First quarter 2018

April 25, 2018

1st quarter results

Commenting on the first quarter of 2018, Benoît Potier, Chairman and CEO of Air Liquide, said:

For the first three months of this year, revenue growth was very solid on a comparable basis. It accelerated compared with the previous quarters in a more favorable economic environment. The activity level in terms of new customers’ projects was also higher.
All of our activities leveraged on this environment. The growth of Large Industries, driven by stronger demand in Europe and the start-ups and ramp-ups of new production units, is of particular note, as is the sustained growth of Industrial Merchant. This quarter was also marked by improvement in Engineering & Construction and the ever-dynamic development of Global Markets & Technologies. In addition, all geographies were up, especially Asia, with double-digit sales growth in China.
The Group continues to generate recurring operational efficiency gains and new synergies related to the integration of Airgas. Cash flow remains high, allowing for further targeted investments. In the first quarter, our investment decisions amounted to nearly 600 million euros and will contribute to the future growth of the Group.
Accordingly, assuming a comparable environment, Air Liquide is confident in its ability to deliver net profit growth in 2018, calculated at constant exchange rate and excluding 2017 exceptionals1.

Q1 2018 Group revenue reached € 5,010 million, up +6,0% on a comparable basis2. Gas & Services, Engineering & Construction, and Global Markets & Technologies contributed to this dynamic growth in a more favorable economic environment. This environment also had a positive impact on the Group’s Gas & Services base business3 and on the activity of our customers, whose projects are more numerous. The level of growth for the 1st quarter follows an already solid rise in sales observed in the 4th quarter of 2017 (+4.5%). On a reported basis, Group revenue decreased -3.2% compared with Q1 2017 due to a strong negative currency impact (-8.2%), a scope effect (-0.7%), and a slightly negative energy impact (-0.3%).

Gas & Services revenue totaled € 4,831 million for the first three months of the year, up +5.0% on a comparable basis, and down -4.3% as published compared with the same period in 2017, due primarily to the negative currency impact and a scope impact.

On a comparable basis, all geographies progressed. The developing economies recorded sales growth of +10.7% for the 1st quarter of 2018.
On a comparable basis, Gas & Services sales rose this quarter for all activities:

  • Industrial Merchant sales grew +4.2%, with increases observed in all geographies, particularly the developing economies. In the Americas, demand was higher in all market segments and was particularly strong in the manufacturing sector. Airgas posted solid sales for packaged gases and hardgoods. In Europe, activity remained robust despite an unfavorable calendar effect. All countries contributed to growth and demand remained dynamic in Eastern Europe. In Asia, China’s growth continued at a pace surpassing +15%, with bulk and cylinder volumes up substantially, particularly for the automotive, metal fabrication, and research sectors. Australia returned to growth. The global price effect at +2.1% for the 1st quarter, has strengthened compared to the 4th quarter of 2017.
  • Large Industries posted sales growth of +6.0%, well above the 4th quarter of 2017. Large Industries was experiencing a clear recovery in Europe, due in particular to sustained demand for hydrogen for the refining and petrochemicals industries, as well as solid cogeneration activity in Benelux. In the Americas, activity was driven by higher air gas sales in the United States and in Canada, and by the start-up of an oxygen production unit for a steelmaker in Argentina. In Asia, start-ups of air gas units in China and sustained demand for hydrogen in South Korea drove activity. High growth in the Middle East and Africa was attributable to the start-up of the world’s largest oxygen production unit in South Africa and the contribution of the Yanbu hydrogen production facility in Saudi Arabia, which is running at full capacity.
  • Electronics revenue grew +5.7% in the 1st quarter of 2018, driven by double-digit sales growth in Asia and high sales of equipment and installations globally. Asia benefited from start-ups and ramp-ups of carrier gas production units in China and in Japan, and from demand for advanced materials which remains strong.
  • Healthcare sales remained solid, increasing by +4.9%. All regions posted growth in this quarter, and activity was particularly dynamic for the developing economies, most notably in South America. Home healthcare continued to grow and demand for home diabetes care remains strong. Growth was also driven by strong demand for specialty ingredients developed for the cosmetics industry. The Group continued its strategy of targeted acquisitions with two new acquisitions, in France and in Saudi Arabia.

After several challenging quarters and stabilization in the 4th quarter of 2017, Engineering & Construction sales resumed growth in the 1st quarter of 2018, reaching € 85 million. The quarter saw further improvement in order intake.

The dynamic development of Global Markets & Technologies revenue continues, with sales reaching € 94 million, an increase of +24.4% on a comparable basis. Every market segment was experiencing growth, with activity driven in particular by start-ups of biomethane production units and high sales in the maritime sector. In addition, hydrogen energy for mobility is continuing to develop.

The Group is pursuing its efforts to reinforce competitiveness and generated operational efficiency gains of € 79 million. The cost and sales synergies linked to the acquisition of Airgas also continued during the 1st quarter of 2018, reaching a cumulative total since the acquisition of USD 237 million.

Cash flow from operating activities before changes in working capital requirements for the first three months of the year reached € 975 million and corresponded to 19.5% of sales.

12017 exceptionals: exceptional non-cash items having a net positive impact on 2017 net profit.
2Comparable change: excluding currency, energy, and significant scope impacts.
3Comparable change excluding the contribution of startups, ramp-ups, and small acquisitions.