EuroBusiness Media (EBM): Benoît Potier, hello.
Benoît Potier: Hello.
EBM: You are the Chairman and CEO of the Air Liquide Group. Today, you are publishing the Group’s results for 2021.
How would you describe this year marked by covid, inflation and, in particular, the sharp increase in energy prices?
Benoît Potier: We have stepped up in all areas.
Firstly, in the fight against the pandemic, unfortunately for the second year in a row.
And then inflation, notably with a marked increase in energy prices and, of course, the long-term challenge of the energy transition.
2021 tested our resilience yet again, there is no doubt about that. We have also demonstrated our strong responsiveness and ability to adapt. How is this reflected in real terms?
Regarding financial performance, through strong sales and net profit growth and the continued improvement in operating margin.
Regarding extra-financial management, through major progress in the energy transition with several partnership agreements, especially in line with the ambitious targets that we set in 2021.
It has therefore been an excellent year considering the rather complex environment.
EBM: Now let us talk about the Group’s results. How would you describe Air Liquide’s financial performance?
Benoît Potier: Firstly, the Group’s sales growth was strong. Sales reached a record high of € 23.3 Bn, up +13.9% as published and +8.2% on a comparable basis excluding currency, energy and significant scope impacts. This is the best growth rate in the past 10 years.
I would like to underline that all activities have posted growth. Engineering & Construction and Global Markets & Technologies have benefited from projects related to the energy transition.
In Gas & Services, which represents around 95% of our sales, comparable growth was +7.3% and all regions enjoyed sustained growth. Asia (+6%), Europe (+7%), the Americas (+8%) and all business lines posted growth rates of between +5% and +8%.
EBM: You mentioned an increase in margin despite a backdrop of inflation. What drove this performance?
Benoît Potier: The Group’s operating margin continued to improve, reaching 19.2% excluding the energy impact, compared with last year. This represented an improvement of +70 bps. To enhance this margin, we mainly acted on three levers.
Firstly, prices, where we offset the rather significant increase in costs. In particular in Industrial Merchant, which we have rejuvenated in order to maintain our margin in this backdrop of marked inflation, notably in the second half of the year.
The second lever was efficiencies. We have generated € 430 M in efficiencies and measures implemented across four programs: business, performance (i.e. cost control), procurement, and transformation programs.
Finally, we have reviewed our business portfolio with 8 disposals and 21 bolt-on acquisitions.
EBM: And in terms of other financial indicators, how have they shaped up? Are we still seeing a strong performance at the end of 2021?
Benoît Potier: Of course. The Group is certainly performing well and this performance is improving year after year.
Firstly, the increase in margin was accompanied by a +13.3% improvement in recurring net profit excluding the currency impact and excluding non-recurring items. This net profit reached € 2.57 Bn, a record level for the Group! As a result, cash flows also increased markedly at +9.1%, which allowed us to make a high level of investments, significantly reduce our net debt-to-equity ratio to below 50% and, of course, pay a dividend to our shareholders.
Finally, recurring return on capital employed, at 9.3%, was close to the 10% target set for 2023–2024.
As you can see, the Group’s balance sheet is very strong and its financial performance excellent considering the context.
But that’s not all. While efficiently conducting its operations and serving its patients and industrial customers, the Group was also extremely active in terms of development and agreement signatures.
EBM: Indeed, at the beginning of the interview you mentioned the major progress on the energy transition front. Can you tell us more about this?
Benoît Potier: Sustainable development is at the heart of the Group’s strategy and activities. We must and we know how to combine financial and extra-financial performance.
What does that mean for Air Liquide? In practice, this means acting and fighting against global warming ourselves, but also contributing to the energy transition within our ecosystems. In order to do so, we have technologies and products that are at the heart of the energy transition. It is a chance for us to be positioned like this
So yes, 2021 was extremely active in terms of initiatives, in terms of investments and of partnerships.
This was reflected in investment decisions, which totaled € 3.6 Bn. This figure includes the acquisition of Sasol’s oxygen activities in Secunda South Africa, which is the largest oxygen production site in the world. This was also reflected in a portfolio of investment opportunities that remained high at € 3.3 Bn. And it is interesting to note that a large 40% share of these projects are related to the energy transition.
EBM: We are very familiar with your long-standing commitment to hydrogen. Has the year been particularly active in this regard?
Benoît Potier: Absolutely. We continued with our initiatives in mobility and the decarbonization of industry. We signed around 30 agreements for the development of hydrogen, the procurement of renewable electricity and the decarbonization of industry. Let me give you a few examples.
First of all, in Normandy, we have begun the study of a major infrastructure project to capture and store CO₂ – with customers that include Esso, Borealis, TotalEnergies and Yara International – in order to decarbonize the Normandy industrial basin.
In technologies, we signed a Memorandum of Understanding with Siemens Energy for the development of large-scale electrolyzers in Europe.
In aeronautics, we signed two partnership agreements with Airbus and major airport groups to develop the use of hydrogen and ramp up the decarbonization process in the aviation sector.
Finally, in heavy-duty mobility, we signed two agreements, one with IVECO and the other with Faurecia.
Globally, we were able to act in the present and prepare for the future.
EBM: And let’s talk about the future. What will the major trends be for Air Liquide in the years to come?
Benoît Potier: I believe that the crisis has accelerated the growth trends on which the Group is already well positioned. What are these?
First of all, the acceleration seen in the decarbonization of industries. And then, in the Healthcare field, the digitalization and personalization of care and, finally, the growing use of technologies, notably digital, but also High Technologies.
These are the markets of the future and they are our markets.
In March, we will be presenting our new strategic plan and you will see how Air Liquide will combine financial and extra-financial performance for society as a whole.
Acting for a sustainable future lies at the heart of our strategy.
EBM: So, still about the future, there is also the change of governance set for June 1, 2022. In practice, what will be different?
Benoît Potier: This change of governance combines continuity and renewal. It is a very important step for the Group. We have introduced a new governance structure for the succession, with a separation of the roles of CEO and Chairman of the Board. François Jackow will be appointed Chief Executive Officer of the Group and I will be put forward to be appointed as Chairman of the Board of Directors.
I know François well, we have worked together for many years. He has almost 30 years’ experience in the Group. We share the same values and the same culture. I have every confidence in him to lead the Group through these challenges, which also represent opportunities, with hydrogen, the reduction in CO₂ emissions, Healthcare, Digital, High Technology, but also new ways of working that must be in line with our employees’ expectations.
EBM: And in the shorter term, what is the Group’s outlook for 2022?
Benoît Potier: The future is promising and, of course, that also applies to 2022. And I am confident for several reasons.
First of all because the men and women at Air Liquide have demonstrated, in particular during the pandemic, their commitment, ability to adapt and their responsiveness. And once again, I would like to sincerely thank them for everything that they have done during this period.
Confident too, because Air Liquide’s technologies and solutions are adapted to the markets as they emerge. After covid, they are also adapted to the challenges faced by our customers and, more broadly, to the expectations of society as a whole.
Finally, because the Group and its business model are very solid. As we have seen, the exceedingly good 2021 results put us in an excellent position to continue the Group’s sustainable and responsible growth.
This means that, assuming no significant economic disruption, Air Liquide is confident in its ability, in 2022, to further increase its operating margin and to deliver recurring net profit growth at constant exchange rates.
EBM: Benoît Potier, a few words from you to conclude?
Benoît Potier: We start 2022 well prepared and, looking further ahead, we are fortunate to be faced with extremely promising markets and a transforming society to which we have a great deal to contribute. It is an exciting adventure in the making. We will therefore continue to invent the future, a future that is sustainable and useful to us all.
EBM: Benoît Potier, thank you.
Benoît Potier: Thank you.
