First half 2016: Robust Gas & Services sales growth Acquisition of Airgas accretive as of 2016


* Variation H1 2016/H1 2015 excluding currency and energy impact

Commenting on the first six months of 2016, Benoît Potier, Chairman and CEO of Air Liquide, said:

This first half has been characterized by the completion of the Airgas acquisition, which will be accretive in 2016, and its first contribution to the Group’s performance. In a context of moderate global growth, Gas & Services sales posted robust growth. Growth is the result of dynamic Electronics sales, higher volumes in Large Industries, and rising Healthcare business. This first half is also characterized by a negative currency impact and lower energy prices.
All geographies are progressing on a comparable basis, benefiting notably from the slight improvement in demand in industry since the beginning of the year. This increase was more pronounced in Asia Pacific and the developing economies.
The Group continues to generate recurring efficiency gains, to which will be added the first benefits of synergies with Airgas in the second half of the year. The operational performance of Gas & Services is solid, as evidenced by the margin increase and strong cash flow growth.
The investment backlog, amounting to 2.1 billion euros, and recently signed new contracts, will contribute to growth in the coming years.
Following the completion of the acquisition of Airgas, Air Liquide is confident in its ability to generate growth in 2016, both in net profit and in net earnings per share, including the effect of the capital increase planned for September/October.

Group revenue for the first half of 2016 was € 8,295 million, including € 511 million of Airgas sales consolidated as of 23 May 2016 (closing date of the acquisition). Revenue for the first half increased +2.2% on a reported basis and +8.0%, excluding the currency and energy impact, as compared with the first half of 2015. Excluding Airgas, comparable growth1 was +1.7%.
Gas & Services sales, at € 7,618 million including Airgas sales since 23 May 2016, grew by +4.3% on a reported basis and by +10.6%, excluding the currency and energy impact, compared with the first half of 2015. Excluding Airgas, comparable growth is +3.6%. For the first half, the currency impact (-2.6%) and theenergy impact (-3.7%) are both unfavorable.
The developing economies continued to post strong growth, with Gas & Services sales up +11.4% on a comparable basis.
Overall, all Gas & Services activities progressed in the first half on a comparable basis, with the exception of Industrial Merchant, which remained contrasted:

  • Large Industries revenue, sharply up +6.2%, saw growth in all geographic zones. It benefited from the ramp-up of our production units, especially in Germany, Eastern Europe, North and South America, and China. The contribution of the two hydrogen production units on the Yanbu site, which started up in Q2 2015, remained significant this half, especially in Q1. In the US, growth accelerated in Q2 thanks to the start-up of a new air separation unit, while in China volumes remained high throughout the first half of 2016.
  • Industrial Merchant, down by -1.6%, remained contrasted. However, a slight improvement was noted in Q2. Sales in Europe, positive this first half, were up +2.7% for the second quarter, due mainly to higher bulk volumes. In North America, market segments related to energy and metal fabrication are still affected by weak demand for oil services and related industries, while the Agri-Food, Pharmaceutical, and Research markets are growing. This market dynamic is the same for Airgas, whose gas sales were slightly up in the first half. The situation is also contrasted in Asia Pacific, with sales down in Japan while volumes are rising sharply in China. The overall price effect remains modest at +0.4% against a global backdrop of low inflation.
  • Electronics continued to post robust growth of +11.2%, driven by strong demand for equipment and installations and advanced materials sales, which rose by more than +25%. Activity was particularly strong in Asia Pacific, with double-digit growth in Japan, China, and Singapore.
  • Healthcare, up by +4.8%, benefited from sustained high demand for home healthcare services, from dynamic hygiene sales, which rose by +19%, and from its expansion in the developing economies, Brazil and Argentina in particular. Including the contribution of Airgas via its sales of medical gases to hospitals, global Healthcare revenue in the second quarter was up +11.5%, excluding the currency impact.

Engineering and Construction revenue, which stood at € 254 million, fell sharply compared with the first half of 2015, adversely impacted by the slowdown in major projects related to energy and by the low number of new projects.

Global Markets & Technologies revenue amounted to € 146 million. It rose by +10.7% on a comparable basis, driven by markets related to maritime and space in the first quarter, as well as by dynamic biogas sales in the second quarter.

1 Adjusted for currency, energy and significant M&A impact (Airgas).