Sharing stakes in the future

Dear Shareholders,

2019 was a landmark year for your Group, with significant progress in three areas: improved performance, and in particular a higher operating margin; a high level of investments to serve our customers and strengthen our efficiency; and finally, the operational implementation of our climate action plan.

This progress is the result of a clear strategy which targets profitable, steady and responsible growth over the long term. More than ever, our 67,000 employees are committed to achieving our objectives and I would like to take this opportunity to recognize their dedication, professionalism and inventiveness, which are essential to the Group’s success.

Strong growth in 2019

In 2019, your Group sales climbed +4.3% to 22 billion euros, with a +6.1% increase in net profit^(a) to 2.2 billion euros. Excluding exceptional items, recurring net profit^(b) was up +11.1%^(c). All Gas & Services activities, which account for 96% of Group revenue, progressed^(d), with particularly dynamic Electronics and Healthcare. Geographically, every region grew^(d), notably the Europe and Asia-Pacific regions.

Overall, and despite the global economic slowdown observed in the fourth quarter, the Group delivered robust results in 2019, confirming the relevance of our economic model and strategy.

Improved performance

In addition to strong sales, all financial indicators improved. I would like to mention, in particular, the marked improvement in the operating margin. After the increase seen in 2018, it climbed a further +70 basis points^(e) in 2019. This new step-up was driven by three factors: the dynamic management of both pricing and product mix (towards offerings with greater value-added), as well as the asset portfolio and efficiencies. The latter reached 433 million euros. Cash flows were high and the debt to equity ratio has been further reduced to 64%. The Group’s balance sheet is therefore solid. Finally, return on capital employed^(f) improved further this year and reached 8.6%. This good performance means that in 2020 a dividend of 2.70 euros^(g) per share will be proposed, which represents a strong growth of +12.4%^(h). Moreover, in 2020, assuming no major changes in the environment and the international health situation is under control, Air Liquide is confident in its ability to further increase its operating margin and to deliver net profit growth, at constant exchange rates.

Marked rise in investments

In an environment offering many industrial opportunities, in 2019 we decided to significantly increase investment level to 3.7 billion euros. This demonstrates the high level of commitment to our customers, particularly with new projects signed in Large Industry and Electronics that will allow us to further strengthen our position in major industrial basins. We have also made investments to improve our industrial efficiency, as well as to develop new markets such as hydrogen and biomethane, which are not only sources of future growth but also contribute to the emergence of a low-carbon society.

Contributing to the development of a low-carbon society

I would like to take this opportunity to reflect on the fight against global warming which has become a key focus. I believe that companies – and notably industrial companies – have a major role to play, in particular during the decade ahead of us. The work that we carry out with our customers, as well as through the Hydrogen Council, which just three years after its creation brings together more than 80 global industrial players, is an excellent illustration of the growing collective awareness for the need for climate action. At Air Liquide, we made strong commitments just over a year ago when we announced our “Climate Objectives”, which are the most ambitious in our sector. They target, in particular, a 30% reduction in our carbon intensity by 2025⁽ⁱ⁾. This approach, which largely involves the Group’s employees, implies taking measures with regard to our assets but also extends to our customers and all of our ecosystems. It is in this context that a number of projects relating to the energy transition, in the area of CO₂ emissions reduction or of hydrogen, were signed in 2019.

Sharing stakes in the future

Inventing the future has been our business for over a century. Your Group is constantly innovating to meet its customers’ expectations and address increasingly specialized scientific and technological challenges, with the aim of being useful to society as a whole, in areas where we are able to make a difference. As a shareholder, you therefore support a Group which is firmly focused on the future. And I am pleased to see that even more of you have decided to join the Air Liquide share ownership adventure. The Group is extremely proud of this growing interest and the loyalty of our individual shareholders. When meeting with you, I truly appreciate the extent to which your choice to invest is not just a financial decision but is also driven by strong beliefs. More than just shares, you own “stakes in the future”, a future that – like us – you hope will be more sustainable and responsible considering the numerous challenges our world is facing today. Inventing this future implies coupling financial success with common good, combining individual outlook with collective challenges, and never sacrificing tomorrow for the sake of the present.

This shared vision is what unites us.

This shared vision is the theme that we have chosen to illustrate, in particular through many of our shareholders’ personal stories, in this new edition of the Shareholder’s Guide that is dedicated to you.

Thank you for your trust and loyalty.

(a) Net profit (Group share).

(b) Recurring net profit (Group share) excluding exceptional and significant transactions that have no impact on the operating income recurring.

(c) Change excluding the currency, energy (natural gas and electricity) and significant scope impacts.

(d) On a comparable basis, i.e. excluding the currency, energy (natural gas and electricity) and significant scope impacts.

(e) Change excluding energy.

(f) Based on the recurring net profit.

(g) Proposed for the 2019 fiscal year at the Annual General Meeting on May 5, 2020.

(h) Taking into account the free share attribution of 1 for 10 carried out in October 2019.