Air Liquide continues its trajectory with another solid quarter, combining sales growth, performance improvement and investment momentum

Commenting on sales in the first quarter of 2024, François Jackow, Chief Executive Officer of the Air Liquide Group, stated:

“With a proven resilient business model, Air Liquide delivers once again a solid performance in the first quarter. The Group thus maintains its growth trajectory despite an uncertain environment, and continues to prepare a sustainable future thanks to an investment momentum supported by numerous projects in the energy transition. Air Liquide’s teams are moreover fully mobilized on continuous performance improvement and structural efficiency projects undertaken as part of our ADVANCE strategic plan, of which the original margin increase ambition we doubled at the beginning of the year^([1]).

Group sales increased by +2.1% on a comparable basis - the first quarter of last year having been particularly dynamic. Published sales were down -7.3%, due to the decline in energy prices - for which variations are contractually passed through to Large Industries customers - as well as negative currency impacts. Revenue reached 6.65 billion euros, including 6.36 billion euros for the Gas & Services business.

The Gas & Services business, which represents 96% of the Group’s revenue, was up +2.0% on a comparable basis. Geographically, growth was notably driven by the dynamism of the Americas. By business line, Healthcare in particular stood out, with Industrial Merchant and Large Industries also contributing to the increase in sales on a comparable basis.

In line with the ADVANCE renewed ambition announced in February this year, Air Liquide is pursuing the continuous improvement of its operational performance by implementing new structural actions to deliver savings in the coming quarters. Over the first three months of the year, the Group notably generated efficiencies amounting to 112 million euros, ahead of its average annual target of 400 million euros. It also continued the active management of its business portfolio and the adjustment of its prices in Industrial Merchant, leveraging its ability to create value for customers.

Still very high at 4.1 billion euros, the Group’s backlog is diversified and well balanced among activities and geographies. Investment decisions amounted to close to 900 million euros, up +11% compared to last year. The 12-month portfolio of investment opportunities remains high at 3.4 billion euros. More than 40% of these opportunities are related to the energy transition with, in particular, the first decarbonization projects in the United States and Europe. This portfolio includes projects in Electronics in Asia, as well as in the United States and Europe.

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^([2]).”

Highlights

Corporate

• Project to divest Air Liquide's businesses in 12 countries in Africa. Annual sales in these countries represent less than 10% of the Group’s revenue in Africa.

Electronics

• Announcement of an investment of more than 50 million euros to build a new innovative production unit in Singapore and to transform existing facilities located in Malta (New York, United States), in order to supply ultra-pure nitrogen to GlobalFoundries. These projects will enable GlobalFoundries to benefit from greater energy efficiency.

Sustainable development

• Announcement by Air Liquide and Sasol of long-term contracts (PPA) with Enel Green Power RSA for a total capacity of 110 MW of renewable electricity for the Sasol site in Secunda, South Africa.
• Continued expansion of Air Liquide’s biomethane production capacities in the United States, with the construction of two production units in line with a circular economy approach.

Hydrogen

• Announcement by Air Liquide and TotalEnergies of the launch of the TEAL Mobility joint venture to create the leader in hydrogen distribution with a network of 100 truck stations in Europe.
• As the Paris 2024 Olympic and Paralympic Games approach, reopening ceremony for the Air Liquide hydrogen refueling station on Place de l’Alma, Paris.

Decarbonizing industry

• As part of the renewal of a long-term agreement with Dow, investment of nearly 40 million euros to increase efficiency and reduce the CO2 emissions of the Air Liquide industrial gas production site in Stade, Germany.

Group revenue totaled 6,650 million euros in the 1^st quarter of 2024, posting a growth of +2.1% on a comparable basis with the 1^st quarter of 2023. The Group’s published sales were down -7.3% in the 1^st quarter of 2024, affected by unfavorable energy (-5.5%) and currency (-3.9%) impacts. There was no significant scope impact. The favorable impact on comparable growth of proactive price increases to counter hyperinflation^([3]) in Argentina is estimated at approximately +1.7%.

Gas & Services revenue reached 6,358 million euros, up by + 2.0% on a comparable basis. As published revenue for Gas & Services were down -7.8% in the 1^st quarter of 2024, penalized by unfavorable energy (-5.7%) and currency (-4.1%) impacts. There was no significant scope impact.

Comparable growth^([4]) in the Industrial Merchant (+1.5%) business continued in the 1^st quarter of 2024 with slightly lower volumes and a price effect (+3.7%) that eased sequentially. Americas is the region contributing the most to the price effect (+6.5%) with proactive price increase campaigns, in particular in the United States (Airgas for +3%) and Argentina to counter hyperinflation (for +3%). Revenue from Large Industries (+0.9%) benefited from the start-up of two new units but was impacted by customer turnarounds and the divestiture of a cogeneration unit in Europe, while activity remained broadly stable. The Healthcare business was the growth driver in the 1^st quarter, with an increase in sales of +8.1%, supported by the growth of all therapies in Home Healthcare and the increase in the prices of medical gases in an inflationary environment. Lastly, revenue from the Electronics business was slightly down by -2.0% against a very high basis of comparison in the 1^st quarter of 2023: the decrease in sales of materials in a context of soft demand from memory manufacturers was partially offset by the +6% growth in carrier gas sales.

• Gas & Services revenue in the Americas increased by +6.3% and reached 2,550 million euros in the 1^st quarter of 2024. All businesses grew in the region. Large Industries (+4.8%) benefited from strengthening demand over the quarter and from the start-up of an Air Separation Unit. In Industrial Merchant, revenue increased by +4.8%, supported by a price effect that remained very solid (+6.5%) and resilient gas volumes. The strong growth in Healthcare (+20.4%) was notably driven by the dynamic development of sales of Medical Gases in the United States and Home Healthcare in Latin America. Solid growth in Electronics (+3.3%) benefited from higher sales of carrier gases, equipment and installations.
• In Europe, sales were down slightly by -1.6% in the 1^st quarter of 2024 and reached 2,250 million euros. In Large Industries, revenue (-1.1%) was impacted by the divestiture of a cogeneration unit, partially offset by slightly higher volumes of hydrogen. In Industrial Merchant (-6.4%), prices were down (due to contractual indexation on energy price for the bulk), and volumes were affected by an unfavorable working day impact. The Healthcare business posted very solid sales growth (+4.3%), supported by the increase in the number of patients in Home Healthcare and the increase in volumes and prices of medical gases in an inflationary context.
• Revenue in the Asia-Pacific region was flattish (-0.9%) in the 1^st quarter of 2024 and amounted to 1,291 million euros. In Large Industries (-1.0%), the start-up of a new unit in March partially offset weak demand and customer turnarounds. Industrial Merchant’s sales were up by +0.7%, supported by higher prices and increased volumes excluding helium. Electronics revenue decreased by -1.7% against a very high basis of comparison in the 1^st quarter of 2023, the growth in carrier gas sales partially offsetting lower sales of specialty materials, equipment and installations.
• Revenue in the Middle East & Africa region increased sharply by +10.5% to 267 million euros in the 1^st quarter of 2024. All business lines grew.

Revenue in Global Markets & Technologies totaled 200 million euros in the 1^st quarter, up +4.7%. Order intake for Group projects and third-party customers amounted to 176 million euros.

Consolidated revenue from Engineering & Construction totaled 92 million euros in the 1^st quarter of 2024, up +6.5% compared to the 1^st quarter of 2023. Order intake for the Group and third-party customers reached 342 million euros.

Efficiencies^([5]) reached 112 million euros in the 1^st quarter of 2024, up +22.2% compared to the 1^st quarter of 2023. The price effect in the Industrial Merchant business stood at +3.7% and came in addition to the significant price increase of +12.9% in the 1^st quarter of 2023. This price effect eased sequentially. Portfolio management of businesses continued in the 1^st quarter with 3 acquisitions in Industrial Merchant in the United States and China, and 2 divestitures, technological activities for the Aeronautics sector (Global Markets & Technologies) and the welding equipment rental activity in Industrial Merchant in Europe.

Cash flows from operating activities before changes in working capital amounted to 1,608 million euros, up by +0.5% as published compared to the 1^st quarter of 2023 and by +6.1% excluding the currency impact and two exceptional indemnity payments received in the 1^st quarter of 2023 and 2024 respectively. This growth was higher than comparable sales growth (+2.1%) in the 1^st quarter. This leverage effect reflects the contribution of the three drivers of margin improvement, namely pricing, efficiencies and portfolio management.

In the 1^st quarter of 2024, industrial and financial investment decisions amounted to 888 million euros, an increase of +11.4% compared to those of the 1^st quarter of 2023. The investment backlog stood at a very high level of 4.1 billion euros, compared to 3.5 billion euros in the 1^st quarter of 2023.

The additional contribution to sales of unit start-ups and ramp-ups totaled 53 million euros in the 1^st quarter of 2024. Over the year, it is expected to be between 270 and 290 million euros.

The portfolio of 12-month investment opportunities remained stable at a high level of 3.4 billion euros at the end of March.

In order to decarbonize its production units, the Group decided on the electrification of a third Air Separation Unit in China, which will reduce Scope 2 emissions by around 340,000 tonnes of CO2 per year. Air Liquide and Sasol also announced that they had signed new long-term renewable power purchase agreements in South Africa, bringing the total capacity for the Secunda site to approximately 690 MW, corresponding to a reduction of more than 1.2 million tonnes per year of CO2 emissions for Air Liquide. Furthermore, in order to actively contribute to the decarbonization of mobility, the Group decided to invest in the logistics chain downstream of the Normand’Hy electrolyzer in France and created the TEAL joint venture with TotalEnergies, which aims to roll out more than 100 hydrogen refueling stations in Europe in the next 10 years.

Footnotes

1. ^{^} Operating margin excluding energy passthrough impact.
2. ^{^} Operating margin excluding energy passthrough impact. Net profit recurring excluding exceptional and significant transactions that have no impact on the operating income recurring.
3. ^{^} See definition in appendix.
4. ^{^} 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.
5. ^{^} See definition in appendix.