EuroBusiness Media (EBM): Air Liquide, world leader in gases, technologies and services for industry and health, reports full-year results for 2013. Benoît Potier, welcome. You are the Chairman & CEO of Air Liquide. How would you describe these results for 2013?
Benoît Potier: 2013 is definitely a solid year, from different perspectives. If you take the activity level, it grew by 22% compared with 2008. When we look at all business lines and geographies, we are growing. Our margins and net income are up and there is a good management of key items in the balance sheet, in particular with a slight decrease in net debt. If I now look at the context, we saw a return to a more positive economic environment in the course of the year and it is visible in particular in Electronics and Industrial Merchant. We also saw an acceleration of the growth in the United States and China. So, globally, this is another year of growth for the Group, thanks to two things: the global presence and all the initiatives that we took in growth markets. At the same time, the Group continued to reinforce its competitiveness through efficiency programmes that have been reinforced: we had more than €303 million of efficiency gains in the year. Also, thanks to the efforts to adapt our structures to the dynamic of our markets. In a nutshell, 2013 is a solid performance.
EBM: What are the key figures to remember for 2013?
Benoît Potier: In terms of growth, first, the Group revenue grew by 3.7% if we exclude the Forex and Natural Gas effect, and we grew even more in the Gas & Services Division which represents more than 90% of the year’s turnover. In terms of efficiency, the gains were ahead of our annual target, which translated into an improvement in the margin ratio to 16.9%. In terms of cash flow and balance sheet, the cash flow, after change in working capital requirement, was on the rise by 3.5%. The net profit was up by 5.5%, if we exclude the effect of foreign currency, and 3.1% as reported. There was a new increase in the dividend which will be proposed to shareholders, which is a very regular progression, as always. And the net debt was down at 56% of equity. If I look at the CAPEX, which is, of course, the engine for growth, we spent €2.2 billion this year, which is a good year in terms of investment. If we look at the number of employees, we reached more than 50,000 employees worldwide, which means we welcomed 750 new employees who joined the Group during the year 2013. In a nutshell, it is a new year of growth with improvement in the margin and in the operating income, and we also demonstrated our capacity to generate profitable growth over the long term.
EBM: What can you tell us about the geographies?
Benoît Potier: We saw growth across all geographies, and we also saw a return to a more favourable environment in the course of the year. Let’s take, first, the Americas: we saw an acceleration in this zone with a Gas & Services comparable growth of 7%, and 11% just for the fourth quarter. As an example, in the United States, the demand was driven by refining in chemicals for hydrogen. We also had an acceleration in Asia-Pacific with a Gas & Services growth of 7% for the fourth quarter, and overall in China for the year we saw 11% growth, with an uptick in start-ups at the end of year. Africa and Middle East saw 12% growth over the year. Europe’s growth was a little bit more modest, but in Healthcare and in Eastern Europe – the industrial portion of industrial Europe – we saw double digit growth in the course of the year. Overall, Gas & Services for industry in developing economies grew by 9%. We also had continued growth initiatives in the major industrial basins, like Antwerp or Rotterdam in Europe, or Bayport in the US. We were able to invest more in new plants and we also had opportunities to invest in gasification projects in China, which were either decided or commissioned. We finally pursued acquisitions in Healthcare in France, in Poland and in Scandinavia. So therefore, we enjoyed a development in growth markets, be they geographical or by sector.
EBM: And what are you observing in terms of business activity?
Benoît Potier: All of our Gas & Services business lines are growing and I’ll start with Large Industries. The growth was driven by the demand from refineries and chemicals, in particular in the US. But the demand was also there for oxygen, in particular in Eastern Europe. We also had start-ups which accelerated at year-end, notably in China, but also in countries like Mexico, Canada, South Africa or Taiwan. In Healthcare, we saw an increase in all geographies through organic growth, but also through acquisitions in Europe, in particular in Home Healthcare, but also in Australia. In Industrial Merchant, which covers R&D labs, but also manufacturing and automotive industries, food or craftsmanship, we had a stabilisation in Europe; a sound volume and price effect in North America; and overall a good dynamic in Q4 in Asia. In Electronics, we saw a rebound which was evident as of Q3 through sales of equipment and installations in the US, but also through ALOHA™ specialty gases sales and through the acquisition of Voltaix. So overall in Electronics, the growth in Q4 was 9%. There was also a high level of order intake in Engineering & Construction and some new contracts in technologies, overall Engineering & Technologies representing €1.9 billion of order intake in 2013. In the other activities, we saw an increase in Diving. The Welding activity was adjusted to market dynamics. So overall, I’d like to highlight the Electronics and Industrial Merchant business lines, which were back to growth in the course of the year, and I would say that our business and geographic mix was solid in 2013.
EBM: In the current context, what is your outlook for 2014 and are you confident over the medium term?
Benoît Potier: Yes, I am confident, and this for several reasons. One, the investments decided in 2013, mostly through contracts, reached a high level of €2.7 billion. Second, the level of order intake in Engineering and Technology was high. Third, the portfolio of opportunities one year ahead remains robust. We had 23 production units commissioned, which is in line with our objectives of 50 units for 2013-2014 period. And finally, the innovation process was strengthened. So, all of that will contribute to growth in the years ahead. And consistent with our strategy in 2014 we are pursuing our investments and targeting growth markets. We will continue to adapt our structures and achieve efficiencies, so that the Group has the best possible positioning to ensure both its competitiveness and its development over the long term. And we will obviously continue to innovate. All of this gives the Group confidence in its medium term growth prospects. Our objective remains steady growth, generating good profitability over the long term.
EBM: Benoît Potier, Chairman & CEO of Air Liquide, thank you very much.
Benoît Potier: Thank you.
