(Boursier.com) — Liquid air publishes a 2023 turnover slightly higher than analysts’ expectations, at €27.608 billion, up 3.7% compared to 2022. The group’s published sales, however, are down 7.8% , impacted by unfavorable energy (-7.6%) and currency (-4.2%) effects, the significant scope effect being slightly positive at +0.3%.
Analysts expected an annual turnover of 27.550 billion euros, according to a market consensus.
Gas & Services turnover reaches 26,360 million euros in 2023, a comparable increase of +4.2%. Published sales of the Gas & Services activity were down 7.7%, penalized by negative energy (-8%) and foreign exchange (-4%) effects while the significant scope effect was slightly positive at +0.3%.
The two drivers of growth for the year 2023 were the Industrial Merchant activity, with sales up +8.5% which benefited from a price effect which remained high (+8.4%) and volumes resilient, and the Health activity (+8.4%), supported by the dynamic development of Home Health and by the rise in the prices of medical gases in an inflationary environment.
Large Industries’ turnover was down 1.8% over the year, with demand having stabilized at a relatively low level. Electronics sales increase by +2.4% in 2023 after growth of +16% in 2022, the sharp drop in demand from memory manufacturers having impacted sales from the 2nd quarter.
Air Liquide declared that it had almost achieved its objective of increasing its operating margin, at +160 basis points, planned for 2025, and indicated that it was doubling its initial ambition.
Quoting…
The group’s current operating income (ROC) thus reached 5,068 million euros in 2023, a published increase of 4.2%. On a like-for-like basis, it grew by +11.4%, which is significantly higher than the comparable sales growth of +3.7%, highlighting a strong leverage effect. This performance illustrates the progress of the action plan deployed around 3 levers: efficiencies, price management particularly in Industrial Merchant and dynamic management of the asset portfolio. Efficiencies thus amount to 466 million euros in 2023, a strong increase of 23.2% compared to 2022 and significantly above the annual objective of 400 million euros.
Excluding the energy effect, the operating margin improved very significantly by +80 basis points. Thus, the sum of improvements in the operating margin excluding energy effect in 2022 and 2023 reaches +150 basis points and compares to the +160 basis points expected over the 4-year period of the ADVANCE plan. Consequently, the ambition to improve the margin excluding energy effect of the ADVANCE strategic plan is raised to +320 basis points over 4 years, which reflects an acceleration. This corresponds to twice the improvement initially planned. Thus, +170 basis points of improvement are expected for the remaining 2 years of the ADVANCE plan.
The group’s share of net profit reached 3,078 million euros in 2023, strong published growth of +11.6% and an increase of +21% excluding foreign exchange. It thus exceeds 3 billion euros for the first time. Recurring net income (Group share) stood at 3,320 million euros, up +5% and +13.3% excluding currency effect. Net profit per share stood at 5.90 euros, a published increase of +11.7% compared to 2022, in line with the increase in net profit (Group share).
The net cash flow generated by operational activities, after variation in working capital requirements, reached 6,263 million euros, representing a strong increase of +7.8% compared to 2022 and +12.8% excluding the effect exchange.
Net debt as of December 31, 2023 amounts to 9,221 million euros, down 1,040 million euros compared to December 31, 2022. Indeed, the self-financing capacity generated by operations makes it possible to reduce the net debt after the payment of more than 3.4 billion euros in gross industrial investments and 1.6 billion euros in dividends.
The return on capital employed after tax (ROCE) is 9.8% in 2023. The recurring ROCE stands at 10.6%, an improvement compared to 10.3% in 2022 and in line with the objective of Double-digit ROCE of the Advance strategic plan.
Industrial and financial investment decisions reach a high level of 4.3 billion euros in 2023, a sharp increase compared to 4 billion euros in 2022. The amount of investments currently being executed (“investment backlog “) stands at a record level of 4.4 billion euros at the end of 2023, a sharp increase compared to 3.5 billion euros at the end of 2022.
Dividend of 3.20 euros
At the General Meeting of April 30, 2024, the payment of a dividend of 3.20 euros per share will be proposed to shareholders for the 2023 financial year, representing growth of +8.5% compared to the last year. The dividend will be detached on May 20, 2024 and paid on May 22, 2024. In addition, an allocation of free shares at the rate of one free share for every 10 shares held, as well as the application of a loyalty bonus, are planned for June 2024.
For 2024, the group says it is confident in its ability to once again increase its operating margin and achieve growth in recurring net profit, at constant exchange rates…
Commenting on the activity of the year 2023, François Jackow, Managing Director of the Air Liquide group, declared: “Air Liquide achieved a solid performance in 2023, which highlights the resilience and quality of our economic model as well as the mobilization and agility of our teams in a complex and changing macroeconomic and geopolitical environment. The Group’s performance is characterized by an increase in its sales on a comparable basis, a further improvement in its operating margin excluding the energy effect and an investment dynamic which is accelerating, particularly in decarbonization projects.
In particular, I am proud to underline that we have, in two years, practically achieved the ambition of increasing the margin that we had set for ourselves by 2025 as part of our ADVANCE strategic plan. As a result, we are announcing today that we are doubling our initial ambition.
We also confirm ADVANCE’s other financial objectives of like-for-like sales growth and return on capital employed, as well as our ambition in terms of investment decisions. Likewise, on an extra-financial level, our numerous initiatives in terms of decarbonization confirm our objective of combining growth in our activity and a reduction in our CO2 emissions in absolute value from 2025.
Turnover reached 27.61 billion euros, up +3.7% like-for-like in 2023. In published data, it stood at -7.8%, due to the drop in food prices. energy – variations of which are contractually passed on to Large Industry customers – but also negative exchange rate effects. The Gas & Services activity, which represents 95% of the Group’s turnover, recorded a comparable increase of +4.2%. Within this activity, all geographies are progressing, particularly the Americas and Europe, driven in particular by Industrial Merchant and Healthcare.
In line with its ADVANCE plan, Air Liquide continues to continuously improve its operational performance. The Group generated record efficiencies of 466 million euros, up +23% despite an inflationary context unfavorable to savings on purchases, and continued dynamic management of its business portfolio. Its ability to offer its customers value-added offers allows it to adjust its Industrial Merchant prices. As a result, the operating margin increases again, by +80 basis points excluding energy effect in 2023, and therefore by +150 basis points over 2022-2023. Having thus practically achieved our margin ambition at mid-term of ADVANCE which was +160 basis points, we are now targeting an increase of +320 basis points, or double our initial ambition, over the duration of the plan.
The Group’s share of net income came to 3.08 billion euros, a published growth of +11.6%. Recurring net income increased by +13.3% excluding currency effects. Cash flow increased by +12.8% excluding currency effects. The balance sheet is strong with a net debt to equity ratio of 36.8%. At 10.6% at the end of December, recurring ROCE remains well above 10%, in line with ADVANCE’s objectives, despite the increase in our investments. Reflecting our confidence in the future, the dividend which will be submitted to the vote of shareholders next April amounts to 3.20 euros per share, an increase of +8.5%. In addition, an allocation of free shares is planned for June 2024, at the rate of one share for every 10 shares held.
The Group’s investment dynamic is accelerating, supported in particular by our projects in the energy transition and electronics. The portfolio of projects under execution is historically high at 4.4 billion euros. Investment decisions reached a record level of 4.3 billion euros in 2023.
In 2024, Air Liquide is confident in its ability to once again increase its operating margin and achieve growth in recurring net income, at constant exchange rates.”