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H1 2020 Results: High sales resilience and significant margin improvement

Paris, France,
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Commenting on the 1st half of 2020, Benoît Potier, Chairman and CEO of Air Liquide, said:

“This exceptional first half of the year once again demonstrates the Group’s resilience in the face of this unprecedented health crisis. Sales for the half year totaled more than 10 billion euros, marking a limited decline of -3.2% on a comparable basis. This reflects the solid performance of Gas & Services, which represent 96% of revenue, and of Global Markets & Technologies. 

Within Gas & Services, Electronics sales increased; Healthcare, at the frontline of the pandemic, posted strong growth. Large Industries showed resilience, whereas Industrial Merchant was more impacted. Geographically speaking, activity levels reflect the evolution of the pandemic. China has returned to levels of solid growth, signs of a recovery are appearing in Europe, whereas the situation in the Americas remains contrasted.

The Group’s operating margin has climbed a further +50 basis points, excluding the energy impact. This was driven by the ongoing efficiency programs in the amount of 200 million euros, in line with the annual objective of more than 400 million euros, and by an additional cost containment plan launched in response to the crisis. The margin was also supported by the strength of the price policy and of the portfolio management.

Net profit improved by +1.8%. The cash flow to sales ratio was particularly high at 23.1%. The debt-to-equity ratio was down compared with its level at June 30, 2019.

As 12-month investment opportunities remained dynamic, industrial investment decisions for the first half were high, at 1.3 billion euros. These decisions, a third of which are climate-related projects, include innovation investments and customer asset takeover opportunities, leading to greater industrial and environmental efficiency.

Air Liquide is a key player of the climate and the energy transition with oxygen and hydrogen. Thanks to its presence across all business sectors, the Group has a major role to play in the current economic and societal transformation.

In a context of limited local lockdowns and progressive recovery during the second half of 2020, Air Liquide is confident in its ability to further increase its operating margin and to deliver net profit close to preceding year level, at constant exchange rates (1).”

(1) To be noted, 2020 net profit as published should increase provided that the schülke divestiture project is completed within the year. 2020 recurring net profit, meaning excluding the gain from schülke divestiture and exceptional and significant items that have no impact on the operating income recurring, should be close to 2019 recurring net profit at constant exchange rates.


Group revenue for the 1st half of 2020 totaled 10,273 million euros. The limited decline in sales over the half year of -3.2% for the Group and -2.7% for Gas & Services underlined the resilience of the business model despite the COVID-19 pandemic which affected all activities and regions. Consolidated sales of Engineering & Construction (-41.3%) reflected the priority allocation of resources to internal projects as well as the impact of the pandemic which led to closure of the workshop in China for four weeks and to several projects being postponed by a few months. Global Markets & Technologies reduced the pace of its activity during the pandemic while pursuing its development with sales growth of +3.2% in the 1st half. The Group’s published revenue was down -6.2% as the slightly positive currency impact +0.1% was not sufficient to offset the strong negative energy impact of -2.7% and the significant scope impact of -0.4%.

Gas & Services revenue for the 1st half of 2020 reached 9,920 million euros. Sales as published were down -5.8%, negatively affected by unfavorable energy (-2.8%) and significant scope (-0.4%) impacts, despite the slightly positive currency impact (+0.1%).

  • Gas & Services revenue in the Americas totaled 3,975 million euros in the 1st half, marking a decline of -5.1% on a comparable basis. North America was affected by the pandemic as of the end of March and after showing initial signs of a recovery in certain markets at the end of May, the activity stabilized in June. Latin America, which was affected by the virus later in the 2nd quarter, continues to fight against COVID-19. Large Industries sales were down slightly over the half year (-1.3%). With revenue down -8.3%, Industrial Merchant was the most affected by the public health crisis and lockdown measures despite high price impacts at +4.0%. Electronics posted strong growth of +5.1%. Healthcare remains fully committed to the fight against the pandemic, notably through the supply of medical oxygen and equipment, and posted sales growth of +5.4%, with strong momentum in Latin America.
  • Revenue in Europe was stable over the half year (+0.2%), reaching 3,440 million euros. The region was particularly impacted by the public health crisis as of mid-March, notably in Southern Europe, and activities have begun to gradually recover since the beginning of May. Large Industries sales were down by -3.5%. Industrial Merchant, which was down -8.2%, was the most impacted by the public health crisis. Healthcare activities, which account for more than 40% of Gas & Services sales in Europe, remain fully mobilized to fight against COVID-19 and saw revenue growth of +10.8% in the 1st half.
  • Revenue in Asia-Pacific reached 2,236 million euros in the 1st half, down -2.1% on a comparable basis. China was the first country to suffer the effects of the COVID-19 pandemic, with a -2.5% decline in sales in the 1st quarter. The recovery in this country was also very fast, with revenue in China posting growth of +2.1% in the 2nd quarter, with positive growth in all industrial activities. Part of the region remains affected by the pandemic and lockdown measures. In the 1st half 2020, Large Industries (-2.0%) was supported by the resilience of its business model. Industrial Merchant (-5.8%) was the most impacted. Electronics (+1.5%) represents a third of the region’s sales and posted a very dynamic growth of +12% excluding Equipment & Installation sales.
  • Revenue in the Middle East and Africa amounted to 269 million euros, down -7.3% over the 1st half of the year on a comparable basis. Industrial Merchant sales were very weak during the 2nd quarter following the introduction of lockdown measures across the region. Large Industries demonstrated its strong resilience despite a major customer maintenance turnaround during the 1st quarter, with the region’s two major units – in Saudi Arabia and South Africa – continuing to operate at a good level during the 2nd quarter. Healthcare, posted strong growth, notably in Saudi Arabia.

Healthcare is highly mobilized in the fight against COVID-19 and posted significant growth of +8.7%. Electronics also enjoyed very solid growth of +2.0% (+8.9% excluding Equipment & Installations sales), driven by very dynamic sales in Carrier Gases and Advanced Materials. Industrial Merchant (-8.1%) was the hardest hit by the public health crisis, but price impacts remained strong at +2.9%. Sales in Large Industries were down slightly, by -2.5% over the half year, due to a weaker demand in the 2nd quarter in particular in Europe and the United States — two regions which were strongly affected by the pandemic.

Contribution to consolidated revenues from Engineering & Construction stood at 104 million euros in the 1st half, and reflected the priority allocation of resources to internal projects as well as the impact of the pandemic which led to closure of the workshop in China for four weeks and to several projects being postponed by a few months.

Global Markets & Technologies revenue reached 249 million euros, up +3.2%. The biogas activity remained very dynamic in the United States and Europe. Order intake for Group projects and third-party customers enjoyed a strong increase and included helium cryogenic refrigerators, Turbo-Brayton LNG reliquefaction units and hydrogen stations.

Efficiencies amounted to 200 million euros over the first six months of the year, in line with the annual objective now fixed at more than 400 million euros. Moreover, exceptional cost reductions under the public health crisis response plan were to offset the low activity level and are not, due to their nature, sustainable over the long term.

Group operating income recurring (OIR) amounted to 1,813 million euros in the 1st half of 2020, stable as published and up slightly +0.2% on a comparable basis versus 2019. The operating margin (OIR to revenue) stood at 17.6%, an improvement of +100 basis points compared with the 1st half of 2019, and of +50 basis points excluding the energy impact. Gas & Services operating margin as published stood at 19.6%, an improvement of +120 basis points compared with the 1st half of 2019, and of +60 basis points excluding the energy impact.

Net profit — Group share amounted to 1,078 million euros in the 1st half of 2020, an increase of +1.8% as published. Despite the pandemic and the resulting significant decline in activity, net earnings per share were up +1.8% compared with the 1st half of 2019 and reached 2.29 euros per share.

Cash flow from operating activities before changes in working capital amounted to 2,371 million euros in the 1st half of 2020, which corresponds to a high level of 23.1% of sales, a marked improvement of +170 basis points compared with the 1st half of 2019([1]). Net cash flow from operating activities after changes in working capital requirement amounted to 2,153 million euros, up markedly by +9.9%. The net debt-to-equity ratio, adjusted for the seasonal effect of the dividend payment, stood at 64.5%, down sharply compared with end-June 2019 (70.7%).

Industrial investment decisions totaled 1.3 billion euros, stable compared with the 1st half of 2019, despite the challenging global health situation. Electronics reached a record level of investment during the 1st half, notably thanks to the signing of several new units in Asia. The 12-month portfolio of investment opportunities stood at 2.9 billion euros, stable compared to the end of 2019 and up compared to the 1st quarter of 2020.

The Group confirmed the start-up dates of the main projects for 2020 and maintained its forecast for the additional contribution to 2020 sales of unit start-ups and ramp-ups of between 150 million and 180 million euros. Based on the health situation as of the beginning of the 3rd quarter, the Group’s best estimate regarding the additional contribution to sales for 2021 is in the range of 300 million euros, reflecting notably the postponement of certain start-ups and ramp-ups to 2021 due to the COVID-19 crisis.

Recurring return on capital employed after tax (Recurring ROCE)([2]) stood at 8.4%, an increase of +10 basis points compared with the 1st half of 2019.

In the 1st half of 2020, the Group maintained its dividend payment and increased industrial capital expenditure while refinancing in advance the debt maturing in 2020. These initiatives underline the robustness of the balance sheet and net cash flow from the Group’s operating activities in a crisis context and its ability to ensure its future growth. 

  1. ^ Compared with restated 1st half 2019 following changes in 2019 annual financial statements: financial costs before taxes linked to IFRS 16 are reclassified in other financial expenses whereas they were included in net finance costs on 30 june 2019. A distinction is now made between other non-cash items under which the adjustment of this cost is recognized as well as income and expenses under IAS 19 and IFRS 2 and other cash items.
  2. ^ Based on the recurring net profit, see reconciliation in appendix.