Commenting on sales in the 1(st) quarter of 2022, Benoît Potier, Chairman and CEO of the Air Liquide Group, said:
"There was strong growth in this first quarter, which reflects a good level of activity and demonstrates the Group's resilience in a context marked, notably, by inflation and the war in Ukraine.
Group sales were up +8% on a comparable basis and +29% based on published figures, notably reflecting the sharp rise in energy prices contractually passed on to Large Industries customers. Sales reached 6.9 billion euros, including 6.6 billion for Gas & Services. This growth confirms the strength of the Gas & Services businesses and the strong momentum of the Engineering & Construction and Global Markets & Technologies business lines.
Gas & Services, which represents over 95% of Group sales, was up +7.1% on a comparable basis. This reflects notably the strong growth of the Electronics business line as well as Industrial Merchant which demonstrated, once again, its ability to adapt prices to reflect rising costs. Despite a high basis of comparison, the Healthcare business line continued to grow. In terms of geographies, growth was particularly strong in Europe and the Americas.
Regarding efficiencies, the Group continued to take action to improve performance. In the 1(st) quarter of 2022, 77 million euros in efficiencies were generated in spite of a highly inflationary context, and we confirm our target of over 400 million euros over the year. Cash flow remains high at more than 23% of sales excluding the energy effect.
Investment decisions over the quarter reached the very high level of 913 million euros, with several Electronics projects, particularly in Asia. The 12-month portfolio of opportunities remains stable at 3.3 billion euros. The proportion of projects linked to the energy transition exceeds 40%.
These investments will foster future growth. They will also contribute to ADVANCE, Air Liquide's new strategic plan for 2025. This plan, which combines financial and extra-financial performance, is structured around four priorities: delivering strong financial performance, decarbonizing industry, promoting progress through technological innovation and acting for all. With ADVANCE, the Group reaffirms its commitment to sustainable development while continuing its growth trajectory.
In 2022, assuming no significant economic disruption, Air Liquide is confident in its ability to further increase its operating margin and to deliver recurring net profit growth at constant exchange rates.(1) "
Group revenue totaled 6,887 million euros in the 1(st) quarter of 2022, up a strong +7.9% on a comparable basis. This performance was delivered in a challenging context of exceptionally high energy prices, strong inflation, strain on supply chains and the war in Ukraine. The Group benefited from a solid business model and proactive actions to increase prices in the Industrial Merchant business. Introduced in the 2(nd) half of 2021, the effectiveness of these increases started to be seen from the 4(th) quarter of 2021, with stronger pricing in the 1(st) quarter of 2022. The Group's published revenue saw very strong growth of +29.1% with an energy impact that reached +16.4% and with favorable currency (+4.2%) and significant scope (+0.6%) impacts.
Gas & Services revenue totaled 6,590 million euros, up by + 7.1% on a comparable basis. Sales as published for the 1(st) quarter of 2022 showed a strong growth of +29.1%, with a very high energy impact at +17.2% and with positive currency (+4.2%) and significant scope (+0.6%) impacts.
Large Industries sales were stable (+0.1%) on a comparable basis compared to the 1(st) quarter of 2021, with mixed activity depending on the region. In the Americas, demand was robust across all markets, while in Europe and Asia, sales were lower in the Steel and Refining industries. Demand in the Chemicals industry remained solid globally. Industrial Merchant business posted strong comparable growth of +11.9%, driven by the acceleration of pricing which was up +10.7%, even reaching +19.4% in Europe, and by solid volumes. Sales comparable growth was particularly dynamic in Electronics, at +13.7%, with all business segments showing strong growth. Healthcare continued to grow (+2.6%) on a comparable basis, supported by the momentum of Home Healthcare activity, despite a particularly high basis of comparison in 2021 related to the strong demand for medical oxygen to treat Covid-19.
Consolidated revenue from Engineering & Construction totaled 108 million euros in the 1(st) quarter of 2022, posting a strong growth of +40.3% and reflecting the increase in order intake in recent quarters. Order intake reached 264 million euros.
The sales of Global Markets & Technologies totaled 189 million euros in the 1(st) quarter, up a strong +18.3%, driven by the dynamic biogas activity and the increase of sales for the hydrogen mobility. Order intake for Group projects and third-party customers reached 214 million euros, up compared to 2021.
Efficiencies(3) reached 77 million euros in the 1(st) quarter. This performance was delivered in a context of high inflation unfavorable to procurement efficiencies. The projects initiated at the beginning of 2022 are expected to increase their contribution over the coming quarters, hence confirming the annual objective set at more than 400 million euros. In this inflationary environment, the priority of operations was the passthrough of costs into pricing.
Cash flow from operating activities before changes in working capital totaled 1,400 million euros, a strong increase of +12.6% and +8.7% excluding the currency impact. It stood at 23.3% of sales excluding the energy impact, stable compared to the 1(st) quarter of 2021. It allowed, in particular, the financing of industrial investments, which amounted to 784 million euros, representing 13.0% of sales excluding the energy impact.
In the 1(st) quarter of 2022, industrial and financial investment decisions reached the very high level of 913 million euros, compared to 603 million euros in the 1(st) quarter of 2021. They included several carrier gases supply projects in Asia but also in the United States and in Europe for Electronics customers. The 12-month portfolio of investment opportunities is stable at the high level of 3.3 billion euros at the end of March. Projects related to the energy transition account for more than 40% of the portfolio.
The additional contribution to revenue of unit start-ups and ramp-ups amounted to 105 million euros in the 1(st) quarter of 2022 and is expected to be between 410 and 435 million euros in 2022, higher than in 2021.
Analysis of 1(st) quarter 2022 revenue
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.
Group revenue totaled 6,887 million euros in the 1(st) quarter of 2022, up a strong +7.9% on a comparable basis. This performance was delivered in a challenging context of exceptionally high energy prices, strong inflation, strain on supply chains and the war in Ukraine. The Group benefited from a solid business model and proactive actions to increase prices in the Industrial Merchant business. Introduced in the 2(nd) half of 2021, the effectiveness of these increases started to be seen from the 4(th) quarter of 2021, with stronger pricing in the 1(st) quarter of 2022.
Engineering & Construction posted a strong growth of +40.3%, which reflects the increase in order intake in recent quarters. Global Markets & Technologies business was up +18.3%, driven by strong momentum in biogas and sales for hydrogen mobility. The Group's published revenue saw very strong growth of +29.1% with an energy impact that reached +16.4% and with favorable currency (+4.2%) and significant scope (+0.6%) impacts.
Gas & Services revenue totaled 6,590 million euros, up by +7.1% on a comparable basis. Large Industries sales were stable (+0.1%) compared to the 1(st) quarter of 2021, with mixed activity depending on the region. In the Americas, demand was robust across all markets, while in Europe and Asia, sales were lower in the Steel and Refining industries. Demand in the Chemicals industry remained solid globally. Industrial Merchant business posted strong growth of +11.9%, driven by the acceleration of pricing which was up +10.7%, even reaching +19.4% in Europe, and by solid volumes. Sales growth was particularly dynamic in Electronics, at +13.7%, with all business segments showing strong growth. Healthcare continued to grow (+2.6%), supported by the momentum of Home Healthcare activity, despite a particularly high basis of comparison related to the strong demand for medical oxygen to treat Covid-19 in 2021. Sales as published for the 1(st) quarter of 2022 showed a strong growth of +29.1%, with a very high energy impact at +17.2% and with positive currency (+4.2%) and significant scope (+0.6%) impacts.
Gas & Services revenue in the Americas region totaled 2,331 million euros in the 1(st) quarter of 2022, showing a strong increase of +9.0%. Growth in Large Industries reached +8.3%, driven by the dynamic demand, particularly in the Chemicals and Steel industries. Up +10.0%, Industrial Merchant revenue benefited from the acceleration of pricing (+9.3%) and increase in volumes. Proximity care in the United States and the Home Healthcare business in Latin America drove growth in the Healthcare business line (+3.5%) in a context of lower demand for medical oxygen to treat covid-19. Finally, all business segments within Electronics contributed to the particularly dynamic growth (+10.0%).
Americas Gas & Services Q1 2022 Revenue
Revenue in Europe increased by +7.2% in the 1(st) quarter of 2022 and totaled 2,718 million euros in a context of exceptionally high energy prices and the war in Ukraine. While Large Industries showed a -4.5% decrease in sales, growth accelerated in Industrial Merchant to reach an exceptionally high level of +22.7%, driven by record pricing of +19.4%. Healthcare continued to grow (+3.0%) despite a particularly high basis of comparison in 2021, benefiting from dynamic development in Home Healthcare.
Europe Gas & Services Q1 2022 Revenue
Sales in Asia-Pacific were up +4.4% in the 1(st) quarter of 2022 and totaled 1,340 million euros, driven by particularly dynamic growth across all the Electronics business segments (+13.1%). Large Industries sales were down slightly by -1.1%, impacted by soft demand in China and by low hydrogen sales in South Korea. Industrial Merchant revenue grew by +2.7%, benefiting in particular from solid growth in China.
Asia-Pacific Gas & Services Q1 2022 Revenue
Revenue in the Middle-East and Africa totaled 201 million euros, which was stable (-0.2%) compared to the 1(st) quarter of 2021. In Large Industries, revenue was down: oxygen volumes for the Steel industry rose sharply in Egypt, but hydrogen sales to customers in the Yanbu basin in Saudi Arabia were lower. Volumes increased strongly in South Africa with the integration of the 16 Sasol air separation units whose acquisition was finalized at the end of the 1(st) half of 2021: sales of approximatively 35 million euros in the 1(st) quarter were recognized as part of the significant scope impact (and hence excluded from comparable growth). Growth in the Industrial Merchant business remained solid, driven by dynamic volumes and a marked increase of pricing at +4.6%, offsetting the impact of two small divestitures in the Middle-East. In Healthcare, revenue was down due to lower Medical Gas volumes for the treatment of covid-19. Sales in the Home Healthcare business grew in Saudi Arabia, particularly in diabetes treatment.
Consolidated revenue from Engineering & Construction totaled 108 million euros in the 1(st) quarter of 2022, posting a strong growth of +40.3% and reflecting the increase in order intake in recent quarters.
Order intake totaled 264 million euros, which was down slightly compared to the high level recorded in the 1(st) quarter of 2021. Orders for the Group represented more than half of the total and are mainly related to projects in Asia, including nitrogen generators for the Electronics and air separation units for Large Industries.
The sales of Global Markets & Technologies totaled 189 million euros in the 1(st) quarter, up a strong +18.3%. Biogas enjoyed strong momentum, benefiting from the ramp-up of new production units in Europe and from the rise in sales prices relating to the energy price increase and from equipment sales in the United States. Revenue for hydrogen mobility was up significantly, driven by the sale of hydrogen filling stations in China, Japan and Korea.
Order intake for Group projects and third-party customers are increasing and totaled 214 million euros, up compared to 2021. It notably includes sales of Turbo-Brayton LNG reliquefaction units, biogas processing equipment, hydrogen refueling stations and equipment for the Electronics industry.
Efficiencies(4) reached 77 million euros in the 1(st) quarter, representing a saving of 2.0% of the cost base. This performance was delivered in a context of high inflation unfavorable to procurement efficiencies. The projects initiated at the beginning of 2022 are expected to increase their contribution over the coming quarters, hence confirming the annual objective set at more than 400 million euros. In this inflationary environment, the priority of operations was to transfer cost increases into pricing.
Industrial efficiencies contributed more than 50% and included energy efficiency projects in Large Industries and supply chain optimization projects in Industrial Merchant. The Group's digital transformation continued: in Large Industries with the connection of new units to remote operation centers (Smart Innovative Operations, SIO), in Industrial Merchant with the acceleration of tools implementation to optimize delivery routes (Integrated Bulk Operations, IBO) and in Healthcare with the deployment of remote patient monitoring platforms. The implementation of shared services centers and the pursuit of the global continuous improvement program also contributed to efficiencies.
Cash flow from operating activities before changes in working capital totaled 1,400 million euros, a strong increase of +12.6% and +8.7% excluding the currency impact. It stood at 23.3% of sales excluding the energy impact, stable compared to the 1(st) quarter of 2021. It allowed, in particular, the financing of industrial investments, which amounted to 784 million euros, representing 13.0% of sales excluding the energy impact.
INVESTMENT DECISIONS AND INVESTMENT BACKLOG
In the 1(st) quarter of 2022, industrial and financial investment decisions reached the very high level of 913 million euros, compared to 603 million euros in the 1(st) quarter of 2021.
The industrial investment decisions for the 1(st) quarter of 2022 amounted to 880 million euros. Within the Electronics business line, several carrier gases supply projects in Asia but also in the United States and in Europe were decided in the 1(st) quarter. Investment decisions in Large Industries included the installation of an air separation unit in Egypt, which will be connected to existing units with the creation of a new local pipeline network. In Industrial Merchant, the investment in a new liquid production capacity has been decided in the United States.
Financial investment decisions amounted to 33 million euros in the 1(st) quarter of 2022 and included several acquisitions in Industrial Merchant in China.
The investment backlog reached the high level of 3.4 billion euros. Large Industries and Electronics projects account for the vast majority of the investment backlog. These investments' future contribution to annual revenue has also grown, amounting to approximately 1.2 billion euros per year after full ramp-up of the units.
Several major units started up during the 1(st) quarter of 2022. These include Advanced Materials and Carrier Gases production plants for Electronics in Asia.
The additional contribution to revenue of unit start-ups and ramp-ups amounted to 105 million euros in the 1(st) quarter of 2022, including sales of 35 million euros from the Sasol units in South Africa recognized as part of the significant scope effect (and thus excluded from comparable growth).
In 2022, the additional contribution to revenue of unit start-ups and ramp-ups is expected to be between 410 and 435 million euros, higher than in 2021. This includes the contribution of the 16 Sasol units acquired in late June 2021, which stands at approximately 135 million euros, and recognized as part of the significant scope effect.
The 12-month portfolio of investment opportunities is stable at the high level of 3.3 billion euros at the end of March.
Projects related to the energy transition account for more than 40% of the portfolio. These include projects for renewable hydrogen production by electrolysis, facilities for the capture of carbon dioxide emitted by the Group's and its customers' units, as well as hydrogen mobility projects in Europe and Asia. New Carrier Gases plants have been added to the portfolio for the Electronics business line, compensating for the projects decided in the 1(st) quarter, which therefore left the portfolio.
Europe and Asia represent about 75% of this portfolio. Europe remains the portfolio of opportunities' leading region with numerous energy transition projects. It is followed by Asia, due to many Electronics projects, and then by Americas with opportunities in Large Industries and Electronics.
There was strong growth in this 1(st) quarter, which reflects a good level of activity and demonstrates the Group's resilience in a context marked, notably, by inflation and the war in Ukraine.
Group sales were up +8% on a comparable basis and +29% based on published figures, notably reflecting the sharp rise in energy prices contractually passed on to Large Industries customers. Sales reached 6.9 billion euros, including 6.6 billion for Gas & Services. This growth confirms the strength of the Gas & Services businesses and the strong momentum of the Engineering & Construction and Global Markets & Technologies business lines.
Gas & Services, which represents over 95% of Group sales, was up +7.1% on a comparable basis. This reflects notably the strong growth of the Electronics business line as well as Industrial Merchant which demonstrated, once again, its ability to adapt prices to reflect rising costs. Despite a high basis of comparison, the Healthcare business line continued to grow. In terms of geographies, growth was particularly strong in Europe and the Americas.
Regarding efficiencies, the Group continued to take action to improve performance. In the 1(st) quarter of 2022, 77 million euros in e ciencies were generated in spite of a highly inflationary context, and we confirm our target of over 400 million euros over the year. Cash flow remains high at more than 23% of sales excluding the energy effect.
Investment decisions over the quarter reached the very high level of 913 million euros, with several Electronics projects, particularly in Asia. The 12-month portfolio of opportunities remains stable at 3.3 billion euros. The proportion of projects linked to the energy transition exceeds 40%.
These investments will foster future growth. They will also contribute to ADVANCE, Air Liquide's new strategic plan for 2025. This plan, which combines financial and extra-financial performance, is structured around four priorities: delivering strong financial performance, decarbonizing industry, promoting progress through technological innovation and acting for all. With ADVANCE, the Group reaffirms its commitment to sustainable development while continuing its growth trajectory.
In 2022, assuming no significant economic disruption, Air Liquide is confident in its ability to further increase its operating margin and to deliver recurring net profit growth at constant exchange rates(5) .
Performance indicators used by the Group that are not directly defined in the financial statements have been prepared in accordance with the AMF position 2015-12 about alternative performance measures.
The performance indicators are the following:
Definition of Currency, energy and significant scope impacts
Since industrial and medical gases are rarely exported, the impact of currency fluctuations on activity levels and results is limited to euro translation impacts with respect to the financial statements of subsidiaries located outside the eurozone. The currency impact is calculated based on the aggregates for the period converted at the exchange rate for the previous period.
In addition, the Group passes on variations in the cost of energy (electricity and natural gas) to its customers via indexed invoicing integrated into their medium and long-term contracts. This indexing can lead to significant variations in sales (mainly in the Large Industries Business Line) from one period to another depending on fluctuations in prices on the energy market.
An energy impact is calculated based on the sales of each of the main subsidiaries in Large Industries. Their consolidation allows the determination of the energy impact for the Group as a whole. The foreign exchange rate used is the average annual exchange rate for the year N-1. Thus, at the subsidiary level, the following formula provides the energy impact, calculated for natural gas and electricity respectively:
Share of sales indexed to energy year (N-1) x (Average energy price in year (N) - Average energy price in year (N-1))
This indexation effect of electricity and natural gas does not impact the operating income recurring.
The significant scope impact corresponds to the impact on sales of all acquisitions or disposals of a significant size for the Group. These changes in scope of consolidation are determined:
Comparable changes for sales exclude the currency, energy and significant scope impacts described above. For the 1(st) quarter 2022, the calculations are the following:
Efficiencies represent a sustainable cost reduction resulting from an action plan on a specific project. Efficiencies are identified and managed on a per project basis. Each project is followed by a team composed in alignment with the nature of the project (purchasing, operations, human resources...).
The slideshow that accompanies this release is available as of 9:00 am (Paris time) at www.airliquide.com.
Throughout the year, follow Air Liquide on Twitter: @AirLiquideGroup.
Annual General Meeting of Shareholders:
2021 First Half Revenue and Results:
A world leader in gases, technologies and services for Industry and Health, Air Liquide is present in 75 countries with approximately 66,400 employees and serves more than 3.8 million customers and patients. Oxygen, nitrogen and hydrogen are essential small molecules for life, matter and energy. They embody Air Liquide's scientific territory and have been at the core of the company's activities since its creation in 1902.
Taking action today while preparing the future is at the heart of Air Liquide's strategy. With ADVANCE, its strategic plan for 2025, Air Liquide is targeting a global performance, combining financial and extra-financial dimensions. Positioned on new markets, the Group benefits from major assets such as its business model combining resilience and strength, its ability to innovate and its technological expertise. The Group develops solutions contributing to climate and the energy transition--particularly with hydrogen--and takes action to progress in areas of healthcare, digital and high technologies.
Air Liquide's revenue amounted to more than 23 billion euros in 2021. Air Liquide is listed on the Euronext Paris stock exchange (compartment A) and belongs to the CAC 40, CAC 40 ESG, EURO STOXX 50 and FTSE4Good indexes.
(1) Operating margin excluding energy passthrough impact. Recurring net profit excluding exceptional and significant transactions that have no impact on the operating income recurring, and excluding the impact of any US tax reform in 2022.
(2) Compound Annual Growth Rate (CAGR) of sales on a comparable basis over the 2021-2025 period
(5) Operating margin excluding energy passthrough impact. Recurring net profit excluding exceptional and significant transactions that have no impact on the operating income recurring, and excluding the impact of any US tax reform in 2022.
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