EuroBusiness Media (EBM) : Benoît Potier, hello.
You are Chairman and CEO of the Air Liquide group.
Today marks the publication of your financial results for 2020.
As we know, 2020 was an unprecedented year. Tell us how it was for the Air Liquide group.
Benoît Potier : I think what we saw, first and foremost, was the tremendous mobilization of the Group’s teams in the fight against covid-19. The current situation is exceptional and I think that the response by the teams has been outstanding.
In terms of performance, 2020 was also a remarkable year which, I believe, highlights the strength of Air Liquide’s business model.
First of all, an excellent performance, with practically stable sales, a significant operating margin improvement, higher net profit and a highly favorable positioning for future growth.
All in all, a truly exceptional year which combines the strength of our business model with the very high commitment of our teams.
EBM : Indeed, how did the Air Liquide group deal with the crisis?
Benoît Potier : We took action on two levels.
First of all, by continuing to provide our services to our customers and patients on a day-to-day basis in a situation that was unprecedented and which demonstrated the utmost professionalism of the teams. And secondly by fighting the pandemic. And I’m going to be a little more specific. I would like to commend the excellent mobilization of the Group’s Healthcare teams to meet medical oxygen needs, which were multiplied four-, five-, and even six-fold in certain countries; with the 10,000 ventilators in 60 days initiative which we led in France, as well as the home monitoring of patients in all the countries in which we are present.
EBM : You have just announced practically stable sales with an improved margin and net profit increase. What is Air Liquide’s secret?
Benoît Potier : The secret? You know, I believe that first and foremost it is the men and women of our Group. It is our Group’s markets. It is our technologies, know-how and business model.
And also, when you look at how we are present across the world. We have a very wide range of customers, a diversity in our sectors and applications. We are present in all of the major industrial regions. We have long-term contracts which are robust, are well indexed to costs, in particular energy costs which are fluctuating a great deal at the moment. We also have a strong relationship with our customers who expect reliability, require innovation and technological expertise, which we are able to provide. We are also in a position to invest, to innovate and, generally speaking, we are focused on the markets of the future.
EBM : So let’s move on to the indicators which reflect the key points of your financial performance.
Benoît Potier : I’ll start with sales.
Sales were practically stable, at € 20.5 billion on a comparable basis, with a return to growth during the fourth quarter which is extremely positive. If we look at Gas & Services, which account for 96% of sales, it is mainly Healthcare and Electronics that posted growth this year. In terms of regions, the picture is contrasted. We fared well in Europe generally speaking, and enjoyed a strong performance in developing economies with China, which had already recovered in the course of 2020, countries in Eastern Europe and Latin America which also performed well.
In terms of costs, as you know, we aim to further decrease our costs each year. This year, we generated € 441 million in efficiencies which can be described as structural, translating into a 60-bps improvement in the operating margin. And we also, due to the crisis, introduced exceptional cost-containment measures. These measures allowed us to gain an additional 20 bps, which means that, all told, the Group’s operating margin improved by 80 basis points, excluding the energy impact.
When we go down towards the net profit line, this reached € 2.4 billion which represents reported growth of 8.6%.
Recurrent net profit, i.e., excluding non-recurring items and the currency impact, was up 4.4%.That’s a very good performance.
Cash flow is also up markedly, and that is excellent news. It demonstrates the quality of the results. And allows us to maintain a high level of investment and significantly reduce debt. Which, ultimately, means that the Group’s balance sheet remains very strong.
So as you can see, in an especially challenging context, the Group has achieved a remarkable performance in 2020.
EBM : A remarkable performance as you say. And what about your progress in terms of sustainable development?
Benoît Potier : Yes indeed, sustainable development is at the heart of the Group’s strategy. For us, economic performance and responsible growth go hand in hand. Let me give you three examples of indicators which we have been monitoring for some time now.
First of all, carbon intensity. We will have reached our target of reducing carbon intensity by at least 30% in just 5 years, instead of the 10 years initially set. So we have achieved what we set out to do faster, and exceeded what we planned.
The second, very important, indicator is safety. In 2020, a lost-time accident rate per million hours worked of 0.9%, less than 1%. This is our lowest rate in 20 years and I am extremely proud of this result. Of course, there is still progress to be made, in particular in terms of road accidents and accidents in the workplace, but it is still an excellent performance.
And finally, the third indicator, gender diversity. We measure the percentage of women amongst managers and professionals. At the end of 2020, we had reached 30%, which is a good performance. We have seen a steady improvement in this indicator but, of course, it remains insufficient as our target is to reach a rate of 35% by 2025.
So, as you can see, we want to go even further. And that is why, on March 23, the Group will present its sustainable development strategy and objectives. Don't forget to save the date.
EBM : We’ll put it in our diaries. Moving on, what impact is the current crisis having on your corporate program and your medium-term objectives?
Benoît Potier : As of 2019, we achieved the objectives set out in the NEOS program for 2020. We have maintained our double-digit ROCE target, but have slightly delayed its achievement to 2023-2024 due to the covid-19 crisis which paused the meter slightly this past year. But also, and this is very positive, due to the sustained investment program that we have set out in a very favorable environment. We will get back to the markets with a new corporate program to be presented in 2022.
EBM :Talking about the future, what are the major trends the Group intends to focus on?
Benoît Potier : In recent years, the Group has positioned itself on markets of the future. Which markets are these?
First of all, the climate and energy transition. We have been selling oxygen for many many years. We are now also very present in hydrogen and biomethane, in the capture of CO2, and more generally in all fields that relate to the decarbonization of industrial processes, especially those of our customers. Air Liquide is a true driving force in this transformation and we are also very well positioned in this field, with already significant investments. And I have one particular example in mind. The investment in Bécancour, Canada, in the world’s largest Proton Exchange Membrane electrolyzer which produces renewable hydrogen.
The second major focus is Healthcare. This is a major subject, one with major potential, and Air Liquide has great expertise in this field and is therefore able to provide added value and new technologies. I am most notably thinking of e-healthcare. We still have a lot to do in this field, and also a lot to contribute.
And finally, the third major market, that of technologies in the broad sense and in particular, of course, digital technologies. We have a widely recognized expertise in this field. We have already developed a certain number of digital applications which have penetrated our operations. But we also believe that we can go even further in fields such as electronics, or in high tech sectors such as deep cryogenics, space, and even quantum technology.
EBM : In terms of investments. Have you slowed their pace this year?
Benoît Potier : No, quite the contrary. This year we have invested massively. At the end of December 2020, the 12-month portfolio of opportunities had increased yet again and currently stands at € 3.1 billion. This therefore constitutes all of our investment opportunities. Almost 45% of this portfolio is dedicated to the energy transition which highlights the role that this plays in the Group’s portfolio. And moreover, when we measure the industrial investment decisions that have already led to the Group taking positions, these decisions amount to € 3 billion. This is the highest level in 3 years. We are therefore, in my view, very well positioned to support changes in a world that is clearly undergoing a major transformation and also to continue our growth momentum.
EBM : A world undergoing major transformation... What is your view for 2021?
Benoît Potier : 2021 is a year with remaining uncertainties. We must therefore exercise caution, but also show boldness and confidence.
What are the lessons we have learned from the 2020 crisis? First of all, the Group’s strength. The strength of its business model, and of its teams. Secondly, a very good positioning on the markets of the future. Our resilience was excellent during 2020 and we are, as I have said, firmly committed to the climate and energy transition. If I were to take 2021 in terms of outlook, I would say: 2021, in a context we assume will be one of limited local lockdowns during the first half of the year and a recovery in the second half, we are confident in our ability to further increase our operating margin and to deliver recurring net profit growth, at constant exchange rates.
EBM : Benoît Potier, any final words?
Benoît Potier : I would like to tell you that we are ready for 2021. 2020 was a demanding year for the teams and for our customers, but I believe that we have demonstrated what we are capable of, and that is very encouraging. We are therefore, more than ever, ready to invent the future, but also ready to live the future.
It’s been our business for over a century and I would like to wish all our employees an excellent year, and also to thank them! They have been more mobilized than ever to ensure the Group’s success.
EBM : Benoît Potier, thank you very much.
