1st half 2017: Solid Revenue and net profit growth Executing mid-term strategic plan

¹ 2016 restated, Welding and Diving activities reported as discontinued operations.
² Variation H1 2017 vs. restated H1 2016, adjusted as if on January 1, 2016 Airgas had been fully consolidated and the divestments required by US competition regulators had been completed.
³ Variation H1 2017 vs. adjusted H1 2016, excluding currency and energy (natural gas and electricity) impacts.
⁴ Excluding energy impact, vs adjusted H1 2016.

Commenting on the first six months of 2017, Benoît Potier, Chairman and CEO of Air Liquide, said:

"The Group's performance in the first half of 2017 was solid, with further growth in revenue and net profit, as well as an improvement in the operating margin. Sales benefited from the end of the Airgas consolidation effect and positive currency and energy impacts.

The Gas & Services business continued to improve during the first half of the year, benefiting from the confirmed recovery in Industrial Merchant, strong volumes in Large Industries, a good underlying level of activity in Electronics, and continuous development in Healthcare. Global Markets & Technologies sales continued to grow by double digits. Geographically, all regions are generating growth, with Industrial Merchant and Healthcare activities particularly dynamic in developing economies.

The Group's operational performance also improved further in the first half of 2017: the new efficiencies and synergies associated with Airgas contributed to the higher operating margin and net profit. Lastly, the Group's balance sheet remains robust, benefiting from strong growth in cash flows and well controlled debt.

Investment decisions continued during the first half of the year, and the Group can rely on €2.0 billion investment backlog to support its future growth. With Airgas now fully integrated, Air Liquide is focused on executing its mid-term strategic plan.

Assuming a comparable environment, Air Liquide is confident in its ability to deliver net profit growth in 2017."

Group revenue for the first half of 2017 grew by +28.4% to reach 10,293 million euros, benefiting from the consolidation of Airgas sales for the entire semester. Adjusted¹ for major changes in the portfolio, the first half revenue growth was +5.7%.
On a comparable growth basis², Group revenue increased by +1.8% over the first six months, to which are being added a positive currency effect of +1.7% and a favorable energy impact of +2.2%. Growth in the second quarter of 2017, which was +2.0% on a comparable basis, is slightly higher than in the first quarter of 2017. Gas & Services sales rose steadily, while Engineering & Construction remained weak in a challenging environment.

Gas & Services sales reached 9,978 million euros for the first half of 2017, up +31.0% as published. On a comparable basis, growth was +2.7% in the second quarter, in line with the first quarter, despite a highly unfavorable impact of working days in Europe.

All Gas & Services activities contributed to sales growth over the first six months of this year, in particular Industrial Merchant:

• Industrial Merchant experienced a solid growth of +2.8%, driven by all economic sectors. The improvement observed in the first quarter of 2017 in North America and Europe is confirmed and includes both bulk and cylinder volumes. In Asia, sales also increased in the second quarter, particularly in China, where double-digit growth was recorded, and in Japan. In developing economies, revenue rose by +7.2%. Globally, the price effect for the period reached +1.2%, and is slightly positive in Europe after two years of decline.
• Large Industries revenue grew by +2.2% and was contrasted among geographic zones. Demand remained strong in North America. Sales were down in Europe, reflecting temporary maintenance turnarounds and the end of operations in Ukraine, although volumes were improving sequentially to meet demand from refineries and steelmakers. Sales from cogeneration were lower due to decreasing electricity prices in Europe and North America. In Asia, growth was driven by the ramp-up of an air separation unit in Australia and strong demand in Japan, Singapore, and South Korea. China was impacted by temporary customer maintenance turnarounds. In the Middle East, the Yanbu hydrogen production site in Saudi Arabia is running at full capacity and Egypt benefited from the start-up of a new unit.
• Electronics sales were stable at +0.4%, compared to the high first half of 2016, which saw strong sales of equipment and installations. Excluding sales of equipment and installations, activity remained dynamic, growing by +7%, especially in the United States and Asia. In Taiwan and China, growth came in above +10%. Demand for advanced molecules continued to be strong, with double-digit sales growth.
• Healthcare revenue, up +4.5%, continued its development, driven by the steady growth of Home Healthcare, Hygiene, and Specialty Ingredients. In the Americas, Home Healthcare is progressing strongly in Canada, Brazil, and Argentina. In Europe, sales were impacted by less working days for medical gases in the second quarter and a weak contribution from complementary acquisitions. However, Home Healthcare remained dynamic there, particularly in the field of diabetes. The development of Hygiene and Specialty Ingredients continued across the globe at a steady pace. In the developing economies, Healthcare sales continued to increase, with strong growth of +18% for the first six months of 2017.

Engineering & Construction sales stood at 146 million euros for the first six months of the year, down -43.3% on a comparable basis due to the low level of order intake in 2016. The overall environment remains difficult, but is showing signs of improvement. Order intake, particularly for the Chemicals and Energy sectors in China, increased significantly over the period to reach 329 million euros.

Global Markets & Technologies continued to develop, reporting comparable growth for the first six months of +16.4%, with sales of 169 million euros. The biogas and space segments were particularly dynamic.

¹ Variation H1 2017 vs. restated H1 2016, adjusted as if on January 1, 2016, Airgas had been fully consolidated and the divestments required by the US competition regulators had been completed.
² Comparable variation H1 2017 vs. adjusted H1 2016, excluding currency and energy (natural gas and electricity): 2016 base restated, adjusted as if on January 1, 2016, Airgas had been fully consolidated and the divestments required by the US competition regulators had been completed.

The Group continues to reinforce its competitiveness. Efficiency gains reached 148 million euros for the first six months of this year, in line with the target of more than 300 million euros a year. In addition, the synergies related to Airgas have reached a cumulative total of 138 million USD since the acquisition, in line with the Group’s forecasts. Accordingly, the Group’s operating margin, excluding the impact of energy, improved by +70 bps on a comparable basis, reaching 16.5%.
Net profit (Group share) reached 928 million euros, up +14.5% on a published basis, and Net earnings per share increased +4.3% after taking into account the dilutive impact of the 2016 capital increase.

Cash flow (after changes in Working Capital Requirements) is up by +31.2%. Debt-to-equity ratio as of June 30, 2017, adjusted for the seasonality of the dividend and exchange rates, is stable at 90%.

H1 2017 Performance

¹ 2016 restated, Welding and Diving activities reported as discontinued operations.
² Variation H1 2017 vs. restated H1 2016, adjusted as if on January 1, 2016, Airgas had been fully consolidated and the divestments required by the US competition regulators had been completed.
³ Comparable variation H1 2017 vs. adjusted H1 2016, excluding currency and energy (natural gas and electricity) impacts: 2016 base restated, adjusted as if on January 1, 2016, Airgas had been fully consolidated and the divestments required by the US competition regulators had been completed.

The Air Liquide Board of Directors met on July 27, 2017. During this meeting, the Board reviewed the consolidated financial statements for the first half ending June 30, 2017.
Limited review procedures were completed with respect to the consolidated interim financial statements, and an unqualified review report is in the process of being issued by the statutory auditors.

In addition, as announced on the occasion of the publication of the 2016 annual results, the Group confirms that it will distribute one free share for every 10 shares held. The new shares will be allocated on October 4, 2017, and the price adjustment will be made on October 2, 2017¹.

¹Attribution modalities and detailed calendar are available on airliquide.com/shareholders.