(AOF) – Air Liquide Finance is offering to buy back in cash two series of bonds for a total amount of 450 million dollars. The group intends, but is not obligated, to increase one and/or the maximum amounts of the offer, up to a maximum aggregate principal amount for the two series of $500 million, in order to allow combined acceptance of bonds validly tendered up to the initial redemption time.
The series concerned are: bonds bearing interest at 2.50% maturing in 2026, for a maximum amount of 350 million US dollars; and bonds bearing interest at 3.50% maturing in 2046, for a maximum amount of 100 million US dollars. The Offeror is making two separate Tender Offers, each on the terms.
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Key points
– Second in the world behind Linde-Praxair in industrial and medical gases, born in 1902;
– Sales of €29.9 billion structured in 3 divisions: gas and industrial services for 95%, engineering and construction then GMT -global markets and technologies;
– Balance of revenues by geographical area – the Americas for 38%, Europe for 33%, Asia-Pacific for 22%;
– Business model based on multi-year contracts (1/3 of revenue generated by twenty-year contracts) and long-term industrial partnerships offering good visibility of future results and an operating margin of more than 20%;
– Open capital, with 33% individual shareholders and 2.5% for employees, Benoît Poitier, chairing the 12-member board of directors (14 after the May 2023 AGM), François Jackow being CEO;
– Healthy balance sheet, with net debt raised to A2 and reduced to €10.3 billion, or 46% of shareholders’ equity, and free cash flow at 24% of sales and cash flow of €6.26 billion.
Challenges
– Advance 2025 strategy with 3 priorities:
– financial performance: annual increase of 5-6% in revenues, profitability of +10% of capital employed through investment decisions of €16 billion between 2022-2025, half of which devoted to the energy transition,
– decarbonization of industry: low-carbon industrial gases, CO2 capture & management,
– technological innovation addressed to 5 professions: hydrogen mobility, electronics, health, industrial merchant and high technologies – space, cryogenics, quantum…;
– Innovation strategy financed to the tune of +300 M€, aiming at operational excellence, openness to technologies in core businesses or disruptive, through:
– global network of 6 innovation campuses, with + 400 academic partnerships,
– dedicated laboratories: Digital factory for data expertise, Alizent for IoT, m-Lab for molecules, i-Lab for deciphering trends, 60% of which for energy transition, etc.
– ALIAD venture capital fund, in alliance with the Chinese fund CSE and Accelair fund;
– Environmental strategy validated by SBTi and aiming for carbon neutrality in 2050 with 2 intermediate objectives, 2025 (after the stability of emissions since 2021, start of the reduction in absolute terms) and 2035 (decline of 33% vs 2015), through :
– CO2 capture, hydrogen production by electrolysis, decarbonation solutions,
– €8 billion invested by 2035 in the hydrogen value chain,
– partnership with Rothschild & CO and Solar Impulse in a fund endowed with €200 million for SMEs offering solutions for the environment and participation in the global fund for financing carbon-free hydrogen (€1.2 billion in the short term invested, with Baker Hughes, Charg Industries, Plug Power, TotalEnergies and Vinci, for a leverage effect of €15 billion),
– ramping up of renewable energy supplies;
– Advances in the “markets of the future”: healthcare, energy transition and semiconductors;
– Activity financially supported by European and American public funds (transition act);
– Visibility of the activity: industrial and financial investment decisions at a record level of €4 billion and portfolio of investment opportunities at 12 months of €3.3 billion, including +40% in the energy transition.
Challenges
– Waiting for regulatory authorizations for the total disengagement from Russia;
– Energy inflation: offset by savings (€378m) and the transfer of costs to customers despite the difficulties in Industrial Merchant;
– Recovery of sales in Large Industries in Europe;
– After a 7.3% increase in net profit, 2023 outlook for growth in operating margin and net current profit;
– 2022 dividend of €2.95, up 12.2%.
Learn more about the chemical sector
Nothing is going well for German chemistry
German chemicals, very dependent on Russian gas, are in difficulty. Following sluggish sales in the automotive sector and falling demand in construction, production is down 8.5% in 2022, with overall sales down 1.6% to 63.1 Billions of Euro’s. Specialty chemicals are doing better. On the other hand, the production capacity utilization rate in basic chemicals has slowed markedly to less than 80%. Germany’s third industrial sector is tempted by relocation to the United States, where energy costs are much lower. With the Inflation Reduction Act, the United States has put in place an appropriate environment for the current challenges.