EuroBusiness Media (EBM): Air Liquide, world leader in gases, technologies and services for industry and health, reports full-year results for 2014. Benoît Potier, welcome. You are the Chairman & CEO of Air Liquide. How would you describe these 2014 results?
Benoît Potier: This was a solid performance on many levels. The Group, once again, posted higher revenue. We also had all Gas & Services and Technologies businesses which delivered growth on a comparable basis. We also were more competitive and had made substantial efficiency gains, which contribute to the increase in operating margin. We had growth in net profit and cash flow, and also, the balance sheet remains strong. This performance was achieved in an environment where industrial growth was mixed. For Air Liquide, this meant Gas & Services growth, on a comparable basis, of 1% in the advanced economies and of 14% in developing economies. We also had a good momentum in Americas with 8% growth and in Asia Pacific with 12% growth. And finally, we saw signs of improvement in Europe in the fourth quarter. This global environment was also marked by two things: one was the rapid change in exchange rates in the second half – the full-year impact of nearly 2% on Group sales; and second, there was a sharp drop in crude oil prices. Overall, in this environment, the Group achieved, in 2014, another year of net profit growth in line with its objectives.
EBM: What are the key figures to remember for 2014?
Benoît Potier: In terms of growth, the Group revenue was up 4.5% on a comparable basis and nearly 1% as published. And if we just take the Gas & Services revenue, it was up by 4.1% on a comparable basis as well. In terms of efficiency, there was a high level of efficiency gains, €321 million, which was well above the annual target of €250 million, which led to an improved operating margin for the Group, reaching 17.1% which is 20 bps up. In terms of cash flow and balance sheet, the net profit was up by 3.8%, excluding currency and Hygiene divestiture impacts, and up 1.5% as reported. The cash flow, after change in working capital requirements, was up slightly, which enables the financing of a new increase in the dividend, taking into account the free share attribution in 2014 – 1 for 10 – which will be proposed to the shareholders. The investment, that is to say the capital expenditure, was €1.9 billion last year. And a slight improvement in net debt was also visible: the net debt stands at 53% of equity. Altogether, this is another year of margin improvement and net profit growth. The Air Liquide cash flow model once again showed its robustness.
EBM: And what are you observing in terms of business activity?
Benoît Potier: We’ve seen growth for all Gas & Services activities across the board, on a comparable basis. Large Industries, first, is driven by solid demand for air gases in the United States and in Latin America as well as in Asia, China in particular. We also saw higher hydrogen volumes in Asia Pacific and in Northern Europe, especially in the refining sector, and also, a good contribution from new unit ramp-ups.
In Healthcare, there was an increase across geographies with double-digit growth in South America. Home Healthcare was up 5% and Hygiene, particularly dynamic, up 6%.
The Industrial Merchant business is holding well. This line serves a variety of industries, like the R&D labs or materials and energy, fabrication and automotive, food services and craftsmen. There was a solid demand in Canada, improvement in Europe in Q4, high volumes in China. Growth was up 9% in 2014 in developing economies.
In the Electronics business, there was a robust growth of 12%, driven by sales of carrier gases in China and the US, and speciality gases (the Aloha line) in the United States, Japan and Taiwan. A contribution to a performance of Voltaix, acquired in 2013, is also noteworthy.
Sales growth of 16% for engineering technology with order intake which remains high, at €1.4 billion, and in the other activities: Diving is up, Welding continues to adjust to the dynamics of its markets, and sales stabilised in the second half of the year. This new year of growth is once again proof of Air Liquide’s robust business and geographic mix.
EBM: In the current context, what is Air Liquide’s outlook for 2015 and are you confident over the medium term?
Benoît Potier: Yes, I am confident. As you know, we are preparing our future growth today. In 2014, the Air Liquide group commissioned 20 new production units in the world, in the US and in China in particular. We also decided to invest €2.1 billion in growth markets, mostly related to industrial projects, that is to say long-term contracts: as an example, in Texas and in Louisiana, and also in the Rhine-Ruhr area in Germany, in Brazil and in Australia, and for the electronics industry in China. The investment backlog stands at €2.8 billion, which represents €1.2 billion of sales in hand. In the Healthcare sector, the Group made two acquisitions in France and we also pursued our initiatives in the areas of Innovation and Technologies. We decided, as an example, on an additional €100 million investment for research in France and also a new R&D centre in Shanghai, and finally, a new engineering workshop in the Middle East. I’m also delighted with the new developments in hydrogen energy in 2014: Air Liquide actually signed a partnership with an important Japanese car manufacturer and decided on new investments for hydrogen recharging stations in Japan and the US. Lastly, the Group can count on more than 50,000 employees worldwide who are truly engaged and work with passion every day to ensure the success of the Group. If we go on to 2015, we are in line with our strategy: we are pursuing our investments in growing markets; we are continuing to adjust our costs and achieve efficiency gains in order to ensure the Group’s competiveness and long-term growth; and of course, we continue to innovate and prepare for the future. We are, as a matter of fact, preparing the new 2016-2020 corporate programme. For all these reasons, the Group can be confident about its prospects for growth over the medium term. Our objective remains the same: to create value over the long-term for all our stakeholders, customers, shareholders and employees.
EBM: Benoît Potier, Chairman & CEO of Air Liquide, thank you very much.
Benoît Potier: Thank you.
