation units as well as related infrastructure in the framework of a long-term binding agreement with ExxonMobil for its planned low-carbon hydrogen project in Baytown, TX. This will enable Air Liquide to increase its oxygen production capacity by 50% in Texas. Pending final investment decision, this major project would mark the largest industrial investment in the history of the Air Liquide Group. This new Air Liquide Baytown low-carbon platform would deliver primarily vast amounts of low-carbon oxygen and nitrogen to ExxonMobil, and also significant volumes of argon, krypton and xenon to other Air Liquide’s customers, notably in Industrial Merchant. This agreement also leverages existing Air Liquide’s pipelines infrastructure to support low-carbon hydrogen development. Thanks to low-carbon electricity supply and Air Liquide’s innovative solution, the CO2 footprint of oxygen production will be reduced by two-thirds. This major investment would represent the largest low-carbon oxygen production platform in the Americas. Air Liquide will build a new industrial gas production facility in the United States to supply a new fab of one of the world’s leading semiconductor manufacturers. In the framework of a long-term contract, the plant will provide large volumes of high purity industrial gases for the production of memory chips. Air Liquide will invest over 250 million dollars in this state-of-the art production unit.

Contacts

Investor Relations
[email protected]

Media Relations
[email protected]

Read full story here