Air Liquide SA · EURONEXT:AI
Air Liquide SA — FY2008 Earnings Presentation
55 slides from Air Liquide SA's earnings presentation, Feb 16, 2009
Slide 1: 2008 Revenue and Results
2008 Revenue and Results 2008 results in line with objectives ALMA momentum adapted to new environment February 16, 2009 Air Liquide, the world leader in gases for industry, health and the environment
Slide 2: Agenda
Agenda 2008 results Fabienne Lecorvaisier Air Liquide reaction to new economic environment Benoît Potier 2 Air Liquide, the world leader in gases for industry, health and the environment 2008 Revenue and Results – February 16, 2009
Slide 3: 2008 in line with objectives
2008 in line with objectives 12% +11.0% 10% +7.8% 8% 6% +4.9% 4% Revenue : 2% + 8 to +10 % CAGR 0% 2006 2007 2008 250 230 180 200 150 150 GOAL OPAL OPAL Efficiency savings : 100 €600m over 3 years (2008-2010) 50 0 2006 2007 2008 13% 12.3% 12.1% 11.9% 12% Maintain ROCE : between 11 and 12 % 11% 10% 2
Slide 4: 2008 results
2008 results Fabienne Lecorvaisier, Chief Financial Officer
Slide 5: Key figures
Key figures In €m 2008 08/07 08/07 excl. forex Group revenue 13 103 +11.0% +12.6% Gas & Services revenue 11 028 +10.3% +12.1% Net profit (Group share) 1 220 +8.6% +10.8% Cash-flow* 2 293 +9.1% Industrial capex 1 908 +40.4% Dividend €2.25 (+10.3%) * Net cash from operating activities 5 Air Liquide, t
Slide 6: Continued growth
Continued growth Gas and Services comparable * revenue growth +9.9% 10% +9.6% +9.1% +7.9% 10% +9.1 % 5% +7.1% +6.1% +5.5% 5% 0% Q1 Q2 Q3 Q4 2008 2008 2008 2008 0% 2005 2006 2007 2008 *excluding impact of currency and natural gas 6 Air Liquide, the world leader in gases for industry, health and the e
Slide 7: Sustained growth in all regions in 2008
Sustained growth in all regions in 2008 Gas & Services Europe New projects in Large Industries 2008 Q4 2% 19% Increased merchant prices +9.9% Eastern Europe Europe 24% 55% +10.9% Americas Activity and prices +6.6% Americas in Industrial Merchant +2.1% South America +9.1% Asia Pacific Asia +4.1% Stro
Slide 8: Solid performance of all activities in 2008
Solid performance of all activities in 2008 Industrial Merchant Q4 2008 Large Industries 10% 20% +14.8% + 15.5% 15% +5.5% +5.8% +4.8% 5% 10% +8.7% +3.0% + 3.4% +6.7% +7.1% 5% 0% 0% 2005 2006 2007 2008 2005 2006 2007 2008 34% 42% Healthcare 9% Electronics 15% 12% 20% +16.6% +8.7% 8% +7.5% 15% +6.5% +
Slide 9: Operating income
Operating income In €m 2007 2008 08/07 08/07 excl. forex Revenue 11 801 13 103 +11.0% +12.6% Operating Income Recurring 2 730 2 942 +7.8% before depreciation & Amortization Depreciation & Amortization 936 993 +6.1% Operating Income Recurring 1 794 1 949 +8.6% +10.3% Operating Margin excluding natura
Slide 10: Gas & Services operating margin
Gas & Services operating margin 18.1% excl nat. gas In €m 18.1% 1 949 2 000 <42> +102 +211 1 900 +0 1 811 Efficiency +78 1 800 <349> Prices +240 1 700 excl. energy 1 600 1 500 1 400 Gas & Services margin maintained 1 300 1 200 About 50% of efficiency preserved 1 100 0 1 000 2007 Grow th Energy pass
Slide 11: Earnings per share: +10.3%
Earnings per share: +10.3% 08/07 In €m 2007 2008 08/07 excl. forex Operating income recurring 1 794 1 949 +8.6% +10.3% Other non-recurring operating expenses (5) (30) Operating income 1 789 1 919 + 7.3% Net financial costs (234) (270) and other net financial expenses Income taxes (412) (402) Tax rat
Slide 12: Change in net debt 2008
Change in net debt 2008 In €m <5 484> <311> +513 <4 660> excl. <590> forex & scope of which industrial investments (in €bn) 2 1.9 +2 293 <2 216> 2 1.4 1.1 1.0 1 1 0 2005 2006 2007 2008 Net Debt Cash Net Dividends Forex / Net Debt Dec 31, 2007 Flow* Investments Scope Dec 31, 2008 * Net cash from oper
Slide 13: Diversified and balanced financial structure
Diversified and balanced financial structure As of December 31, 2008 Borrowings by instrument Maturity Fixed / Variable In €m Bonds 6000 Fixed rate Private 54% placements 5000 81% 6% 4000 > 2013 3000 32% Bank 19% 5% 3% debt 2000 Commercial 2010 to Variable rate paper 2012 1000 Put options of minorit
Slide 14: Proposed dividend
Proposed dividend Dividend €(2) +12.1% CAGR over 10 years(2) €2.25(1) 2 1 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Regular progression (1) To be proposed to the Annual General Meeting on May 7, 2009, payment date May 18, 2009 (2) Adjusted to account for bonus share issues and share split
Slide 15: Air Liquide reaction to new economic environment
Air Liquide reaction to new economic environment Benoît Potier, Chief Executive Officer
Slide 16: 1) Context
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Slide 17: New contrasting economic environment
New contrasting economic environment Brutal decline in some cyclical sectors… but certain defensive sectors are resisting Oxygen in Canada for flat steel Hydrogen in France for refining 100 100 75 75 50 50 25 25 Base 100 Base 100 0 0 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Nov-08 Dec
Slide 18: Impact on Q4 sales
Impact on Q4 sales Gas & Services comparable growth* in Q4: Cyclical Defensive Start-ups sectors sectors & prices & acquisitions + + = +7.9% - 4% +6% +6% Resilience demonstrated * Excluding impact of currency and natural gas 18 Air Liquide, the world leader in gases for industry, health and the envi
Slide 19: 2) Air Liquide strengths
2) Air Liquide strengths
Slide 20: Air Liquide strengths
Air Liquide strengths Structural strengths: Markets mix Products / applications portfolio Contract structure Current momentum: Start-ups and ramp-ups Geographical positioning & 20 Air Liquide, the world leader in gases for industry, health and the environment 2008 Revenue and Results – February 16,
Slide 21: Market mix
Market mix Food & Pharmacy Others More Healthcare Welding Materials & Engineering & Energy 16% Construction 14% 13% 12% Homecare Automotive & 8% Manufacturing Hospital 4% 2% Technology & Research 0% Electronics 1990 2000 2008 Craftmen & Networks Share of Healthcare in the Group revenue Others Metals
Slide 22: Products / applications portfolio
Products / applications portfolio Others More on-site production in Welding Cylinders Industrial Merchant E&C 25% 24% Nitrogen bulk 20% 20% Oxygen bulk Others Argon bulk 15% 10% On-sites & Other Oxygen bulk 5% 3% Oxygenotherapy Equipment 0% 1990 2000 2008 Electronics Others Share of on-site producti
Slide 23: Contract structure
Contract structure Duration Fixed part Large Industries : 15 years 60 to 70% Electronics (carrier gases) : 10 years 60 to 70% Industrial Merchant : 3 to 5 years 20% Solid contract structure 23 Air Liquide, the world leader in gases for industry, health and the environment 2008 Revenue and Results –
Slide 24: Capex contributing now
Capex contributing now Portfolio Decisions Capex Start-ups Ramp-ups More start-ups 42 19 10 2007 2008 2009 2010 Mature economies Emerging economies €1bn of additional revenue 2009 - 2010 >€10m investments 24 Air Liquide, the world leader in gases for industry, health and the environment 2008 Revenue
Slide 25: Geographical positioning favorable
Geographical positioning favorable Middle-East & Africa Asia-Pacific More emerging economy activity France 14% Japan Europe 12% 11% 10% 8% Germany 8% 6% 4% 4% United 2% States 0% Americas 1990 2000 2008 Share of revenue outside of OECD Improved mix in major Established positions in economies emergin
Slide 26: Intrinsic resilience
Intrinsic resilience Air Liquide Revenue Cyclical Defensive 100% 50% 80% 70% 60% 45% 0% Markets Sectors Products Contracts 80% resilient 26 Air Liquide, the world leader in gases for industry, health and the environment 2008 Revenue and Results – February 16, 2009
Slide 27: 3) Immediate measures
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Slide 28: Measures taken from October 2008
Measures taken from October 2008 Revenue Cash Execution of projects in-progress Working capital management and customer monitoring Maintaining market shares Financing secured Price increases Review of investment priorities Costs Precautionary measures No new engagements Preparation of structural mea
Slide 29: 2009 priorities
2009 priorities within 2009 Generate accelerated and Secure and finance profitable growth with : short and mid-term growth in revenue and net profit : Investments at €10bn Investments at €1.6bn (2007-2011) in 2009 Efficiency savings Increase cost reduction to of €600m (2008-2010) more than €250m in
Slide 30: Maintaining financial equilibrium
Project management Growth self-financed without >1000 local projects additional debt leverage Deployment of global projects Target: 50 to €100m of additional savings Maintaining Q4 measures Cash-flow - dividends = WCR + Capex = €1.6bn >250 250 230 180 200 150 150 GOAL GOAL OPAL OPAL 100 50 0 2006 20
Slide 31: 4) 2009 and mid-term outlook
4) 2009 and mid-term outlook
Slide 32: Sales scenarios for 2009
Sales scenarios for 2009 2 potential scenarios Extended crisis: Partial recovery in H2: Cyclical sectors at -30% Cyclical sectors at -10% GDP mature economies -1 to -2%* GDP mature economies 0% GDP emerging economies +2 to +3% GDP emerging economies +4% Impact on Group sales in 2009: Forex Cyclical
Slide 33: Mid-term momentum maintained
Mid-term momentum maintained Portfolio Decisions Capex Start-ups Ramp-ups Portfolio maintained between €3bn and €4bn €7bn of investment decisions between 2007 and 2009 Start-ups and ramp-ups contribution of €2.5bn by 2013 Mid-term growth potential preserved 33 Air Liquide, the world leader in gases
Slide 34: Confidence in growth drivers
Confidence in growth drivers Confront growing demand Contribute to reduce harmful emissions in energy for the environment Demand in energy CO2 concentration in the atmosphere Base: IEA (2008) Base: IPCC (2001) O2 and gasification to develop alternative H2 to remove sulfur from fuel fuel Oxycombustio
Slide 35: Confidence in growth area
Confidence in growth area Accompanying Anticipating an extension of life expectancy emerging economies development and insure access to healthcare for all Gas production/GDP 2006 1,5 1.4 Life expectancy 1.1 1 World 0,5 0.4 Mature economies Other less mature economies Emerging economies 0 Japan China
Slide 36: Outlook
Outlook “The Group has made investment commitments totaling around €7 billion over the past three years, setting a solid growth foundation for the years ahead. These investments have been directed primarily towards markets identified as promising and long-term, which will enable Air Liquide, once th
Slide 37: Appendices
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Slide 38: Engineering & Construction fully loaded
Engineering & Construction fully loaded Engineering & Construction activities ≈ €1.1bn third-party sales Total order intake* : €1.4bn, a full year of capacities Capacities loaded in 2009 Orders in hand* : €5.2bn Total order in hand breakdown* Purchase of minority ASU shareholding of the joint-ventur
Slide 39: Engineering Glossary
Engineering Glossary Orders in Hand represent the sum of the initial contracts value of all Group and Third Party contracts managed by the Engineering & Construction entities, excluding contracts under warranty The Order Intake represents the sum of the initial contracts value of all Group and Third
Slide 40: Business mix by region
Business mix by region 2008 Gas & Services revenue : €11.0bn Europe : Americas : Asia-Pacific : €6.1bn €2.7bn €2.1bn 3% 6% 8% 23% 33% 39% 43% 45% 41% 4% 35% 20% Industrial Merchant Large Industries Healthcare Electronics 2008 Gas & Services revenue Middle-East & Africa : €197m 40 Air Liquide, the wo
Slide 41: Europe boosted by start-ups in Q4
Europe boosted by start-ups in Q4 Industrial Merchant Q4 Flat excluding scope effects G&S Sales : €1 628m Volume decline in automotive +10.9% Continued growth in Eastern Europe Large Industries Industrial Merchant -1.1% Ramp-ups (Russia, Belgium, Netherlands) Large Industries +34.8% First full conso
Slide 42: Americas: contrasting trends in Q4
Americas : contrasting trends in Q4 Industrial Merchant Q4 Price increases G&S Sales : €667m Fracking** in Canada +2.1% Growth in South America Large Industries Industrial Merchant +8.2% Impact of hurricanes Steel decline in Canada Large Industries -9.4% chemical production stoppages on the Gulf Coa
Slide 43: Asia: continued development of emerging economies in Q4
Asia : continued development of emerging economies in Q4 Industrial Merchant Q4 Slowdown in automotive and G&S Sales : €575m semiconductors in Japan +4.1% Continued growth in China Large Industries Stoppages of client facilities Industrial Merchant +2.4% in Korea, Singapore and Thailand Large 2 star
Slide 44: Sales breakdown
Sales breakdown In €m H1 08 H2 08 2008 Gas & Services 5 343 5 685 11 028 Engineering & Construction 504 577 1 081 Other activities 523 471 994 Total Group 6 370 6 733 13 103 44 Air Liquide, the world leader in gases for industry, health and the environment 2008 Revenue and Results – February 16, 200
Slide 45: Operating margin
Operating margin Group, in €m 2007 2008 Revenue (as published) 11 801 13 103 Natural gas effect -- 301 Revenue (adjusted) -- 12 802 Operating income recurring 1 794 1 949 Operating margin (as published) 15.2 % 14.9 % Operating margin excl. natural gas 15.2 % 15.2 % Gas & services, in €m 2007 2008 Re
Slide 46: Consolidated income statement
Consolidated income statement In €m 2007 2008 Revenue 11 801 13 103 Operating income recurring before D&A 2 730 2 942 Margin 23.1% 22.5% Depreciation & amortization (936) (993) Operating income recurring 1 794 1 949 Margin 15.2% 14.9% Other non-recurring operating expenses (5) (30) Operating income
Slide 47: 2008 Gas & Services Revenue and OIR
2008 Gas & Services Revenue and OIR Gas & Services 08/07 Margin 08/07 Revenue OIR In €m published excl. nat gas excl. nat gas Europe 6 105 +12.0% 1 130 18.9% (50bps) Americas 2 660 +5.7% 442 17.4% +80bps Asia-Pacific 2 066 +11.6% 327 16.0% +20bps Middle-East 197 +10.4% 50 25.5% (40bps) & Africa Tota
Slide 48: Consolidated statement of cash flows
Consolidated statement of cash flows in €m 2007 2008 Net profit (Group share) 1 123 1 220 Minority interests 47 52 Depreciation and amortization 936 993 Other adjustments (52) (58) Cash flow from operating activities before changes in working capital 2 054 2 207 Changes in working capital 94 128 Oth
Slide 49: Consolidated balance sheet
Consolidated balance sheet In €m ASSETS 12/31/07 12/31/08 EQUITY AND LIABILITIES 12/31/07 12/31/08 Goodwill 3 643 3 956 Shareholders’ equity 6 328 6 857 Fixed assets 9 098 10 236 Minority interests 148 149 Other non-current assets 718 713 Total equity 6 476 7 006 Total non-current assets 13 459 14 9
Slide 50: Industrial capex by region
Industrial capex by region Industrial investments in Gas & Services 2007 2008 Investments* Investments* /Sales /Sales Europe 11.9 % 12.3 % Americas 12.1 % 15.6 % Asia Pacific 18.4 % 29.9 % Middle-East & Africa 27.9 % 40.1 % Total 13.4 % 16.9 % * Excluding financial investments 50 Air Liquide, the wo
Slide 51: Industrial capex
Industrial capex In €m 1200 800 400 0 2004 2005 2006 2007 2008 9.3% 9.3% 10.3% 11.5% 14.6% Capex / Sales Industrial investments S1 S2 51 Air Liquide, the world leader in gases for industry, health and the environment 2008 Revenue and Results – February 16, 2009
Slide 52: Impact of currency, natural gas and Lurgi
Impact of currency, natural gas and Lurgi In €m 2007 Q1 08 Q2 08 Q3 08 Q4 08 2008 €/USD (163) (64) (73) (43) +55 (126) €/CAD (17) +3 (9) (12) (15) (33) €/JP¥ (100) (2) (1) 0 +74 +71 Others (52) (21) (32) (25) (21) (98) Total currency impact (332) (84) (115) (80) +93 (186) Natural gas impact (6) +51
Slide 53: Evolution of the number of shares
Evolution of the number of shares Number of shares 31/12/2007 238 844 710 Bonus shares 24 220 146 Stock options 773 842 Reduction in capital (2 916 350) Number of shares 31/12/2008 260 922 348 2007 2008 Average number of shares outstanding (1) 263 743 077 259 634 357 (1) Used for EPS calculation 53
Slide 54: Sustained and regular performance
Sustained and regular performance 14 000 Revenue (€m): EPS(1) (in €): 5 12 000 +8.6% CAGR over 30 years(2) +9.0% CAGR over 30 years(2) 10 000 4 8 000 3 6 000 2 4 000 1 2 000 0 0 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 1978 1980 1982 1984 1986 1988 1990 1992 19
Slide 55: 2008 Revenue and Results
2008 Revenue and Results For further information, please contact: Investor Relations Corporate Communications Virginia Jeanson + 33 (0)1 40 62 57 37 Anne Lechevranton + 33 (0)1 40 62 50 93 Annie Fournier + 33 (0)1 40 62 57 18 Corinne Estrade + 33 (0)1 40 62 51 31 www.airliquide.com Corporate headqua