Air Liquide SA · EURONEXT:AI
Air Liquide SA — FY2007 Earnings Presentation
47 slides from Air Liquide SA's earnings presentation, Feb 15, 2008
Slide 1: 2007 Revenue and Results
2007 Revenue and Results 2007: strong increase in results Strengthened growth momentum February 15th, 2008
Slide 2: Agenda
2007 revenue and results Agenda DA successful 2007 John Glen DBe the recognized industry leader Benoît Potier 2 2007 revenue and results - 15 February 2008
Slide 3: A successful 2007
ra AIR LIQUIDE A successful 2007
Slide 4: 2007 highlights
2007 highlights In €m 2007 Growth 07/06 Growth 07/06 as published comparable* Group revenue 11 801 +7.8% +7.6% Gas & Services revenue 9 999 +3.8% +7.1% Gas & Services -- 18.1% +50 bps OIR margin Net profit 1 123 +12.1% -- More than Total capital expenditure 2 668 doubled ROCE 12.3% +40 bps -- * excl
Slide 5: Strong market demand
Strong market demand Booming emerging economies Increasing demand for steel & chemicals High growth markets: solar cells, energy and refining Continued strong demand in homecare & hygiene Strong 2nd half semiconductor & flat panel demand Buoyant engineering market 5 2007 revenue and resu
Slide 6: Revenue growth of +7.8%
Revenue growth of +7.8% In €m FY 07 07/06 07/06 revenue as published comparable* Group 11 801 +7.8% +7.6% Gas & Services 9 999 +3.8% +7.1% Engineering & Construction 831 +118.7% +27.3% Other 971 +3.3% +4.1% Excluding currency impact, Group revenue +10.8% Lurgi: € 361m, contributes +3.3% to growt
Slide 7: Accelerating every quarter
Accelerating every quarter Gas & Services Comparable growth* +9.1% 10% +7.9% +6.3% +5.3% 5% 0% Q1 2007 Q2 2007 Q3 2007 Q4 2007 * comparable: excluding impact of currency, natural gas and, for the Group, the Lurgi acquisition 7 2007 revenue and results - 15 February 2008
Slide 8: In Q4, all regions contributing
In Q4, all regions contributing Europe: good growth comparable basis D Strong volumes in Germany Q4 2007 D Stable activity in France Europe +6.3% +5.8% D Homecare acquisitions Americas +8.1% +4.6% Americas: solid performance Asia Pacific +19.1% +14.5% D Regained activity level +9.1% Total G&S* in La
Slide 9: Three WBLs already in line with Objectives
Three WBLs already in line with Objectives Industrial Merchant full year: +4.8% +4.8% Large Industries full year: +7.1% +7.1% 10% 15% 10.6% 5.1% 5.4% 10% 4.3% 4.3% 6.4% 5% 5.5% 5.9% 5% 0% 0% Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2007 Q2 2007 Q3 2007 Q4 2007 mid-term Healthcare full year: +8.7% +8.7% re
Slide 10: Engineering & Construction fully loaded
Engineering & Construction fully loaded Full year pro forma Engineering & Construction activities ≈ €1.2bn third-party sales Total order-intake*: €1.6bn, 100% of 2007 total sales Orders in hand*: €4.9bn Total Order-intake breakdown* 7% ASU 8% HyCO 11% Traditional Energy 11% 63% Alternative Ene
Slide 11: Strong profit delivery
Strong profit delivery In €m 2006 2007 07/06 Operating Income Recurring 1 659 1 794 +8.1% Margin: Group 15.2% 15.2% -- Gas & Services 17.6% 18.1% +50 bps Net Profit (Group share) 1 002 1 123 +12.1% Basic EPS (€) 4.17(1) 4.69 +12.5% Dividend per share (€) 2.00(1) 2.25(2) +12.5% (1) Adjusted for 2006
Slide 12: OPAL delivered
OPAL delivered OIR improved +34% over 3 years €400m cost savings, ≈1/3rd retained in P&L OIR margin up +130 bps at constant 2004 natural gas prices 19% 18.5% 18% 17.2% 17% 16% 0% 15% 2004 2005 2006 2007 OIR Gas & Services margin at constant 2004 natural gas prices 12 2007 revenue and results -
Slide 13: Optimized balance sheet
Optimized balance sheet In €m 2006 2007 07/06 Funds provided by operations 1 889 2 054 +8.7% WCR (109) 94 Others (13) (46) Net cash from operating activities 1 767 2 102 +19.0% Cash invested into business: More than (capex + acquisitions) (1 201) (2 668) doubled Cash back to shareholders: (distribut
Slide 14: Be the recognized industry leader
Be the recognized industry leader
Slide 15: 2007: excellent set of figures
2007: excellent set of figures Growth D+7.8%, acceleration quarter by quarter DTotal capex €2.7bn Efficiency / Productivity DGas & Services operating margins +50 bps D+12.1% net income growth Optimized balance sheet ÎROCE at 12.3% ÎWACC down ÎROE up +140 bps ÎMaintained “A rating” 15 2007 reve
Slide 16: Strategic positioning in 2007
Strategic positioning in 2007 Ahead in €10bn capex program Unique Asian springboard Undisputed homecare leadership in Europe Adapted technology portfolio for Energy developments WBLs driving change 16 2007 revenue and results - 15 February 2008
Slide 17: Gas markets offer strong growth potential
Gas markets* offer strong growth potential +8% Middle East & Africa Eastern Industrial Merchant Europe ≈ +5% pa >+10% p.a North America South America Healthcare +7% pa China 50% Electronics Asia-Pacific ≈ +5% p.a +8% pa excl. Japan Western Large Industries Europe +12% pa Japan Share of expected Indu
Slide 18: Mid-term growth objectives
Mid-term growth objectives Industrial Merchant +8 to 10% p.a. +4-6% pa constant FX Emerging economies Healthcare ÖEnergy +2 +8-12% pa Homecare consolidation to 3% ÖEmerging economies New geographies +1% ÖHealthcare & Electronics Electronics +8-12% pa Asia +5 ÖCurrent growth to 6% Large Industries +8
Slide 19: Ambition: be the recognized industry leader
Ambition: be the recognized industry leader Leading market shares in key markets First to develop new markets and geographies Providing competitive, innovative and environmental solutions based on new technologies Sustained superior financial performance with sustained growth in net earnings
Slide 20: Four strategic levers to achieve ambition
Four strategic levers to achieve ambition Build leadership Drive innovation positions Be the recognized industry leader Deliver efficiency Develop talents 20 2007 revenue and results - 15 February 2008
Slide 21: Deliver and transform
Deliver and transform Key projects Capital saving Cost efficiency to drive Growth project project ROCE: 11-12% €600m cost Growth Capital productivity reduction + 8-10% improvement over 3 years Definition of business models Group culture People Management Communication 21 2007 revenue and results - 1
Slide 22: WBLs approach to cost efficiency
WBLs approach to cost efficiency Large Industries – Energy management Cost efficiency DProcurement through global platforms project DPlant automation / network optimization / sourcing arbitrage ROCE: DEnergy efficient investments 11-12% €600m cost Industrial Merchant – Supply chain improvement r
Slide 23: Reducing capital intensity
Reducing capital intensity Capital saving project ROCE: Design-to-cost - to reduce capital 11-12% Capital intensity, Large Industries and productivity In €bn Industrial Merchant improvement 10 Expected Capex Asset management - better asset 2007 - 2011 productivity in Industrial Merchant Existing
Slide 24: Industrial Investment cycle
Industrial Investment cycle “ Negotiation Î Signature Î Construction Î Commissioning Î Sales ” Portfolio Decisions Capex Start-ups Ramp-ups 1 - 2 years 1 year 2 - 3 years 2 - 5 years 100 Revenue 50 50 50 40 30 2006 2007 2007 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 5 - 7 year
Slide 25: Accelerated start-ups & ramp-ups from 2008
Accelerated start-ups & ramp-ups from 2008 Portfolio Decisions Capex Start-ups Ramp-ups 2007 major start-ups 2008 major start-ups DASU in Russia DHydrogen in Antwerp Key projects DSMR in Italy DCogen in Rotterdam to drive Growth DOxygen in China Growth DIn Electronics in China + 8-10% Accelera
Slide 26: 2007 total capital expenditure: €2.7bn
2007 total capital expenditure: €2.7bn Portfolio Decisions Capex Start-ups Ramp-ups Industrial €1.4bn up +20%, 11.5% of sales Key projects to drive Growth Breakdown by geography Growth + 8-10% Emerging economies 31% Acquisitions €1.3bn: Mature economies DAsian platform 69% DConsolidation in Home
Slide 27: Record €2.1 bn industrial investment decisions
Record €2.1 bn industrial investment decisions Portfolio Decisions Capex Start-ups Ramp-ups up +42% vs 2006, up +82% vs 2005 Key projects Investment decisions in € bn 2.1 to drive Growth 1.5 Growth + 8-10% 1.1 2005 2006 2007 Breakdown by geography Emerging economies 48% Mature 52% economies Ahead
Slide 28: Portfolio doubled to >€3bn
Portfolio doubled to >€3bn Portfolio Decisions Capex Start-ups Ramp-ups Major drivers D Emerging markets Key projects to drive Growth D Energy, with emergence of O2 gasification and oxy-combustion projects Growth + 8-10% Per line of product x2 48% Steel 52% Chemicals Air Gasification Average portf
Slide 29: Five global trends driving demand
Five global trends driving demand Energy Emerging economies Health High tech Environment 29 2007 revenue and results - 15 February 2008
Slide 30: Outlook 2008
ra AIR LIQUIDE Outlook 2008
Slide 31: With solid trends in end-user markets
With solid trends in end-user markets 2007 2008 Steel Sustained demand Chemicals High capacity utilization but uncertainty Oil and gas Heavier crude price and increasing standards Electronics Strong investment in Asia Industrial Merchant Americas No sign of slowdown yet Japan & Australia Modest grow
Slide 32: Guidance 2008
Guidance 2008 “We enter the year with most of our markets well oriented, which gives us confidence in Air Liquide’s ability, at constant exchange rates, to achieve double-digit growth in net profit in 2008 ” 32 2007 revenue and results - 15 February 2008
Slide 33: Appendices
ra AIR LIQUIDE Appendices
Slide 34: 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 T
Slide 35: Business mix by region
Business mix by region 2007 Gas & Services revenue: €10bn Europe*: Americas: Asia-Pacific: €5.63bn €2.52bn €1.85bn 4% 6% 8% 32% 23% 44% 43% 46% 29% 40% 5% 20% Industrial Merchant Large Industries Healthcare Electronics * Including Middle-East & Africa 2007 revenue and results - 15 February 2008 35
Slide 36: Europe: investments & stronger demand driving growth
Europe: investments & stronger demand driving growth Industrial Merchant: Europe Gas & Services Q4 revenue: €1 439m D Strong demand in Germany, Q4 growth 07/06* Northern and Eastern Europe Europe D Neutral portfolio effect +6.3% D Weakness in Southern Europe: strike Industrial in Italy and slowing
Slide 37: Americas: momentum regained in Q4
Americas: momentum regained in Q4 Americas Gas & Services Q4 revenue: €628m Industrial Merchant: Q4 growth 07/06* D Strong demand and favorable Americas pricing in the US +8.1% Industrial +7.8% D Activity stable in Canada Merchant Large D Sustained growth in South America Industries +6.5% Large In
Slide 38: Record quarterly growth in Asia
Record quarterly growth in Asia Industrial Merchant: Asia-Pacific Gas & Services Q4 revenue: €490m D Stable in Japan Q4 growth 07/06* D Strong growth across the region Asia-Pacific D Chinese ramp-ups contribute +19.1% significantly Industrial Merchant +7.6% Electronics: D Ramp-ups in South Korea,
Slide 39: Income statement
Income statement In €m H1 07 H2 07 2007 Revenue 5 629 6 172 11 801 Operating Income Recurring before depreciation 1 320 1 410 2 730 Margin 23.4% 22.8% 23.1% Depreciation & amortization (464) (472) (936) Operating Income Recurring 856 938 1 794 Margin 15.2% 15.2% 15.2% Other non-recurring operating e
Slide 40: Margin ratios
Margin ratios Operating Income Recurring / Revenue H1 07 H2 07 2007 H1 07 H2 07 2007 excl. Nat gas excl. Nat gas excl. Nat gas Group 15.2% 15.2% 15.2% 15.2% 15.2% 15.2% Gas & Services 17.6% 18.8% 17.5% 18.6% 18.1% 18.1% H1 06 H2 06 2006 H1 06 H2 06 2006 excl. Nat gas excl. Nat gas excl. Nat gas Gr
Slide 41: Net debt and gearing
Net debt and gearing In €m 6 000 100% 77% 72% 60% 53% 55% 3 000 10% 0 -35% 2004 2005 2006 2007 Net debt Debt ratio 41 2007 revenue and results - 15 February 2008
Slide 42: Continued profitable growth
Continued profitable growth Good progress in all regions Gas & Services 07/06 OIR 07/06 Revenue % change OIR % change in €m margin as published as published Europe 5 452 +5.4% 1 056 19.4% +0 pts Americas 2 517 -2.0% 417 16.6% +120 pts Asia-Pacific 1 851 +7.9% 292 15.8% +120 pts Middle East & Afric
Slide 43: Industrial capex by zone
Industrial capex by zone 2006 2007 investments* / total revenue investments* / total revenue Europe 9.8% 9.5% Americas 9.4% 11.3% Asia-Pacific 13.0% 17.5% Middle East & Africa 11.9% 28.1% * Excludes financial investments 43 2007 revenue and results - 15 February 2008
Slide 44: Continued devaluation of USD and Yen
Continued devaluation of USD and Yen Currency impact D On P&L 2006 2007 D On 2007 Balance Sheet Revenue -0.4% -3.0% Shareholders equity: (149.8) €m OIR -0.2% -2.6% Net debt: (123.2) €m Net profit (group share) +0.3% -2.3% 2007 breakdown of currency impact on revenue In €m Q1 07 Q2 07 Q3 07 Q4 07 200
Slide 45: Currency, Natural gas and Lurgi impact on revenue
Currency, Natural gas and Lurgi impact on revenue In €m Q1 07 Q2 07 Q3 07 Q4 07 2007 Currency impact (101) (81) (64) (86) (332) Natural gas impact (25) +10 (9) +18 (6) Significant scope impact 0 0 +151 +210 +361 45 2007 revenue and results - 15 February 2008
Slide 46: Evolution of the number of shares
Evolution of the number of shares Number of shares 31/12/2006 242 298 378 Stock options +1 636 982 Reduction in capital -5 090 650 Number of shares 31/12/2007* 238 844 710 *Including 2.2 million treasury shares 2006(1) 2007 Average number of shares outstanding (2) 240 077 134 239 223 974 (1) Adjuste
Slide 47: 2007 Revenue and Results
2007 Revenue and Results 2007: strong increase in results Strengthened growth momentum February 15th, 2008