Q3 2024: Air Liquide continues its trajectory by combining solid performance, sales growth and record investment decisions
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Commenting on sales in the third quarter of 2024, François Jackow, Chief Executive Officer of the Air Liquide Group, stated:
Air Liquide is continuing its trajectory and once again delivered a solid quarter. In a difficult market environment, our sales increased, demonstrating the resilience of our business model. We continued to improve our margin and our investment decisions reached a record level, paving the way for long-term growth. Through the tangible solutions we provide to our customers, our Group supports major transformations, such as the energy transition and those accelerated by digital technology and Artificial Intelligence, which are key growth drivers.
At 6.8 billion euros in the third quarter of 2024, our Group’s revenue was up +3.3%([1]) on a comparable basis (-0.7% as published, reflecting a negative currency impact and lower energy prices, which variations are passed through to our customers), an increase compared to the previous quarter (+3.1%). Gas & Services, which represent 95% of Group revenue, were up +3.6%(1) on a comparable basis: all activities are growing, demonstrating the strength of our diversified business model. Healthcare in particular increased sharply by +9%(1) on a comparable basis. Geographically, the Americas and Asia were particularly dynamic, with respective growth of +8%(1) and +4%.
Air Liquide also continued to improve its performance. The transformation plan announced in July has now entered the execution phase across the entire Group, in particular through the simplification of our organization. Group efficiencies, up +10%, reached a record level of 353 million euros at the end of September. We also continued the dynamic management of our business portfolio, while adjusting our prices in Industrial Merchant thanks to our ability to create value. All of these actions contributed to the continued improvement of +100 basis points in the Group's operating margin excluding the energy impact since the beginning of the year, outpacing our ADVANCE plan, whose performance ambition was raised early in the year.
Paving the way for future growth, our investment momentum is particularly strong. Well diversified, our investment backlog was still at the very high level of 4.2 billion euros in this third quarter. Reaching a record level, investment decisions amounted to 1.4 billion euros with major projects in Large Industries and Electronics. 12-month investment opportunities remained at a high level of more than 4 billion euros, driven by the transformations that the Group accompanies, whether in the energy transition - for more than 40% of them - or in the field of electronics and semiconductors.
In 2024, Air Liquide is confident in its ability to further increase its operating margin and to deliver recurring net profit growth, at constant exchange rates[2].
Highlights
Corporate
- As part of the simplification of the Group organization to meet growing needs of the market and increase its performance, an adjusted governance was announced with changes effective September 1, 2024.
- The divestiture of Air Liquide’s businesses in 12 countries in Africa was finalized on July 22, 2024, illustrating the Group’s strategy of regular review of its business portfolio.
Industry and Energy Transition
- Investment of approximately 150 million US dollars to extend production capacities and the pipeline network in the United States, as part of a contract with LG Chem to supply oxygen to their battery plant for electric vehicles in Tennessee.
- Investment of nearly 60 million euros to acquire and operate an Air Separation Unit (ASU) in Yantai, China under a long-term contract with Wanhua Chemical Group.
- Investment of 100 million euros, including a new Air Separation Unit in Bulgaria and the modernization of four units in Germany, as part of the renewed partnership with Aurubis AG, one of the largest copper recycling groups in the world, to meet the demand for copper, a crucial element in the energy transition.
- Air Liquide's innovative CO2 liquefaction technology, Cryocap™ LQ, was selected by Stockholm Exergi, an energy supplier in Sweden, to contribute to its bioenergy project.
Group revenue amounted to 6,762 million euros in the 3rd quarter 2024 and posted growth of +3,3% compared to the 3rd quarter 2023, demonstrating the resilience of the portfolio of activities in a challenging environment. Growth was up slightly sequentially compared to the first two quarters of the year. The contribution of Argentina([3]) to comparable growth was +2.0%. The Group's published revenue decreased slightly by -0.7%, impacted by unfavorable energy (-0.9%) and currency (-3.1%) impacts. There was no significant scope impact.
Gas & Services revenue in the 3rd quarter of 2024 reached 6,445 million euros, up by +3.6% on a comparable basis (including a contribution of +2.0% from Argentina).
All activities grew([4]) in the 3rd quarter of 2024. Revenue from Large Industries posted an increase of +2.8%, supported by the start-up of two large units at the beginning of the year and the strengthening of demand, particularly in Chemicals in the United States. This growth was impacted by the divestiture of a cogeneration unit in Europe in early January and customers maintenance turnarounds. Development continued in the Industrial Merchant business (+1.7%) in the 3rd quarter 2024 with a solid price effect of +4.1% offsetting slightly lower gas volumes and a marked decline in Hardgoods sales in the United States. In Electronics (+5.9%), all segments contributed to growth, with the exception of Specialty Materials. In a difficult industrial context, the Healthcare business (+9.2%) was the main contributor to the growth in the 3rd quarter. It benefited from the dynamic development of Home Healthcare and the increase in volumes and prices of medical gases in an inflationary environment.
- In the Americas, Gas & Services revenue amounted to 2,562 million euros and all businesses contributed to the strong growth of +8.2% (including the contribution of Argentina for +5.1%). Large Industries (+11.6%) benefited from the start-up of a major unit at the beginning of the year and the strengthening of demand notably in the United States. The increase in Industrial Merchant sales (+4.7%) was supported by a price effect that remained high (+6.9%). Growth was dynamic in Healthcare (+25.3%). In the Electronics business (+12.5%), sales of Carrier Gases and of Equipment & Installation posted double-digit growth.
- Revenue in Europe was down -1.5% in the 3rd quarter of 2024 at 2,247 million euros. Revenue in Large Industries (-3.6%) would be up slightly excluding the divestiture of a cogeneration unit in the 1st quarter. In Industrial Merchant (-2.3%), volumes contracted but the price effect improved sequentially to -0.3%. The Healthcare business posted solid sales growth (+3.0%), supported by the development of Home Healthcare and medical gases.
- The Asia-Pacific region returned to growth (+4.1%) in the 3rd quarter of 2024 with revenue of 1,340 million euros. Sales in Large Industries (+6.6%) benefited in particular from the start-up of a large hydrogen unit in China in March. Revenue in Industrial Merchant (-1.8%) was impacted by the marked decline in helium sales in China, while sales in the rest of Asia increased slightly. The dynamism of Carrier Gases and Advanced Materials were the main contributors to growth in Electronics (+6.8%).
- Revenue in the Middle East & Africa region increased by +1.1% to 296 million euros in the 3rd quarter of 2024. It increased by +6.5% excluding the divestiture of businesses in 12 African countries finalized in July.
Global Markets & Technologies posted a -4.6% decrease in revenue on a comparable basis to 207 million euros in the 3rd quarter of 2024. Excluding the divestiture of the technological activities for the Aeronautics sector in the 1st quarter, revenue from the business was stable compared to the 3rd quarter of 2023.
Consolidated revenue from Engineering & Construction amounted to 110 million euros in the 3rd quarter and remained stable (-0.0%) compared to the 3rd quarter of 2023. Consolidated revenue excludes internal projects, in particular for Large Industries and Electronics, which are growing.
Industrial and financial investment decisions saw a record level of 1.4 billion euros in the 3rd quarter of 2024, thus exceeding 3.0 billion euros since the beginning of the year. The investment backlog stood at a very high level of 4.2 billion euros.
The additional contribution to sales of unit start-ups and ramp-ups totaled 185 million euros at the end of the 3rd quarter.
The portfolio of 12-month investment opportunities remained at the very high level of 4.0 billion euros at the end of September 2024 and the portfolio of opportunities at more than 12 months is continuing to grow and has reached a very high level.
The operating margin (OIR to revenue) in the nine first months of the year posted a strong improvement of +100 basis points excluding the energy impact([5]), driven by the three levers which are the efficiencies, price management and portfolio optimization.
Efficiencies([6]) totaled 120 million euros in the 3rd quarter. They amounted to a record level of 353 million euros in the first nine months of the year, up sharply by +10.3% compared to the same period in 2023. They are well ahead in respect of the annual target of 400 million euros. In an inflationary environment, the Group continued its active price management. Thus, the price impact in the Industrial Merchant business stood at +4.1% in the 3rd quarter 2024 and was in addition to the price increases of +18.0% and +6.5% in the 3rd quarters of 2022 and 2023 respectively. During the first nine months of the year, the Group continued its active portfolio management with 14 acquisitions and 5 divestitures.
Cash flows from operating activities before changes in working capital reached 1,581 million euros in the 3rd quarter 2024, up +4.0% excluding current taxes and +2.4% as published.
Net debt amounted to 9,615 million euros, a decrease of 541 million euros compared to 10,156 million euros as of June 30, 2024.
In terms of extra-financial performance, the Group started up two Air Separation Units in China which were electrified and which had previously consumed steam produced by the customer from coal. This industrial transformation reduces CO2 emissions (scope 2) by approximately 370,000 metric tonnes per year. Air Liquide has also decided to invest in Air Separation Units that will supply oxygen to customers producing essential elements for the energy transition.
Footnotes
- ^ See appendix for impact of Argentina.
- ^ Operating margin excluding energy passthrough impact. Recurring net profit excluding exceptional and significant transactions that have no impact on the operating income recurring.
- ^ See impact of Argentina in Appendix.
- ^ Unless otherwise stated, all variations in revenue outlined below are on a comparable basis, excluding currency, energy (natural gas and electricity) and significant scope impacts.
- ^ No impact from Argentina.
- ^ See definition in appendix.
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EN Q3 2024 - PR + Activity Report
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