Highlights and performance of the group in 2019
2019 Highlights
2019 Highlights
- Large Industries: Signature of numerous long-term contracts, in Russia with Severstal, in the Gulf Coast with Marathon Petroleum Company, Gulf Coast Growth Ventures (GCGV), LyondellBasel and Methanex, and in Kazakhstan with Kazakhstan Petrochemical Industries (KPI). Sale to Fujian Shenyuan of the production center.
- Industrial Merchant: Acquisition by Airgas of Tech Air in the United States and acquisition of Southern Industrial Gas in Malaysia. Launch of Qlixbi, a disruptive innovation that combines technical and digital innovation in the field of welding. Inauguration of the first robotic order preparation line at Feyzin (France).
- Healthcare: Acquisitions in home healthcare of Megamed AG in Switzerland, of Dialibre in Spain, and of Medidis in the Netherlands. E-health: deployment in France of Chronic Care Connect, a remote medical monitoring system.
- Innovation: Inauguration in Japan of the new Tokyo Innovation Campus. Inauguration of Accelair, the deep tech start-up accelerator of the Paris Innovation Campus. Signature of more than 30 contracts for cryogenic equipment based on the Turbo Brayton technology, which lowers LNG boil-off and the greenhouse gas emissions of LNG carriers.
- Climate: Participation in three innovative projects designed to fight climate change: the Northern Lights project for the capture and storage of CO2 in Norway, with thyssenkrupp Steel for the use of hydrogen to reduce carbon emissions in steel production, and with ArcelorMittal for the capture and recycling of carbon emissions related to the production of steel.
- Hydrogen Energy: Acquisition of a nearly 20% equity stake in the Canadian company Hydrogenics Corporation, which specializes in equipment used to produce hydrogen by electrolysis. Construction in Canada of the largest membrane electrolysis plant in the world. Development of hydrogen mobility in China with the creation of the joint venture Air Liquide Houpu Hydrogen Equipment Co. and a memorandum of understanding with Sinopec. Partnership in France with Engie and the Durance Luberon Verdon urban area to produce green hydrogen on an industrial scale (HyGreen project).
- Corporate: Appointment of 4 new members of the Executive Committee effective September 1. 500 million dollar bond issue at a historically low rate to finance long-term growth. Inclusion of a correlation mechanism in the Group’s 2 billion euro syndicated line, between its financial costs and three of its CSR targets, in the areas of carbon intensity, gender diversity, and safety.
Strategy
Air Liquide is a world leader in gases, technologies and services for industry and health. Its ambition is economic and societal. The Group thus strives to be a leader in its industry, deliver long-term performance and contribute to sustainability. Its strategy is customer centric and aims to deliver profitable, regular and responsible growth over the long term. To do so, it relies on its operational excellence, selective investments, open innovation and a network organization implemented by the Group worldwide. Through the commitment and inventiveness of its people, Air Liquide leverages energy and environment transition, changes in healthcare and digitalization, and delivers greater value to all its stakeholders.
Outlook
2019 is a landmark year, characterized simultaneously by a significant improvement in performance, a high level of investments to serve our customers and strengthen our efficiency, and the operational implementation of our climate action plan.
2019 sales were driven by the development of Gas & Services and Global Markets & Technologies. On a comparable basis, all Gas & Services activities, which account for 96% of Group revenue, progressed over the year, with particularly dynamic Electronics and Healthcare. Geographically, every region grew, notably the Europe and Asia-Pacific regions.
Overall, and despite the expected global economic slowdown observed in the 4th quarter, the Group delivered robust results, confirming the relevance of its economic model and strategy.
The improvement in the Group’s operating margin reflects the dynamic management of both pricing and product mix, the asset portfolio, and efficiencies. The latter reached 433 million euros. Cash flows were high and the debt to equity ratio declined substantially. The Group’s balance sheet is solid. ROCE continues to improve. 2019 performance is in line with all of the targets of the NEOS program and the Group’s Climate objectives.
In a context where industrial opportunities remain high, investment decisions rose sharply, to 3.7 billion euros. The new projects that have been signed with our clients in Large Industry and Electronics will allow us to further strengthen our position in our major industrial basins.
The Group starts the year with confidence in a context characterized by a new uncertainty related to the Coronavirus epidemic.
At the publication date of this document, the impact of this epidemic on Air Liquide’s 2020 results is difficult to quantify. Industrial operations are partially affected in China, mainly in Industrial Merchant, which represented less than 25% of the 2019 country sales, China contributing by only 9% to the Group’s total revenues.
This provides us with the opportunity to commend the professionalism of our Chinese colleagues, fully mobilized.
Assuming no major change 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 in 2020, at constant exchange rates.