First quarter 2019: Continued sustained growth and very active business development

April 26, 2019

Commenting on the first quarter of 2019, Benoît Potier, Chairman and CEO of Air Liquide, stated:

“Growth in the first quarter is sustained in line with the performances of previous quarters.  Sales reached 5.4 billion euros, up +9% as published and +5% on a comparable basis, reflecting the good performance of all of the Group's activities as well as the positive trend in exchange rates. Whether it is Gas & Services, Engineering & Construction, or Global Markets & Technologies, all activities are growing.

In Gas & Services, all business lines and geographies are growing, confirming a trend that began four quarters ago. Growth is particularly strong in Electronics and Healthcare. Geographically, Asia confirms its dynamism, with sales remaining strong, especially in China.

Efficiencies contributed 77 million euros in the first quarter and will ramp up, in the framework of a reinforced target of 400 million euros per year. Cash flow, meanwhile, remains solid.

After a record level reached in the fourth quarter of 2018, investment decisions for the first quarter of 2019 remain high at 900 million euros, a figure that includes the acquisition of Tech Air in the United States, an Industrial Merchant business. These investments will contribute to the Group’s future growth.

Accordingly, assuming a comparable environment, Air Liquide is confident in its ability to deliver net profit growth in 2019, calculated at constant exchange rate.”

Group revenue for the 1st quarter of 2019 totaled 5,441 million euros, up +8.6% as published. The currency and energy impacts were positive over the quarter and stood at +2.9% and +0.7% respectively. Group revenue growth was therefore +5.0% on a comparable basis. This was driven by strong Gas & Services sales growth (+4.8%). Engineering & Construction continued to improve (+5.0%) and Global Markets & Technologies kept its strong growth momentum (+15.9%).

Gas & Services revenue reached 5,237 million euros and posted an as published growth of +8.4%, benefiting from favorable currency and energy impacts of +2.9% and +0.7% respectively. Comparable sales were up by a strong +4.8%. All geographies grew and developing economies, in particular China, continued to progress rapidly (+16.0%).

  • Gas & Services revenue in the Americas stood at 2,069 million euros, up +2.4% during the 1st quarter of 2019, driven in particular by Healthcare and Electronics. Despite sustained volume growth, Large Industries was impacted by an unfavorable comparison effect. Industrial Merchant posted robust sales growth.
  • Revenue in Europe totaled 1,829 million euros over the quarter, up +2.8%. Large Industries sales were up, benefiting from strong demand for hydrogen from refiners but were impacted by weaker cogeneration activity when compared to the 1st quarter of 2018. Growth remained solid in Industrial Merchant with high pricing impacts. Healthcare continued its steady development, boosted by organic sales growth in Home Healthcare.
  • Revenue in Asia-Pacific reached 1,194 million euros, up +13.2 %. Sales growth in Large Industries benefited from several start-ups in the 4th quarter of 2018. Industrial Merchant was up markedly, in particular in China. Following record growth in the 4th quarter of 2018, Electronics maintained a significant increase in revenue during the 1st quarter of 2019.
  • Revenue in the Middle East and Africa amounted to 145 million euros, up +3.8% over the quarter with a much more limited contribution from the start-up of the world’s largest Air Separation Unit in South Africa in December 2017.

All business lines contributed to the growth, notably Healthcare and Electronics. Growth in Healthcare continued at a sustained pace (+5.4%) despite the limited contribution from bolt-on acquisitions. Following record growth in the 4th quarter of 2018, Electronics maintained a significant increase in revenue during the 1st quarter of 2019 (+13.7%). Growth remained solid in Industrial Merchant, at +2.8%, despite an unfavorable working day impact. End markets remained well oriented overall and pricing impacts were high. Large Industries (+5.1%) benefited from several start-ups in Asia during the 4th quarter of 2018 and strong hydrogen demand in Europe and the Americas.

Engineering & Construction revenue totaled 93 million euros, relatively stable compared to the 1st quarter of 2018. It continued to benefit from the gradual increase in order intake seen since the beginning of 2017, which now carries on at a more modest pace.

Global Markets & Technologies sales were up +15.9% at 111 million euros, the biogas activity being the main contributor to this growth. Sales related to the Turbo-Brayton technology, which enables the refrigeration and liquefaction of gases for the maritime industry, also posted strong growth.

The Group’s efficiency gains reached 77 million euros in the 1st quarter. Many projects were launched at the end of 2018 and should bring an accelerated contribution over the next quarters to the annual objective now fixed at more than 400 million euros. Slightly more than 30% of efficiency gains contributed to the Climate objectives.

Cash flow from operating activities before changes in working capital requirements reached 1,107 million euros in the 1st quarter. It stood at 20.3% of sales and allowed in particular the financing of net industrial capital expenditure, which totaled 588 million euros and represented 10.8% of sales, in line with the mid-term strategic plan.

Industrial and financial investment decisions totaled 862 million euros in the 1st quarter of 2019, a significant increase compared with 565 million euros in the 1st quarter of 2018. They included, in particular, the Tech Air acquisition in the United States. The strong momentum of investment projects continued, the 12-month portfolio of investment opportunities reached 2.7 billion euros at the end of March 2019, an increase of approximately 100 million euros compared with the end of 2018.