Air Liquide Revenue Rises 31% Amid Energy Cost Pass-Through
The industrial gas company grew comparable sales 7.7% in the first half of 2022 while managing high energy volatility.
Air Liquide reported first-half revenue of 14,207 million euros, a published increase of 31.0% compared to the first half of 2021. The company said this growth was driven by a high energy effect of 16.8%, favorable currency effects of 5.8%, and a perimeter effect of 0.7%. On a comparable basis, revenue rose 7.7%.
Operating margins were impacted by the surge in energy costs, which are contractually passed through to Large Industry customers. This created a dilutive effect on the published operating margin, which fell 190 basis points to 16.1%. However, the company said its operating margin excluding the energy effect improved by 50 basis points compared to the first half of 2021. This improvement reflected the ability to transfer energy and inflation costs into sales prices.
Within the Gas & Services segment, which represents 96% of total revenue, comparable sales grew 7.2%. Electronics sales were particularly dynamic, rising 15.5%. Merchant Industry revenue increased 12.7% due to price effects and solid volumes. Healthcare sales rose 2.3%, supported by home healthcare in Europe and proximity medicine in the United States, despite lower medical oxygen volumes for covid-19.
Regional performance varied by geography. In Europe, the current operating result reached 771 million euros, a published increase of 11.4%. Excluding the energy effect, the European operating margin rose 90 basis points to 19.8%. In the Middle East and Africa, the current operating result rose 61.7% to 96 million euros. This growth was primarily driven by the integration of 16 air gas separation units from Sasol. In Asia-Pacific, the current operating result was 567 million euros, a published increase of 10.5%.
Investment activity remained strong with 1.8 billion euros in investment decisions this semester. Industrial investment decisions reached 1,738 million euros, up from 1,349 million euros in the first half of 2021. The company reported a project portfolio under execution of 3 billion euros.
Net debt stood at 12,010 million euros as of June 30, 2022. This followed the payment of more than 1.4 billion euros in dividends in May and more than 1.5 billion euros in investments during the first half. The net debt to equity ratio, adjusted for dividend seasonality, fell to 46.0% from 56.1% at the end of June 2021.
Air Liquide said it is confident in its ability to further increase its operating margin and achieve growth in recurring net income at constant exchange rates for 2022, provided there are no significant economic disruptions.