Air Liquide Net Income Rises 5.3% Amid Global Growth Slowdown

The Tip Desk · June 30, 2012 · 2 min read

The industrial gas maker increased investment decisions to 1.2 billion euros as it navigates rising energy costs and a cooling global economy.

Air Liquide reported a net income part of the group of 790 million euros for the first half of 2012, an increase of 5.3%. The industrial gas maker said the results reflect a period of slowing global growth and caution among customers due to the European sovereign debt crisis.

Operating performance remained stable despite headwinds. Current operating income before depreciation reached 1,845 million euros, up 4.6%. The company said a slowdown in volume and revenue growth during the second quarter, combined with cost inflation, was partially offset by efficiency programs and price increases in the Industrial Merchant segment.

Cost pressures were evident in the company's spending. Purchases rose 7.7%, driven by a 10% increase in the total cost of electricity and natural gas and a 7% rise in transport costs. Personnel costs increased 7.7%, though the company noted that excluding currency effects, the rise was 4.6% and linked to a 3.8% increase in the average workforce. Other costs were contained, rising 1.7%.

Revenue for the Gas and Services segment reached 6,837 million euros, a reported growth of 5.6%. On a comparable basis, sales in this segment rose 2.4%, consisting of 4.0% growth in the first quarter and 0.9% in the second. The Health activity grew 10.0%, supported by home healthcare in Latin America and medical gas sales in the United States. Conversely, Electronics activity fell 1.6%, penalized by a base effect from a large project delivery in March 2011.

Air Liquide accelerated its investment cycle to sustain long-term growth. Industrial and financial investment decisions totaled 1.2 billion euros for the semester, an 18% increase over the first half of 2011. Net investment payments rose 25.6% to 991 million euros. The company shifted its focus toward advanced economies, which represented 62% of the period's decisions, including a 100 million euro unit near Cologne and nearly 50 million euros for nitrogen production in Canada.

External growth focused on healthcare and distribution. The company announced nearly 800 million euros in acquisitions, including LVL Médical in France for a net investment of 316 million euros and Gasmedi in Spain for 330 million euros. It also acquired Energas & Engweld in the United Kingdom.

Net debt stood at 6,011 million euros as of June 30, 2012, up 7.7% from June 30, 2011. The net debt-to-equity ratio was 60.3%, compared to 62.5% a year earlier.

Looking forward, the company expects the second half of the year to be bolstered by 17 planned startups. Air Liquide continues to target growth in its net income for 2012, provided there is no major deterioration in the economic environment.