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 | 2024/2023 |
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 |
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Variation excluding energy(b) |
| +100 bps |
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Gas & Services OIR Margin | 21.2% | +190 bps |
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Variation excluding energy(b) |
| +110 bps |
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Net Profit (Group Share) | 1,681 | -2.4% |
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Net Profit Recurring (Group Share)(c) | 1,681 | +3.3% |
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Earnings per Share (in euros) | 2.92 | -2.3% |
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Cash flow from operating activities before changes in working capital | 3,155 | -1.7% |
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Net Debt | €10.2 bn |
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Return on Capital Employed after tax – ROCE | 9.8% | -20 bps |
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Recurring ROCE(d) | 10.7% | +50 bps |
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(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
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Group revenue totaled 13,379 million euros in the 1st 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 1st 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 1st 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 1st half of 2024, penalized by unfavorable energy (-3.7%) and currency (-3.4%) impacts. There was no significant scope impact in the 1st half.
Growth(7) in the Industrial Merchant business (+2.0%) continued in the 1st half of 2024 with a price effect of +4.2% in addition to the sharp increase (+10.7%) in the 1st 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 1st quarter and stronger demand from Chemicals customers in Europe and the United States in the 2nd 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 1st 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 2nd quarter and offset the decline observed in the 1st 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 1st 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 2nd quarter. In Industrial Merchant, revenue increased by +5.5%, supported by a price effect (+7.3%) that strengthened in the 2nd 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 1st 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 2nd 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 1st 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 1st half of 2024. All business lines grew.
Sales in the Global Markets & Technologies business amounted to 386 million euros in the 1st 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 1st half of 2024, up +9.9% compared to the 1st half of 2023. Order intake for the Group and third-party customers amounted to 557 million euros in the 1st half.
The Group’s operating income recurring (OIR) reached 2,601 million euros in the 1st 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 1st 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 1st half of 2024, down -2.4% as published. In the absence of significant non-recurring items(9) in the 1st 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 1st 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 1st 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 1st 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 1st half of 2023.
In the 1st 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 CryocapTM carbon capture unit is under construction to decarbonize the Group’s largest hydrogen production unit in Europe. Furthermore, in the 1st half-year, Air Liquide continued to develop projects that will significantly reduce the carbon footprint of its customers.
In the 1st 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 1st half of 2024, up compared to 3.5 billion euros in the 1st half of 2023.
The additional contribution to sales of unit start-ups and ramp-ups totaled 108 million euros in the 1st 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 | 2024/2023 | |
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 |
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Variation excluding energy(b) |
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| +100 bps |
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Other Non-Recurring Operating Income and Expenses | 33 | (87) |
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Net Profit (Group Share) | 1,722 | 1,681 | -2.4% |
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Net Profit Recurring (Group share)(c) | 1,627 | 1,681 | +3.3% |
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Net earnings per share (in euros)(d) | 2.99 | 2.92 | -2.3% |
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Cash flow from operating activities before changes in working capital | 3,211 | 3,155 | -1.7% |
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Net Capital Expenditure(e) | 1,466 | 1,570 |
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Net Debt | €10.6 bn | €10.2 bn |
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Net Debt to Equity ratio(f) | 39.2% | 35.2% |
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Return on Capital Employed after tax – ROCE | 10.0% | 9.8% | -20 bps |
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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 | 2024/2023 |
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 1st 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 1st 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 1st half of 2024 with a price effect of +4.2% in addition to the sharp increase (+10.7%) in the 1st 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 1st quarter and stronger demand from Chemicals customers in Europe and the United States in the 2nd 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 1st 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 2nd quarter and offset the decline observed in the 1st quarter reflecting the high basis of comparison at the beginning of 2023.
As published revenue for Gas & Services were down -4.5% in the 1st half of 2024, penalized by unfavorable energy (-3.7%) and currency (-3.4%) impacts. There was no significant scope impact in the 1st half.
Revenue by geography and business line (in millions of euros) | H1 2023 |
| H1 2024 | 2024/2023 | 2024/2023 |
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 1st 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 2nd quarter. In Industrial Merchant, revenue increased by +5.5%, supported by a price effect (+7.3%) that strengthened in the 2nd 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 1st half-year 2024. In the United States, air gas volumes benefited from the start-up of a major new unit in the 1st quarter. In the 2nd 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 1st quarter to +8.1% in the 2nd quarter. It benefited from proactive price campaigns, particularly in the United States (50% of the +8.1% increase in the 2nd 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 1st 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 1st 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 1st 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 1st half-year 2024, while sales of materials remained down.
Americas
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