(AOF) – Air Liquide’s sales amounted to 8.247 billion euros in the third quarter of 2022, up 8.3% on a comparable basis. The e-gas specialist’s published revenue was up 41.3%, benefiting from a historically high energy effect of +24.4% and a favorable exchange rate effect of 8.8%, while the significant scope effect is limited to -0.2%.
Revenue from Gas & Services, the largest division, amounted to 7.897 billion euros, up 7.2% on a comparable basis. Published revenue for the Gas & Services activity increased by 41.4% in the 3rd quarter, benefiting from a historically high energy effect (+25.6%) and a positive exchange rate effect (+ 8.9%) while the significant scope effect is limited (-0.3%).
Cash flow amounted to 4.569 billion euros at the end of September 2022, up 23.5% in a context of high inflation. It was 23.8% of sales excluding the energy effect, and 20.3% of published sales.
Investment opportunities at 12 months remain high at more than 3 billion euros. More than 40% relate to the energy transition. In this context, the gas specialist has decided to invest 1.1 billion euros this quarter, particularly in electronics and in projects contributing to the fight against climate change.
“With a clear strategic plan, Advance, which further strengthens the resilience of its business model, in 2022, in the absence of significant disruption to the economy, Air Liquide is confident in its ability to once again increase its operating margin and to achieve growth in net recurring income, at constant exchange rates,” said François Jackow, CEO of the Air Liquide group, about his outlook.
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Key points
– Second in the world behind Linde-Praxair in industrial and medical gases, born in 1902;
– Sales of €23.3 billion structured in 3 branches: gas and industrial services for 96%, 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; François Jackow is the new Group Managing Director from June 2022;
– Healthy balance sheet, with net debt rated A, reduced to €10.4 billion, or 58.5% of shareholders’ equity.
Challenges
– Advance 2015 strategy with 3 priorities 1 – financial performance: annual increase of 5 to 6% in turnover, profitability of more than 10% of capital employed and reduction of absolute CO2 emissions from 2025, via investment decisions €16 billion between 2022-2025, half of which devoted to energy transition – 2 – decarbonisation of industry, via the supply of low-carbon industrial gases, CO2 capture & management – 3 – technological innovation addressed to 5 professions: hydrogen mobility, electronics, health, industrial merchant and high technologies – space, cryogenics, quantum…;
– Innovation strategy funded to the tune of +€300m, aiming for operational excellence, openness to core business or disruptive technologies, through: global network of 6 innovation campuses, with +400 partnerships academic innovation centers / 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…/ funds venture capital ALIAD, in alliance with the Chinese fund CSE and Accelair fund;
– Environmental strategy aiming for carbon neutrality by 2050 with 2 intermediate objectives, 2025 (start of absolute reduction in emissions) and 2035 (33% decline compared to 2015), through: CO2 capture, production of hydrogen by electrolysis and use of biomethane / €8 billion invested by 2035 in the hydrogen value chain / partnership with Rothschild & CO and Solar Impulse in a fund endowed with €200 million to support SMEs offering solutions for the environment and participation in the global decarbonized hydrogen financing fund (€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) ;
– Ability to pass on higher energy prices to customers;
– Industrial investment opportunities of €3.3 billion at the end of 2021, of which 40% in the energy transition.
A second part of the year at risk
Chemical players should be faced with a scissors effect. First, they have to face an explosion of costs: experts estimate that in 2022 natural gas prices should increase by 470% and electricity prices by around 300% following the war in Ukraine. Added to this is an oil price that is also on the rise. On the other hand, their ability to increase prices should be penalized by a less dynamic economic context, linked in particular to the difficulties on the Chinese market, weighed down by a wave of confinements. The world leader, BASF, anticipates a decline of between 6% and 14% in its profits in 2022.