Air Liquide: 2012 Performance

Thu Feb 14, 2013 1:20am EST

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Growth in Revenue and Profit

Investments in the Most Dynamic Markets
PARIS--(Business Wire)--
Regulatory News: 

Air Liquide (Paris:AI): 

Key figures

* Group revenue of:

* € 15,326million, up +6%
* Net profit of € 1,609 million, up +4.9%
* Proposed 2012 dividend of € 2.50 per share, up +10.3%

Highlights

* Continued expansion in Developing economies:new projects in Russia, China,
Poland, Brazil, Qatar, Mexico, South Africa… 
* New acquisitions in Home Healthcare: LVL Médical (France), Gasmedi (Spain) 
* New developments in hydrogen energy: Germany, Japan, Netherlands, Norway,
Switzerland 
* Technological advances: extreme cryogenics and space (Ariane launcher, ITER
...)

Air Liquide`s Board of Directors, which met on February 13, 2013, adopted the
2012 audited financial statements. An unqualified report will be issued by the
external auditors. 

2012 consolidated revenue reached € 15,326 million. In a contrasted global
economic environment, Gas & Services showed solid growth up +6.5%. On a
comparable basis, the developing economies, which now represent 23% of sales,
achieved double digit growth (+11%) when advanced economies reached +1%. The
fourth quarter showed an improvement in growth in all regions. 

Highlights of the year included sustained growth in Large Industries notably
from the increase in hydrogen demand for refining and chemicals in Asia and the
United States, and by the progression of Healthcare driven by organic growth and
acquisitions in Europe. Industrial Merchant activityis slightly up in a very
competitive environment, while Electronics has seen signs of recovery in the
fourth quarter. 

Operating Income Recurring is up +6.3% at € 2,560 million. The operating margin,
benefiting from efficiency gains of € 284 million, is stable at 16.7%. Net
profit (Group share) is at € 1,609 million, up +4.9%. Cash flow (after change in
Working Capital Requirements) is up +11.7%. Net debt stands at € 6,103 million,
stable excluding acquisitions, leading to a gearing ratio of 58%. The pro forma*
Return on capital employed is preserved at 11.9%. 

Commenting on the 2012 results, Benoît Potier, Chairman and CEO of the Air
Liquide Group, stated: 

"In the context of the global economic slowdown in 2012, the Group`s performance
is solid. Our extensive geographic presence, our initiatives in new markets and
targeted acquisitions allow us to show further growth in activity and operating
results.

In 2012, the total amount of investment decisions rose to € 2.9 billion, the
highest level since 2007. The increase in the Engineering & Construction order
intake, the high level of our 12-month portfolio of investment opportunities and
the scheduled commissioning of 50 plants in the next two years confirm customer
confidence in the medium-term.

The Group continues to strengthen its competitiveness and innovation to ensure
profitable growth over the long-term, based upon a sustained investment program
and upon efficiencies for which the 2011-2015 objective is increased by +30% to
€ 1.3 billion.

Barring a degradation of the environment, Air Liquide is confident in its
ability to deliver another year of net profit growth in 2013."

* Pro forma: by including the annualized profit impact of the acquisition of LVL
Médical and Gasmedi.

________ 

At the next Annual General Meeting of Shareholders, the Board of Directors will
propose the payment of a dividend of 2.50 € per share, up +10.3%, taking into
account the attribution of 1 free share for 10 existing in 2012. The ex date has
been set for May 16,and the payment date on May 22, 2013. 

The Board also approved the draft resolutions to be submitted to the Annual
General Meeting, and in particular the renewal of Mr. Thierry Desmarest and Mr.
Thierry Peugeot, as directors, for a period of four years. Mr. Alain Joly`s
mandate will expire at the next AGM. Member of the Board since 1982, Mr. Alain
Joly was Chairman and CEO from 1995 to 2001, and then Chairman of the
Supervisory Board from 2001 to 2006. The Board expressed its deepest thanks for
his enormous contribution to Air Liquide`s development over these years. 

Furthermore, the Board set the compensation for the Executive officers for 2013:
details will be published on the Air Liquide website. 

________ 

Benoît Potier also comments the Group`s 2012 results in a video interview,
available in French and Englishat 8.00 am Paris time, at www.airliquide.com

Follow the announcement of the results live on Twitter thanks to the hashtag
#ALresults

All year long, follow the most recent news for Air Liquide on
https://twitter.com/airliquidegroup

Upcoming events 

First quarter 2013 revenue

Wednesday, April 24, 2013 

Annual General Meeting of Shareholders

Tuesday, May 7, 2013 

First half revenue and results

Tuesday, July 30, 2013 

Air Liquide is the world leader in gases for industry, health and the
environment, and is present in 80 countries with close to 50,000 employees.
Oxygen, nitrogen, hydrogen and rare gases have been at the core of Air Liquide`s
activities since its creation in 1902. Using these molecules, Air Liquide
continuously reinvents its business, anticipating the needs of current and
future markets.The Group innovates for the good of society while delivering
growth and consistent performance.

Innovative technologies that curb polluting emissions, lower industry`s energy
use, recover and reuse natural resources or develop the energies of tomorrow,
such as hydrogen, biofuels or photovoltaic energy… Oxygen for hospitals, home
healthcare, fighting nosocomial infections… Air Liquide combines many products
and technologies to develop valuable applications and services not only for its
customers but also for society.

A partner for the long term, Air Liquide relies on employee commitment, customer
trust and shareholder support to pursue its vision of sustainable, competitive
growth. The diversity of Air Liquide`s teams, businesses, markets and geographic
presence provides a solid and sustainable base for its development and
strengthens its ability to push back its own limits, conquer new territories and
build its future.

Air Liquide explores the best that air can offer to preserve life, staying true
to its Corporate Social Responsibility and sustainable development approach. In
2012, the Group`s revenues amounted to € 15.3 billion of which 82% were
generated outside France. Air Liquide is listed on the Paris Euronext stock
exchange (compartment A) and is a member of the CAC 40 and Dow Jones Euro Stoxx
50 indexes.

www.airliquide.com

2012 key figures

In 2012, the Group once again achieved its objective of net profit growth due to
sound activity. Gas and Services activity continued to improve in all divisions
and across all regions, with + 11% comparable growth for developing economies,
and more subdued + 1% growth for advanced economies. Gas and Services operating
margin was preserved due to an efficiency retention rate of 29%. An overheads
cost alignment program was also initiated.

Despite worldwide customer prudence due to short-term economic uncertainties,
the strong investment momentum was maintained with continued high level of
industrial investment decisions, a particularly significant level of
acquisitions and very strong engineering order intake. The Group`s financial
structure remained solid.

The Board of Directors therefore proposes to maintain the dividend par value to
be submitted to the Shareholders` Meeting of May 7, 2013 at 2.50 euros per
share. Considering the free share attribution in May 2012, this dividend
guarantees an increase of + 10.3% for each shareholder and a pay-out ratio of
49.9%.

 (in millions of euros)                                                      2011             2012            2012/2011          2012/2011    
                                                                                                               published         comparable   
                                                                                                              change             change       
 Total revenue                                                               14,457           15,326          + 6.0%             + 2.5%(a)    
 Of which Gas and Services                                                   13,064(b)        13,912          + 6.5%             + 2.8%(a)    
 Operating income recurring                                                  2,409            2,560           + 6.3%                          
 Operating income recurring as % of revenue                                  16.7%            16.7%           =                  =(c)         
 Net profit - Group share                                                    1,535            1,609           +4.9%                           
 Net earnings per share (in euros)                                           4.93(d)          5.17            + 4.9%                          
 Adjusted dividend per share (in euros)                                      2.27(d)          2.50(e)                                         
 Cash flow from operating activities before change in working capital        2,728            2,913           + 6.8%                          
 requirement                                                                                                                                  
 Net capital expenditure(f)                                                  1,676            2,848           +70.0%                          
 Net debt                                                                    5,248            6,103                                           
 Debt-to-equity ratio                                                        53%              58%                                             
 Return On Capital Employed - ROCE after tax(g)                              12.1%            11.9%(h)                                        


(a)Excluding natural gas, currency and significant scope impacts. Natural gas is
an essential raw material for the production of hydrogen and the operation of
cogeneration units. All Large Industries hydrogen and cogeneration contracts
have clauses indexing sales to the price of natural gas. Hence, when the price
of natural gas varies, the price of hydrogen or steam for the customer is
automatically adjusted proportionately, according to the index.
(b) Revenue adjusted to include the specialty ingredients activities in
Healthcare previously consolidated in Other Activities.
(c) Excluding the natural gas impact. Explanation of the natural gas impact on
revenues andoperating margin in appendix.
(d) Adjusted for the free share attribution in May 2012.
(e) Subject to the approval of the May 7, 2013 Shareholders` Meeting.
(f) Including transactions with minority shareholders.
(g) Return On Capital Employed - ROCE after tax: (net profit after tax before
deduction of minority interests - net cost of debt after taxes)/weighted average
of (shareholders` equity + minority interests + net indebtedness).
(h) Pro forma, including annualized profit impact of the acquisition of LVL
Médical and Gasmedi.

Summary

Group revenue increased by + 6.0%, amounting to 15,326 million euros. Gas and
Services revenue totaled 13,912 million euros, up + 6.5%. In terms of comparable
growth, excluding the impacts of exchange rate differences, the acquisitions of
LVL Médical and Gasmedi and rising natural gas prices, Gas and Services revenue
rose by +2.8%. Group operating margin was stable at 16.7%. Net profit (Group
share) increased by + 4.9%, amounting to 1,609 million euros.

Net cash from operating activities before changes in working capital requirement
amounted to 2,913 million euros, up + 6.8%. Capital expenditure, net of
disposals, rose sharply to 2,848 million euros, due to the numerous acquisitions
carried out during the year and industrial investments which remained at a high
level. Net debt as of December 31, 2012 totaled 6,103 million euros, and the
debt-to-equity ratio increased slightly compared to December 31, 2011, to 58%.

2012 highlights

Despite an uncertain economic context, 2012 was marked by customer confidence in
the outlook for the medium and long-term. Whereas the slowdown in global demand
led to short-term growth uncertainties, Air Liquide signed investment decisions
of more than 2.9 billion euros over the period that will contribute to growth in
the years to come. This amount of investment decisions, close to a record level,
included industrial investments of 2 billion euros and acquisitions of 887
million euros. 

Throughout 2012, the Group therefore on the one hand, pursued its organic
development strategy with the signature of numerous contracts worldwide and, on
the other, bolstered its current positions through targeted acquisitions. 

HEALTHCARE: GROWTH DRIVER IN EUROPE

The contribution of Healthcare to Gas and Services revenue increased
significantly from 16%, as published in 2011, to 18% for the year 2012 due to
several factors:

* The finalization of several acquisitions, of which two were of an important
size, enabled the Group to reinforce its positions in the European Home
Healthcare market. In August and September 2012, the Group acquired,
respectively, the French activities of LVL Médical for 316 million euros and
Spanish Gasmedi, ranked number three in its Home Healthcare market, for 330
million euros. The revenues of LVL Médical in France and Gasmedi amounted to 104
and 82 million euros, respectively, in 2011. The combined expertise of LVL
Médical in France and Gasmedi in Spain and Air Liquide`s ability to innovate
will enable the Group to improve the service rendered to all patients. These
acquisitions bring the number of patients treated by Air Liquide to more than
one million worldwide.
To finance these two acquisitions, Air Liquide issued, under its EMTN program,
9-year bonds at a rate of 2.125%. This issue was qualified as a Socially
Responsible Investment (SRI) based on a rating from the ESG agency Vigeo. This
assessment was based on the social, environmental and governance criteria of Air
Liquide`s Home Healthcare activity. The Group has thus become the first company
to issue bonds that specifically meet the criteria of Socially Responsible
Investors. This issue, placed mainly with SRI mandated investors, has enabled
the Group to diversify its financing sources.

* Furthermore, to optimize the synergies, in terms of the market or regulatory
framework, at the start of the fiscal year Air Liquide integrated its Seppic
subsidiary, recognized leader in healthcare specialty ingredients into its
Healthcare world business line.

DEVELOPMENT OF ACTIVITY IN ALL REGIONS AND BUSINESS LINES

In 2012, Air Liquide pursued its growth strategy through industrial investments
and acquisitions. In developing economies, the Group extended its operations in
the fast growing regions of Eastern Europe and Latin America. In advanced
economies, Air Liquide leveraged its existing positions and, based on its
proprietary technologies, strengthened its presence.

* In Russia, the Group accelerated its growth by starting up two new air
separation units: the first will serve merchant customers in the Tatarstan
region, while the second will supply the customer Severstal in Cherepovets. Air
Liquide also acquired two regional industrial gas bulk and cylinder activities,
Logika in Moscow, and Lentechgas in Saint Petersburg. These two initial
investments will be supplemented by the commissioning of air separation units.
In Poland, the Group also pursued its growth and signed a contract with KGHM
Polska Miedz, leader in the copper industry. These new contracts are aligned
with the contracts signed in 2011 with Metinvest in Ukraine and Severstal in
Russia, and emphasize the Group`s interest in this rapidly developing region. 
* In South America, after having invested in Chile last year, Air Liquide
intensified its development in the region. In Brazil, the Group has undertaken
to build two new production units to satisfy the growing demand from local
players such as FEMSA, the world`s leading bottler of Coca-Cola and Suzano Papel
e Celulose, the leading paper manufacturer in Latin America. After an initial
investment in Mexico in 2011, Air Liquide pursued its development in the steel
industry by signing a gas supply contract in Pesqueria, in the state of Nuevo
Léon, providing for the construction of an air separation unit and a hydrogen
production unit. 
* In China, the industrial gas business, which has until now focused on steel
production, is gradually diversifying with new opportunities, particularly in
the electronics and chemicals sectors. After having commissioned a major
hydrogen production unit in Shanghai, in January 2012, the Group decided to
build a new hydrogen unit in the Liaoning province. 
* The Group has expanded its coverage in South Africa and has signed a contract
with the country`s second largest steel producer, Evraz Highveld Steel and
Vanadium, by investing in a new air separation unit. 
* In Western Europe, the Group acquired the British company Energas & Engweld, a
distributor in the cylinder market. In Germany, benefiting from the competitive
advantage of its pipeline network, the Group won a major long-term contract with
Bayer MedicalScience amounting to an investment of 100 million euros for the
construction of a new hydrogen and carbon monoxide production unit. 
* Finally, in the Electronics sector, in the United States, following the
technological and commercial success of the ALOHA range, the Group has doubled
its world advanced precursor production capacity.

HYDROGEN: THE ENERGY CARRIER OF TODAY AND THE FUTURE

Significant progress has been achieved in the promising development of hydrogen
energy. Today, this technology is already used for targeted applications:
back-up electric generators, supply of electricity to remote locations, bus or
forklift captive fleets. Recently, in the automobile sector, several
manufacturers have announced the planned sale of electrical vehicles powered by
hydrogen fuel cells by 2015. 

Similarly, in 2012, Air Liquide inaugurated its first hydrogen filling station
accessible to passenger cars in Dusseldorf, and has entered into a contract with
the German government to build 10 new filling stations over the next three
years. The Group has also installed two new stations: in Oslo, Norway and Brugg,
Switzerland. At the year-end, the Group decided to build and operate a public
filling station in Rotterdam. These development projects have extended beyond
the boundaries of Europe; in Japan, Air Liquide set up a team to respond to the
Japanese government`s project to install 100 hydrogen filling stations by 2015. 

In order to offer its customers a complete hydrogen chain with no CO2 emissions
- from well to wheel - the Group is actively working upstream on various clean
hydrogen production projects. Accordingly, Air Liquide acquired biogas
installations in the state of Georgia, United States. The recovery of biogas
from buried waste will enable Air Liquide to produce Blue Hydrogen using
renewable and carbon-free energy sources. 

2012 income statement

Preliminary note: The consolidation of Seppic within Gas and Services at the
start of 2012 modified the Group revenue segment breakdown. The 2011 Gas and
Services and Other activities revenues have been revised to take account of this
change. Similarly, the 2011 operating income recurring breakdown has been
revised.

REVENUE

 Revenue                             2011                 2011            2012          2012/2011        2012/2011    
 (in millions of euros)              As published         revised                       change           comparable   
                                                                                                         change(a)    
 Gas and Services                    12,839               13,064          13,912        + 6.5%           + 2.8%       
 Engineering and Construction        705                  705             785           + 11.3%          + 9.4%       
 Other Activities                    913                  688             629           - 8.4%           - 9.8%       
 TOTAL REVENUE                       14,457               14,457          15,326        + 6.0%           + 2.5%       
 (a) Excluding currency, natural gas and significant scope impacts.                                                   
                                                                                                                      


Group

In 2012, Group revenue totaled 15,326 million euros, up + 6.0% as published
compared to 2011, due to a + 3.2% positive currency impact and the contribution
from two significant acquisitions progressively from the 3rd quarter. On a
comparable basis, revenue increased by + 2.5% compared to 2011.

 Revenue by quarter                                      QI 12                           Q2 12                           Q3 12         Q4 12  
 (in millions of euros)                                                                                                                       
 Gas and Services                                        3,443                           3,394                           3,490         3,585  
 Engineering and Construction                            178                             188                             167           252    
 Other Activities                                        158                             172                             146           153    
 TOTAL REVENUE                                           3,779                           3,754                           3,803         3,990  
 2012/2011 published change                              +6.7%                           +5.1%                           +5.7%         +6.6%  
 2012/2011 comparable change(a)                          +4.5%                           +1.2%                           +1.0%         +3.3%  
 (a) Excluding currency, natural gas and significant scope impacts.                                                                           
                                                                                                                                              


Currency, natural gas and significant scope impacts

In addition to the comparison of published figures, financial information is
given excluding currency, natural gas price fluctuation and significant scope
impacts.

Since industrial and medical gases are rarely exported, the impact of currency
fluctuations on activity levels and results is limited to euro translation
impacts with respect to the financial statements of subsidiaries located outside
the Euro zone. Fluctuations in natural gas prices are generally passed on to our
customers through indexed pricing clauses.

 (in millions of euros)                  Group         Gas and Services  
 2012 revenue                            15,326        13,912            
 2012/2011 % published change            + 6.0%        + 6.5%            
 Currency impact                         +464          +441              
 Natural gas impact                      +17           +17               
 Significant scope impact                +25           +25               
 Comparable change                       +364          +365              
 2012/2011 % comparable change(a)        + 2.5%        + 2.8%            
 (a)Excluding currency, natural gas and significant scope impacts.       
                                                                         


Gas and Services

Unless otherwise stated, all the changes in revenue outlined below are based on
comparable data (excluding currency, natural gas and significant scope impacts).


Gas and Services revenue totaled 13,912 million euros, up + 6.5% as published,
and benefited from a + 3.4% positive currency impact. The net impact of the sale
of the Electronics equipment activity in 2011 and the acquisitions of LVL
Médical and Gasmedi was + 0.2%. The impact of rising natural gas prices was
limited this year to + 0.1%, with the decrease in prices in Americas and
Asia-Pacific offsetting the overall increase worldwide. On a comparable basis,
revenue increased by + 2.8% compared to 2011, with growth in all regions and
business segments. 

The renewed growth in the first quarter was of short duration, with a marked
slowdown in the second and third quarters. Growth improved in the fourth
quarter, due to a more favorable comparison base of the 4th quarter 2011 which
has already been affected by the global economic slowdown. 

The activity level in 2012, which varied quarter on quarter, remained solid
throughout the year and was overall significantly higher than in 2011, exceeding
the 2008 benchmark level on average by 20%. 

This annual performance was attributable to:

* a + 11% increase in sales in developing economies, where growth was sustained
due to continued start-ups and ramp-ups, solid growth in demand and some small
acquisitions; 
* a + 1% increase in advanced economies, where the low demand growth in Europe
and Japan was offset by the steady performance in North America and Australia.

Due to a higher growth rate, the contribution of developing economies to Gas and
Services revenue again increased to reach 23% of sales in 2012. This
contribution was even higher for industrial activities. 

Despite a few start-up delays during the year, the contribution of start-ups,
ramp-ups, site takeovers and minor acquisitions to Gas and Services sales was +
3.5%, and + 3.7% including the significant scope impact.

 Revenue                        2011               2012          2012/2011         2012/2011    
 (in millions of euros)         revised(a)                       published         comparable   
                                                                 change            change(b)    
 Europe                         6,810              7,025         + 3.2%            + 1.0%       
 Americas                       2,859              3,108         + 8.7%            + 6.2%       
 Asia-Pacific                   3,083              3,416         + 10.8%           + 2.2%       
 Middle East and Africa         312                363           + 16.5%           + 16.0%      
 GAS AND SERVICES               13,064             13,912        + 6.5%            + 2.8%       
 Industrial Merchant            4,892              5,193         + 6.2%            + 2.5%       
 Large Industries               4,585              5,015         + 9.4%            + 5.6%       
 Healthcare                     2,301              2,482         + 7.9%            + 4.2%       
 Electronics                    1,286              1,222         - 5.0%            - 8.4%       
 (a)Figures adjusted for the transfer of the specialty ingredients activities to Healthcare     
 (b)Excluding currency, natural gas and significant scope impacts.                              
                                                                                                


Europe

Revenue in Europe totaled 7,025 million euros, up + 1.0%. Demand for hydrogen
increased sharply, whereas the growth in volumes of other industrial gases
remained low, particularly in Southern Europe. The region continued to benefit
from regular growth in Healthcare and the strong momentum of the developing
economies, which generated growth of + 25% due to ramp-ups, site takeovers and
minor acquisitions in Russia, Poland and Turkey. 

Europe Gas and Services 2012 revenue

* Large Industries revenue increased by + 2.5%. This performance reflects
sustained demand in the Chemicals and Refining sectors throughout Europe that
offset the dwindling demand in the metals sector and some customer plant
closures. Expansion in the major industrial countries of Eastern Europe has
produced results: Large Industries revenue rose by + 20% due to start-ups in
Russia and a site takeover in Turkey. 
* Industrial Merchant sales declined slightly by - 0.5%. Double-digit growth
continued in developing economies due to new facilities, acquisitions of
distributors close to new facilities and strong demand. However, business in
advanced economies suffered from a difficult economic climate. Cylinder and bulk
volumes are well short of 2008 levels, particularly in Southern Europe where
business continued to decline. In Northern Europe, volumes were stable and
business benefited from the acquisition of Energas, a local player in the UK.
Pricing remained positive during the year at + 0.9%. 
* The Healthcare development continued, with growth of + 2.7%,and + 6.1%
including the impact of the acquisitions since September of LVL Médical in
France and, since October, Gasmedi in Spain. Excluding LVL Médical and Gasmedi
acquisitions, Home Healthcare rose by + 3%, driven by the steady growth of
demand and the expansion of the portfolio of therapies provided to patients
despite intense price pressure during contract renewals. The rise in medical gas
volumes was hindered by the budgetary pressures of certain states. Hygiene
activities developed steadily due to sustained demand. Specialty ingredients
posted + 1% increase in revenue due to a very high comparison base in 2011. 
* Electronics revenue decreased by - 12.9% following record Equipment and
Installations sales in 2011, mainly due to the construction of a new
photovoltaic panel fab in Italy. Carrier and specialty gas sales growth,
however, remained solid, benefiting from new contracts, including the start-up
of the fab in Italy.

Americas

Gas and Services revenue in the Americas totaled 3,108 million euros, up + 6.2%.
Industrial activity remained sustained in North America, with strong demand in
hydrogen for Refining and greater Industrial Merchant price elasticity than in
Europe. In South America, regular growth of more than + 12%, was achieved during
the year, in both the industrial and Healthcare domains. 

Americas Gas and Services 2012 Revenue

* Large Industries posted solid +7.8% sales growth benefiting from site ramp-ups
in Texas and Louisiana, a site takeover and particularly robust demand in the
Chemicals sector which benefited from declining natural gas prices. Demand in
the metals sector remained buoyant in South America and gradually recovered in
the Northern economies. Cogeneration unit sales were affected by declining
electricity prices. 
* Industrial Merchant sales rose by +5.7% with a consistent performance across
the entire region. The business momentum was sustained by steady industrial
demand, acquisitions of distributors in Canada and Brazil as well as the
development of bulk gas sales for oil exploration. Cylinder activity also
improved over the entire region and particularly in South America. Pricing
campaigns continued throughout the year. 
* Healthcare revenue rose by +11.3% driven by the performance of Home Healthcare
in Latin America (Argentina, Brazil and Chile). The more subdued growth in North
America was attributable to the solid Home Healthcare growth in Canada,
primarily due to minor acquisitions and a slight slowdown in medical gases in
the United States at the end of the year. 
* Electronics activity, which declined by -5.0%, suffered from the end of the
investment cycle in 2011. Equipment and Installations revenue declined after a
very profitable first half of 2011, due to the installation of a new fab in the
United States. A new installation project should begin in early 2013. Specialty
gas sales, particularly those from the Aloha range, remained buoyant.

Asia-Pacific

Revenue in the Asia-Pacific region increased by + 2.2% to 3,416 million
euros.Performance remained very contrasted, with a decline of almost - 8% in
Japan and an + 8% rise in developing economies. The region, which represents
two-thirds of the Group`s Electronics business, was marked by the turnaround in
this sector`s investment cycle, as well as a certain prudence of customers in
their inventory management. The momentum remained strong in China, at + 15%, due
to solid demand in all business lines which improved at the end of the year, and
despite a lower contribution from start-ups than in previous years. 

Asia-Pacific Gas and Services 2012 Revenue

* Large Industries sales increased by + 10.8%. Growth was less than in previous
years due to fewer start-ups. Growth was more sustained in the fourth quarter
due to the ramp-up of a major unit in China and strong hydrogen volumes across
the region. Growth in China remained high at + 25% for the year as a whole. 
* Industrial Merchant posted + 1.5% growth during the year. The situation was
contrasted from country to country. Activity in Japan declined, and showed no
signs of the expected post-earthquake recovery. Sales growth was positive in all
other countries in the region. Sales growth in China improved quarter by quarter
to return to the level of 2011. 
* Electronics posted a - 8.1% decline for the year. Equipment and Installations
sales declined throughout the region compared to very high levels in 2011. The
Electronics sector restructuring continued in Japan and impacted the entire
production chain, and particularly industrial gas demand. Excluding Japan, gas
sales growth remained positive, particularly in China, due to new specialty and
carrier gas contracts.

Middle East and Africa

Middle East and Africa revenue totaled 363 million euros, up + 16.0%. Large
Industries posted strong growth in the Middle East and South Africa due to
ramp-ups of new units. The construction of the major hydrogen unit in Yanbu
continued to schedule. Industrial Merchant growth bounced back after a subdued
2011 marked by the impact of the Arab Spring. Healthcare activities continued to
develop steadily, particularly in South Africa and Tunisia. 

Engineering and Construction

Engineering and Construction revenue totaled 785 million euros, up + 11.3% as
published compared to 2011 reflecting progress of third-party sale of equipment
projects. 

In 2012, total order intake rose significantly to 1.7 billion euros, a + 69%
increase compared to the previous year. The vast majority of projects involve
air gas and hydrogen production units. This strong growth reflects an increase
in projects for third-party customers, particularly in North America, and an
amount of Group projects slightly up on the previous year. 

Orders in hand totaled 4.0 billion euros as at December 31, 2012, reflecting the
high order intake during the year. 

Other Activities

 Revenue                                       2011                                2011                            2012           2012/2011           2012/2011    
 (in millions of euros)                        as published                        revised                                        change              comparable   
                                                                                                                                                      change (a)   
 Welding                                       469                                 469                             450            - 3.9%              - 4.0%       
 Diving and other                              444                                 219                             179            - 18.1%             - 22.1%      
 TOTAL                                         913                                 688                             629            - 8.4%              - 9.8%       
 (a) Comparable: excluding currency impact.                                                                                                                        
                                                                                                                                                                   


The -8.4% decline in revenue from Other Activities in 2012 was attributable to
the disposal of certain industrial activities from Specialty Chemicals in the
second half of 2011. 

After a stable first half-year, Welding activity declined in the second half of
2012, reflecting the problems in the European economy, particularly in the
metals, automobile and construction sectors. 

Diving (Aqua Lung) posted + 8.2% published growth for 2012, due to steady demand
in Asia and Africa. 

OPERATING INCOME RECURRING

Operating income recurring before depreciation and amortization totaled 3,792
million euros, up +6.4%. Depreciation and amortization amounted to 1,232 million
euros, up +6.7%, reflecting the impact of unit start-ups during the year and
acquisitions. 

Group operating income recurring (OIR) totaled 2,560 million euros in 2012, up
+6.3% compared to 2011. Operating margin (OIR over revenue) was stable at 16.7%
mainly due to the increase in the level of efficiencies. For the full year,
efficiencies amounted to 284 million euros, exceeding the annual target of more
than 200 million euros. Excluding the effect of energy indexation, pricing was
positive over the period, and partially offset cost inflation of + 2.3%. 

These efficiencies represent a 2.6% cost saving. More than 40% of this stems
from purchasing and the realignment in structures where activity has suffered
from falling demand, particularly in Japan and Welding. Other projects designed
to reduce energy consumption, optimize the logistics chain and roll out
worldwide or regional purchasing platforms continued. 

Gas and Services

Gas and Services operating income recurring totaled 2,622 million euros, up
+6.1%. The published operating income recurring over revenue amounted to 18.8%,
compared to 18.9% in 2011. Excluding the natural gas impact it remained stable
at 18.9%.

Cost inflation, excluding the impact of energy indexation, gradually decreased
in the second half and totaled + 2.7% for the year. Prices continued to rise by
+ 0.4% due to persistent efforts in Industrial Merchant (+ 1.9%) and despite
continuous price decreases in Electronics and Healthcare. In addition,
efficiencies totaled 272 million euros. A portion of efficiencies was absorbed
to offset the difference between cost inflation and rising prices. The remaining
efficiencies, i.e. the retention, helped sustain the margin. The retention rate
was 29% in 2012. 

Gas and Services 2012 operating income recurring by geography

 Gas and Services Operating margin (a)        2010         2011                2012   
                                                           revised (b)                
 Europe                                       19.1%        18.8%               18.3%  
 Americas                                     21.5%        22.0%               24.0%  
 Asia-Pacific                                 16.4%        16.3%               15.1%  
 Middle East and Africa                       25.0%        20.8%               21.2%  
 TOTAL                                        19.2%        18.9%               18.8%  
 (a) Operating income recurring/revenue                                               
 (b) Revised for integration of Seppic in Gas and Services                            
                                                                                      


Operating income recurring in Europe totaled 1,285 million euros, up +0.6%. The
operating margin, excluding the natural gas impact, was broadly stable at -20
basis points. Despite a gradual improvement in prices quarter by quarter, the
low level of activity in certain Western European countries and the time lag
between the increase in prices and inflation weighed on the margin in Industrial
Merchant. Margins for the other business lines slightly improved or remained
stable. 

Operating income recurring in the Americas amounted to 745 million euros, up
+18.6%. Excluding the natural gas impact, the operating margin rose by +120
basis points due to business growth and non recurring items in 2012. 

In Asia-Pacific, operating income recurring amounted to 516 million euros, an
increase of +2.8%. Excluding the natural gas impact, the operating margin as a
percentage of revenue declined by -120 basis points due to a change in business
mix with greater share of hydrogen sales in the region. 

Operating income recurring for Middle East and Africa amounted to 77 million
euros, an increase of +18.3%. The operating margin rose by + 40 basis points,
due to a favorable comparison base following the Arab Spring of 2011. 

Engineering and Construction

Operating income recurring for Engineering and Construction was 79 million
euros. The operating margin reached 10.0%, slightly down compared to the
exceptional 10.6% in the previous year. 

Other Activities

The Group`s Other Activities reported operating income recurring of 37 million
euros, down - 33.5%, while the operating margin totaled 5.8%, a decrease of -
220 basis points. This decline reflects the sale of industrial activities from
Specialty Chemicals at the end of 2011 and the difficult context for Welding.
Margins increased slightly for the Diving activity. 

Research and Development and corporate costs

Research and Development and corporate costs include intersector consolidation
adjustments and amounted to 177 million euros, down - 8.6%. This decline
reflected the Group`s efforts to control corporate holding costs whilst
maintaining its research and innovation initiatives and investments. 

NET PROFIT

Other operating income and expenses was a negative balance of - 27 million euros
in 2012 compared to a positive balance of 28 million euros in 2011. They include
primarily higher restructuring and acquisition costs than in previous years. As
a reminder, in 2011, they benefited from capital gains on the disposal of
non-strategic subsidiaries. 

Net financial expenses, at - 312 million euros increased by + 4.6% compared to -
298 million euros in 2011. Net finance costs, up +1.8%, excluding the currency
impact, reflected a slight increase in average debt over the year offset by a
decline in the average financing rate from 4.8% in 2011 to 4.6%. 

Other financial income and expenses were virtually stable. 

Taxes totaled 566 million euros, down - 1.8%. The effective tax rate was 25.5%
compared to 27.0% in 2011. This rate was attributable to a tax gain resulting
from the favorable evolution of tax audits. Excluding this impact, the effective
tax rate for the year would have been 27.7%. 

Profit from associates amounted to 20 million euros, compared to 33 million
euros in 2011. This decline was primarily due to the change to proportionate
consolidation of an Engineering and Construction subsidiary in Asia. Minority
interests rose by + 10.6%, amounting to 66 million euros. 

Overall, net profit (Group share) amounted to 1,609 million euros in 2012, up
+4.9%. 

Net earnings per share was 5.17 euros, up +4.9% compared to 2011, after
adjustments for the free share attribution in May 2012. The average number of
outstanding shares used for the net earnings per share calculation as of
December 31, 2012 was 311,147,191. 

Change in the number of shares

                                                 2011                  2012         
 Average number of outstanding shares (a)        311,594,600(b)        311,147,191  
 (a) Used to calculate net earnings per share                                       
 (b) Adjusted for the free share attribution in May 2012.                           


                                                                                            
 Number of shares as of December 31, 2011                                      283,812,941  
 Options exercised during the year, prior to the free share attribution        245,020      
 Cancellation of treasury shares                                               (1,200,000)  
 Free shares issued                                                            29,003,797   
 Options exercised during the year, after the free share attribution           419,401      
 Number of shares as of December 31, 2012                                      312,281,159  


DIVIDEND

At the Shareholders Meeting of May 7, 2013, the payment of a dividend of 2.50
euros per share will be proposed to shareholders in respect of fiscal year 2012,
a + 10.3% increase, taking into account the free share attribution in May 2012.
This represents an estimated distribution amount of 803 million euros, up +
10.2% and a pay-out ratio of 49.9%. 

The ex-dividend date has been set for May 16, 2013 and the dividend will be paid
on May 22, 2013. 

2012 cash flow and balance sheet

 (in millions of euros)                                                                        2011           2012     
 Cash flow from operating activities before changes in working capital                         2,728          2,913    
 Change in working capital requirement                                                         (193)          (67)     
 Other                                                                                         (109)          (137)    
 Net cash from operating activities                                                            2,426          2,709    
 Dividends                                                                                     (721)          (781)    
 Purchases of property, plant and equipment and intangible assets, net of disposals (a)        (1,676)        (2,848)  
 Increase in share capital                                                                     52             37       
 Purchase of treasury shares                                                                   (94)           (104)    
 Other                                                                                         (196)          132      
 Change in net indebtedness                                                                    (209)          (855)    
 Net indebtedness as of December 31                                                            (5,248)        (6,103)  
 Debt to equity ratio as of December 31                                                        53 %           58 %     
 (a) Including minority interest transactions.                                                                         
                                                                                                                       


CASH FLOW FROM OPERATING ACTIVITIES

Cash flow from operating activities before changes in the working capital
requirement amounted to 2,913 million euros, up +6.8% on 2011, compared to a
4.9% increase in net profit. This performance, which was partially attributable
to the rise in depreciation and amortization charges during the year, mainly
reflects the quality of the operating results. 

CHANGE IN WORKING CAPITAL REQUIREMENT

The working capital requirement increased by + 67 million euros in 2012,
strictly managed relative to the growth in revenue. The working capital to sales
ratio, excluding taxes, was 7.1%, compared to 7.0% in 2011. A decline in
Engineering advances was compensated by an improvement in the performance of Gas
& Services, primarily due to the considerable rise in cash inflows in the
Southern European healthcare sector. 

TOTAL CAPITAL EXPENDITURE

Following the significant level of investment decisions in 2010 and 2011,
totaling on average 2.1 billion euros per year, total industrial capital
expenditure increased to 2.0 billion euros in 2012. Acquisitions, intended to
strengthen the Group`s local presence in Home Healthcare and Industrial
Merchant, totaled nearly 890 million euros, including buybacks of minority
interests. 

Group gross capital expenditures

 (in millions of euros)        Industrial          Financial               Total   
                               investments         investments (a)         capex   
 2007                          1,359               1,308                   2,667   
 2008                          1,908               242                     2,150   
 2009                          1,411               109                     1,520   
 2010                          1,450               332                     1,782   
 2011                          1,755               103                     1,858   
 2012                          2,008               890                     2,898   
 (a)Including minority interest transactions.                                      
                                                                                   


Industrial investment

Industrial investment amounted to 2.0 billion euros in 2012, up + 14% compared
to 2011. The amount of Gas and Services investment breaks down as follows: 

Gas and Services Industrial investment by geographical area

 (in millions of euros)        Gas and Services                                                                        
                               Europe           Americas           Asia-Pacific           Middle-East           Total  
                                                                                          and Africa                   
 2011                          690              387                510                    137                   1,724  
 2012                          691              467                570                    224                   1,952  


Industrial disposals amounted to 49 million euros. 

Financial investment

Financial investment amounted to 890 million euros, including minority interest
transactions of 11 million euros. This comprises two acquisitions in Home
Healthcare, LVL Médical in France and Gasmedi in Spain, for a net amount of 632
million euros, as well as numerous small acquisitions in Healthcare and
Industrial Merchant. Disposals of financial investments totaled 1 million euros.


NET INDEBTEDNESS

Net indebtedness as of December 31, 2012 totaled 6,103 million euros, up 855
million euros compared to December 31, 2011, reflecting the acceleration in the
acquisition program. The debt-to-equity ratio was 58%, a slight increase
compared to December 31, 2011. The Group`s financial structure remained
extremely secure. 

ROCE

The return on capital employed after tax was 11.7%. The pro forma ROCE,
including the annualized profit impact of the acquisition of LVL Médical and
Gasmedi, was 11.9%, compared to 12.1% published at the end of 2011. This
decrease reflects the substantial ongoing industrial investment, which will
contribute to medium-term growth. 

INVESTMENT CYCLE AND FINANCING STRATEGY 

The Group`s steady long-term growth is largely due to its ability to invest in
new projects each year. Industrial gas investment projects are widespread
throughout the world, highly capital intensive and supported by long-term
contracts, particularly for Large Industries. Air Liquide has thus tailored its
financing strategy to the nature of its projects, based on the diversification
of funding sources, the prudential management of the balance sheet and
innovative financing sourcing. This financing strategy is fundamental for the
Group`s continued development. 

Investments

The Group`s investments reflect its growth strategy. 

They can be classified into two categories:

* Industrial investments, which bolster organic growth or guarantee the
efficiency, maintenance or safety of installations; 
* Financial investments, which strengthen existing positions, or accelerate
penetration into a new region or business segment through the acquisition of
existing companies or assets already in operation.

The nature of the industrial investment differs from one world business line to
the next: from gas production units for Large Industries, to filling centers,
logistics equipment, storage facilities and management systems for Industrial
Merchant, Electronics and Healthcare. Capital intensity varies greatly from one
business line to another. 

Long-term development is one of the key characteristics of the industrial gases
business. It is particularly evident in the investment cycle, where there is
approximately a 5-year span between the study of a new construction project for
a Large Industries customer and the first corresponding industrial gas sales.
Monitoring this cycle is essential to anticipating the Group`s future growth.

PORTFOLIO OF OPPORTUNITIES

As at December 31, 2012, the 12-month portfolio of opportunities totaled 4.0
billion euros, virtually stable compared to December 31, 2011. This level of
opportunities remains high, even though the investment decisions during the
year, and which were therefore removed from the portfolio, were very
substantial. This relative portfolio stability was attributable to the entry of
new projects, some of which were of considerable size, mostly located in
developing economies. Project reviews increased compared to 2011. 

As at December 31, 2012, 64% of projects in the portfolio were located in
developing economies, very similar to previous year. In advanced economies,
there were renewals and also the commissioning of new facilities in the world`s
most competitive industrial basins (Northern Europe, United States, etc.). 

Projects are spread out over the Group`s four geographical areas, but the
percentage in the Americas and the Middle East and Africa is increasing. The
percentage of projects in China decreased slightly but was offset by the rest of
Asia. In Europe, projects are evenly spread between Western Europe and Central
and Eastern Europe. 

The outsourcing of industrial gas production continued, both in advanced
economies when replacing old plants, and in developing economies for new
facilities. The 12-month portfolio of opportunities includes 12 planned site
takeovers, currently operated by the clients themselves. 

The majority of the portfolio concerns Large Industries, since Industrial
Merchant, Healthcare and Electronics projects frequently amount to less than 5
million euros. The percentage of Large Industries projects relating to metals
was stable, while Chemicals sector projects declined. Energy-related projects
have increased significantly and tend to be individually much larger. They
generally take longer to negotiate and therefore remain longer in the portfolio.
The weight of Industrial Merchant, Electronics and Healthcare projects remained
close to that of the previous year. 

INVESTMENT DECISIONS

The Investment decision process is at the heart of the Group`s growth strategy
and covers:

* internal and external growth projects; 
* equipment renewals; 
* investments contributing to efficiency and reliability; 
* industrial safety improvement.

Strict discipline drives investment decisions, as they commit the Group over the
long term. A dedicated process is in place to ensure that selected projects
comply with the Group`s rules and sustain long-term growth with a required
minimum return on capital employed of between 12% and 13%. 

The return on capital employed (ROCE) for a major Large Industries long-term
contract will change over the term of the contract. It is lower in the first
four to five years, due to the ramp-up in client demand, compared to a
straight-line depreciation over time. Return on capital employed increases
rapidly thereafter. The Group`s ROCE is calculated using net profit, after
taxes, depreciation, amortization and impairment. 

Investment decisions

 (in billions of euros)        Industrial investment        Financial investment             Total                  
                               decisions                    decisions (acquisitions)         investment decisions   
 2008                          2.2                          0.2                              2.4                    
 2009                          1.0                          0.1                              1.1                    
 2010                          1.8                          0.4                              2.2                    
 2011                          1.9                          0.1                              2.0                    
 2012                          2.0                          0.9                              2.9                    


In 2012, industrial and financial investment decisions, representing Group
commitments to invest, rose by + 45% amounting to a particularly high level of
2.9 billion euros and were staggered over the four quarters of the year. They
include the still significant level of industrial investments of 2.0 billion
euros and almost 1 billion euros of acquisitions. 

Large Industries, Industrial Merchant and Healthcare each represent around 30%
of investment decisions. Industrial investments in developing economies account
for 28% of total decisions, industrial investments in advanced economies for 42%
and acquisitions for 30%.

* Industrial investment decisions were spread throughout the year. The
percentage of decisions regarding investments located in developing economies
declined compared to 2011. This change was due to several important projects won
in Germany and the Netherlands. In developing economies, the most significant
projects were located in Poland, Ukraine, China and Brazil.
In geographical terms, industrial decisions were spread across all regions. This
year, Europe represented 50% of decisions: new facilities for chemicals in
Germany and the Netherlands and for the treatment of metals in Poland, contract
renewals and CO2 capture in France and a site takeover in Ukraine. The
percentage for the Americas increased this year and reached the same level as
Asia. Among the developing economies, China, Brazil and Poland are the leading
countries in terms of 2012 decisions.
In Large Industries, decisions were balanced between air gas and hydrogen units.
In Industrial Merchant and Electronics, decisions mainly concerned on-site
(customer sites) and carrier gas production units.

* Financial investment decisions amounted to more than 887 million euros in 2012
and include two major acquisitions in Home Healthcare in France and Spain for a
total of 646 million euros. The remaining amount involves more modest Home
Healthcare acquisitions in Canada, Poland, Brazil and South Korea, and
acquisitions of local Industrial Merchant players in the United Kingdom, Russia,
the United States and Canada. The contribution of all acquisitions, less the
impact of disposals, including those of insignificant scope, to Gas and Services
sales was around + 1% during the year.
With three consecutive years amounting to more than 2 billion euros, investment
decisions are in line with the Group`s medium-term objectives and will guarantee
part of its future growth. The investment portfolio stability and the
substantial level of decisions together illustrate the dynamism of the
industrial gas investment cycle and customers confidence in the medium-term.

CAPITAL EXPENDITURE

In 2012, gross capital expenditure totaled 2,898 million euros, including
minority interest transactions. This amount comprised several acquisitions
totaling 890 million euros, including two of significant scope in Healthcare and
several reasonably-sized acquisitions in Healthcare and Industrial Merchant, as
well as a site takeover in Ukraine. 

Asset disposals amounting to 49 million euros concerned non-strategic
activities, and particularly two minor subsidiaries in Oceania. 

Net capital expenditure therefore totaled 2,847 million euros. Gas and Services
gross capital expenditure represented 20.3% of sales, compared to 14.2% in 2011.


START-UPS

In 2012, 17 units were commissioned, evenly split between advanced and
developing economies. Many of the start-ups were air gas production units for
the steel industry, in China, Russia and Egypt. There were also four Industrial
Merchant start-ups: in Canada and the United States to supply the oil
exploration services sector, in Sweden to extend Air Liquide`s coverage and in
Portugal to optimize logistics. 

Certain start-ups initially scheduled for 2012 were postponed for periods
ranging from one month to a few quarters. The reasons for these delays were
mainly technical setbacks relating to customer unit start-ups. There should be
more start-ups in 2013 and 2014: 50 are expected for this period. 

Financing Strategy

The Group`s financing strategy is regularly reviewed to provide support to the
Group`s growth strategy and take into account changes in financial market
conditions, while respecting a gearing ratio in line with a Standard & Poor`s
long term "A" rating (positive outlook since May 8, 2012). 

In 2012, the existing prudential principles were maintained:

* diversifying funding sources and debt maturities in order to minimize
refinancing risk; 
* backing commercial paper issues with confirmed lines of credit; 
* hedging interest rate risk to ensure visibility of funding costs, in line with
long-term investment decisions; 
* funding of investments in the currency of the operating cash flows generated,
to ensure a natural foreign exchange hedge; 
* centralizing excess cash through Air Liquide Finance, a wholly owned entity of
L`Air Liquide S.A.

DIVERSIFYING FUNDING SOURCES

Air Liquide diversifies its funding sources by accessing various debt markets:
commercial paper, bonds and banks. 

Air Liquide uses short-term commercial paper market, in France through two
French Commercial Paper programs of up to an outstanding maximum of 3 billion
euros, and in the United States through a US Commercial Paper program (USCP) of
up to an outstanding maximum of 1.5 billion US dollars. 

Air Liquide also has a Euro Medium Term Note (EMTN) program to issue long-term
bonds of up to an outstanding maximum amount of 6 billion euros. At the end of
2012, outstanding bonds issued under this program amounted to 3.9 billion euros
(nominal amount). 

In 2012, the Group conducted several bond issues in US dollars, yen and euros
under its EMTN program for an amount equivalent to 770.4 million euros (nominal
amount), in order to finance its acquisitions and investments. 

Air Liquide Finance carried out a US private placement in September 2012 for 700
million US dollars, to renew the US private placement issued in 2004, for which
the last tranche matured in August 2012. 

As of December 31, 2012, funding through capital markets still accounts for more
than two thirds of the Group`s gross debt, for an amount of bonds outstanding of
4.8 billion euros (nominal amount). 

The Group also obtains funding through bank debt (loans and lines of credit). 

To avoid liquidity risk relating to the renewal of funding at maturity, and in
accordance with the Group`s internal policy, the Group aims to limit its
short-term debt maturities to 2.1 billion euros, an amount which is covered by
committed credit lines. 

These credit lines include a 1 billion euro 5-year syndicated credit facility
(with two one-year extension options) with the Group`s core banks, renewed in
advance in November 2011 to replace a syndicated credit facility that matured in
July 2012. On October 12, 2012, the participating banks renewed their first
extension option, extending the initial maturity by an additional year. 

Net indebtedness by currency

                                       2011                2012  
 EUR (euro)                            22%                 35%   
 USD (US dollar)                       30%                 27%   
 JPY (Japanese yen)                    23%                 16%   
 CNY (Chinese renminbi)                12%                 12%   
 Other                                 13%                 10%   
 TOTAL                                 100%                100%  


Investments are essentially funded in the currency in which the cash flows are
generated, thus creating a natural foreign exchange hedge. Air Liquide`s debt is
thus mainly in the euro, US dollar, Japanese yen and Chinese renminbi, which
reflects the significant weight of these currencies in the Group`s investments
and cash flow. 

The share of the Group net indebtedness denominated in euros increased because
of the two significant home healthcare acquisitions in Europe. 

In 2011, Air Liquide was the first French corporate to issue
renminbi-denominated bonds for a record total amount of 2.6 billion renminbis
(or 316.3 million euros equivalent) with 5 and 7-year maturities. In 2012, Air
Liquide continued to innovate in the bond markets, and became the first
corporate to issue a Socially Responsible Investment-labeled bond, for a total
amount of 500 million euros and a coupon of 2.125% with a 9-year maturity. This
bond was used to refinance the Home Healthcare acquisitions of LVL Médical and
Gasmedi. The attribution of a rating of the Group`s Home Healthcare segment from
the extra-financial rating agency Vigeo provided qualification as a Socially
Responsible Investment (SRI). More than 60% of this bond was placed with
investors holding SRI mandates.

CENTRALIZATION OF FUNDING AND EXCESS CASH

To benefit from economies of scale and facilitate capital markets funding (bonds
and commercial paper), the Group uses a dedicated subsidiary, Air Liquide
Finance. This subsidiary centralizes the Group`s funding activities,
particularly in Europe, North America, Japan and China. It also hedges foreign
exchange and interest rate risk for the Group`s subsidiaries in those countries
where it is permissible under law. 

As of December 31, 2012, Air Liquide Finance had granted, directly or
indirectly, the equivalent of 6.3 billion euros in loans and received 3.3
billion euros in cash surpluses as deposits. These transactions were denominated
in 19 currencies (primarily the euro, US dollar, Japanese yen, Chinese renminbi,
British pound sterling, Swiss franc, Singapore dollar and Brazilian real) and
extended to approximately 200 subsidiaries. 

The matching positions per currency within Air Liquide Finance, resulting from
the currency hedging of intra-group loans and borrowings, ensure that these
intra-group funding operations do not generate foreign exchange risk for the
Group. 

Furthermore, in certain specific cases (e.g.: regulatory constraints, high
country risk, partnerships), the Group limits its risk by setting up independent
funding for these subsidiaries in the local banking market, and by using
credit-risk insurance. 

DEBT MATURITY AND SCHEDULE

To minimize the refinancing risk related to debt repayment schedules, the Group
diversifies funding sources and spreads maturities over several years. This
refinancing risk is also reduced by the regularity of the cash flow generated
from the Group operations. 

The 2012 bond issues (including the US private placement) have helped to
continue to extend the average maturity of the Group`s debt, which is now 5.1
years (compared to 4.6 years at the end of 2011 and 4.4 years at the end of
2010). 

CHANGE IN NET INDEBTEDNESS

Net indebtedness stood at 6,103 million euros as of December 31, 2012, compared
to 5,248 million euros as of December 31, 2011, an increase of 855 million
euros. 

This increase primarily reflects the financing of acquisitions, particularly in
France and Spain, partially offset by the positive impact of foreign currency
fluctuations. The Group`s 2012 capital expenditure and the dividends paid to
shareholders were funded from the cash flows generated by the Group`s commercial
activities. 

The net indebtedness to equity ratio stood at 58% at the end of 2012 (compared
to 53% at the end of 2011). The higher level is the result of a significant
increase in 2012 industrial investments and acquisitions. The equivalent ratio
calculated using the US method of net indebtedness / (net indebtedness +
shareholder`s equity), reached 37% at the end of 2012, compared to 35% at the
end of 2011. The financial expenses coverage ratio (operating income recurring +
share of profit of associates)/net finance costs stood at 10.3 in 2012 compared
to 10.5 in 2011. 

The average cost of net indebtedness stood at 4.6% in 2012, a slight decrease
compared to 2011 (4.8%). Cost of net indebtedness is calculated by dividing net
finance costs for the fiscal year (274.1 million euros in 2012, excluding
capitalized interest) by the year`s average outstanding net indebtedness. 

The average cost of gross indebtedness also declined in 2012. 

The reduction in the average cost of net indebtedness arises primarily from
lower interest rates on the portion of the variable debt and significantly lower
fixed rates on the new bond issues compared to those that matured in 2012. 

BANK GUARANTEES

In connection with its Engineering and Construction activity, the subsidiaries
of the Group sometimes grant bank guarantees to customers, during tendering
period (bid bond), and after contract award, during contract execution until the
end of the warranty period (advance payment bond, retention bond, performance
bond, warranty bond).The most common bank guarantees extended to clients to
secure the contractual performance are advance payment guarantees and
performance guarantees. 

The projects for which these guarantees are granted are regularly reviewed by
Management and, accordingly, when guarantee calls become probable, the necessary
provisions are recorded in the Consolidated financial statements. 

CREDIT RATINGS

The Air Liquide long-term credit rating from Standard & Poor`s has remained
unchanged at "A" since 2007, with a positive outlook issued on May 8, 2012. 

The short-term credit ratings of "A-1" from Standard & Poor`s and "P-1" from
Moody`s have remained unchanged for 10 years. 

The main indicators analyzed by the rating agencies are net debt to equity and
the ratio of cash flow from operations before change in working capital to net
debt, adjusted primarily for pension liabilities. 

OUTLOOK 

In the context of the global economic slowdown in 2012, the Group`s performance
is solid. Its extensive geographic presence, the initiatives in new markets and
targeted acquisitions allow it to show further growth in activity and operating
results. 

In 2012, the total amount of investment decisions rose to 2.9 billion euros, the
highest level since 2007. The increase in the Engineering & Construction order
intake, the high level of our 12-month portfolio of investment opportunities and
the scheduled commissioning of 50 plants in the next two years confirm customer
confidence in the medium-term. 

The Group continues to strengthen its competitiveness and innovation to ensure
profitable growth over the long-term, based upon a sustained investment program
and upon efficiencies for which the 2011 -2015 objective is increased +30% to
1.3 billion euros. 

In the short term, the Group is actively working on controlling costs,
streamlining its internal processes and adapting its organization. Accordingly,
during 2013, an organization founded on a base in Paris and three principal hubs
in Houston, Frankfurt and Shanghai will gradually take shape, in order to
optimize the Group`s resources and be more agile in responding to market trends.


Barring a degradation of the environment, Air Liquide is confident in its
ability to deliver another year of net profit growth in 2013. 

Appendices

 4th quarter 2012 revenue                                                                          
                                                                                                   
 By geography                                                                                      
 Revenues                          Q4 2011            Q4 2012        Published        Comparable   
 In millions of euros              revised(a)                        Change           change (b)   
 Europe                            1,72               1,827          +6.2%            +2.3%        
 Americas                          722                797            +10.3%           +7.6%        
 Asia-Pacific                      787                868            +10.4%           +6.2%        
 Middle-East and Africa            84                 93             +11.1%           +11.2%       
 Gas and Services Revenues         3,313              3,585          +8.2%            +4.6%        
 Engineering & Construction        258                252            -1.9%            -2.6%        
 Other Activities                  174                153            -12.1%           -12.1%       
 Group revenue                     3,745              3,99           +6.6%            +3.3%        
                                                                                                   
                                                                                                   
 By World business line                                                                            
 Revenues                          Q4 2011            Q4 2012        Published        Comparable   
 In millions of euros              revised(a)                        Change           change (b)   
 Large industries                  1,256              1,307          +4.1%            +2.2%        
 Industrial Merchant               1,174              1,296          +10.4%           +7.7%        
 Electronics                       291                304            +4.6%            +1.7%        
 Healthcare                        592                678            +14.3%           +5.0%        
 Gas and Services Revenues         3,313              3,585          +8.2%            +4.6%        
 (a) Restated for the integration of Seppic into the G&S activity.                                 
 (b) Excluding currency, natural gas and significant scope impacts.                                
                                                                                                   


 Segment information                                                                                                             
                                                                                                                                 
                         2011(a)                                                2012                                             
                         Revenue            Operating            OIR            Revenue            Operating            OIR      
                                            income               margin                            income               margin   
                                            recurring                                              recurring                     
 Europe                  6,810.3            1,278.0              18.8%          7,025.5            1,285.1              18.3%    
 Americas                2,859.0            627.8                22.0%          3,108.2            744.6                24.0%    
 Asia-Pacific            3,083.2            501.8                16.3%          3,415.6            515.6                15.1%    
 Middle-East and         311.5              64.9                 20.8%          362.7              76.8                 21.2%    
 Africa                                                                                                                          
 Gas and                 13,064.0           2,472.5              18.9%          13,912.0           2,622.1              18.8%    
 Services                                                                                                                        
 Engineering &           705.1              74.7                 10.6%          784.6              78.7                 10.0%    
 Construction                                                                                                                    
 Other activities        687.8              55.2                 8.0%           629.7              36.7                 5.8%     
 Reconciliation          -                  (193.7)              -              -                  -177.0               -        
 Total Group             14,456.9           2,408.7              16.7%          15,326.3           2,560.5              16.7%    
 (a)Restated for the integration of Seppic into the G&S activity.                                                                
                                                                                                                                 


Currency, natural gas and significant scope impacts

In addition to the comparison of published figures, financial information is
given excluding currency, the impact of natural gas price fluctuations and
significant scope effect.

Since industrial and medical gases are rarely exported, the impact of currency
fluctuations on activity levels and results is limited to euro translation
impacts with respect to the financial statements of subsidiaries located outside
the Euro-zone. Fluctuations in natural gas prices are generally passed on to our
customers through indexed pricing clauses.

Impacts for 4th quarter 2012

 (in millions of euros)                            Group        Gas and Services  
 Revenue Q4 2012                                   3,991        3,585             
 Change Q4 2012/ Q4 2011 published (%)             +6.6%        +8.2%             
 Currency impact                                   +63          +61               
 Natural gas impact                                +4           +4                
 Significant scope impact                          +54          +54               
 Comparable change                                 +125         +153              
 Change Q4 2012/ Q4 2011 comparable (a) (%)        +3.3%        +4.6%             
 (a) Excluding currency, natural gas and significant scope impacts                
                                                                                  


For the Group, the currency impact is +1.7%, the natural gas impact is +0.1% and
significant scope impact is +1.5%. 

For Gas and Services, the currency impact is +1.8%, the natural gas impact is
+0.2% and significant scope impact is +1.6%. 

Explanation of the natural gas impact

Natural gas is an essential raw material for the production of hydrogen and the
operation of cogeneration units. All Large Industries hydrogen and cogeneration
contracts have clauses indexing sales to the price of natural gas. Hence, when
the price of natural gas varies, the price of hydrogen or steam for the customer
is automatically adjusted proportionately, according to the index. 

When the price of natural gas increases, revenue and costs rise by the same euro
amount, without significantly impacting Operating income recurring. This
mechanism has a negative effect on the operating margin. 

Conversely, when the price of natural gas decreases, revenue and costs decrease
and operating income recurring is maintained, which has a positive effect on the
operating margin. 

In both cases, natural gas price fluctuations do not change the intrinsic
profitability of the activity. 

In 2012, considering the minimal fluctuations in the average price of natural
gas, Gas and Services operating margins were not impacted. Nevertheless, at the
regional level, the decline in prices in North America led to a decrease in
revenue and automatically increased the operating margin. Conversely, in the
rest of the world, the rise in the price of natural gas slightly increased
revenue therefore leading to a decrease in operating margin.

 Consolidated income statement                                                                                    
                                                                                                                  
 In millions of euros                                                   2011             2012             Change  
                                                                                                          12/11   
 Revenue                                                                14,456.9         15,326.3         6.0%    
 Other income                                                           139.3            134.5                    
 Purchases                                                              (5,761.6)        (6,098.6)                
 Personnel expenses                                                     (2,481.5)        (2,666.7)                
 Other expenses                                                         (2,789.5)        (2,903.2)                
 Operating income recurring before depreciation and amortization        3,563.6          3,792.3          6.4%    
 Depreciation and amortization expense                                  (1,154.9)        (1,231.8)        6.7%    
 Operating income recurring                                             2,408.7          2,560.5          6.3%    
 Other non-recurring operating income                                   123.1            13.4                     
 Other non-recurring operating expenses                                 (95.3)           (40.5)                   
 Operating income                                                       2,436.5          2,533.4          4.0%    
 Net finance costs                                                      (235.5)          (248.1)          5.4%    
 Other financial income                                                 68.7             69.2                     
 Other financial expenses                                               (131.4)          (133.0)                  
 Income taxes                                                           (576.4)          (566.0)                  
 Share of profit of associates                                          32.8             20.0                     
 Profit for the period                                                  1,594.7          1,675.5          5.1%    
 • Minority interests                                                   59.8             66.1                     
 • Net profit (Group share)                                             1,534.9          1,609.4          4.9 %   
                                                                                                                  
 Basic earnings per share (in euros)                                    4.93(a)          5.17             4.9%    
 (a) Adjusted for free share attribution in May 2012                                                              
                                                                                                                  


 Consolidated balance sheet                                                                                                                  
                                                                                                                                             
 In millions of euros                                                                            As at December 31        As at December 31  
                                                                                                 2011                     2012               
 ASSETS                                                                                                                                      
 Goodwill                                                                                        4,558.5                  5,132.7            
 Other intangible assets                                                                         638.2                    726.5              
 Property, plant and equipment                                                                   12,096.9                 12,784.7           
 Non-current assets                                                                              17,293.6                 18,643.9           
 Non-current financial assets                                                                    398.3                    435.8              
 Investments in associates                                                                       211.1                    221.7              
 Deferred tax assets                                                                             290.3                    365.5              
 Fair value of non-current derivatives (assets)                                                  63.6                     53.8               
 Other non-current assets                                                                        963.3                    1,076.8            
 TOTAL NON-CURRENT ASSETS                                                                        18,256.9                 19,720.7           
 Inventories and work-in-progress                                                                784.1                    775.8              
 Trade receivables                                                                               2,779.3                  2,826.5            
 Other current assets                                                                            444.8                    422.3              
 Current tax assets                                                                              52.0                     71.3               
 Fair value of current derivatives (assets)                                                      45.2                     33.2               
 Cash and cash equivalents                                                                       1,761.1                  1,154.2            
 TOTAL CURRENT ASSETS                                                                            5,866.5                  5,283.3            
 TOTAL ASSETS                                                                                    24,123.4                 25,004.0           
 EQUITY AND LIABILITIES                                                                                                                      
 Shareholders` equity                                                                            9,758.6                  10,211.7           
 Minority interests                                                                              237.1                    232.6              
 TOTAL EQUITY                                                                                    9,995.7                  10,444.3           
 Provisions, pensions and other employee benefits                                                1,897.0                  2,216.1            
 Deferred tax liabilities                                                                        1,204.9                  1,134.8            
 Non-current borrowings                                                                          5,662.5                  5,789.0            
 Other non-current liabilities                                                                   190.4                    195.6              
 Fair value of non-current derivatives (liabilities)                                             126.1                    85.1               
 TOTAL NON-CURRENT LIABILITIES                                                                   9,080.9                  9,420.6            
 Provisions, pensions and other employee benefits                                                190.6                    243.2              
 Trade payables                                                                                  1,992.5                  1,896.1            
 Other current liabilities                                                                       1,244.4                  1,325.6            
 Current tax payables                                                                            162.3                    176.6              
 Current borrowings                                                                              1,373.5                  1,484.7            
 Fair value of current derivatives (liabilities)                                                 83.5                     12.9               
 TOTAL CURRENT LIABILITIES                                                                       5,046.8                  5,139.1            
 TOTAL EQUITY AND LIABILITIES                                                                    24,123.4                 25,004.0           
                                                                                                                                             
                                                                                                                                             
 Consolidated cash flows statement                                                                                                           
                                                                                                                                             
 For the year ending 31/12                                                                                                                   
 In millions of euros                                                                            2011                     2012               
 Operating activities                                                                                                                        
 Net profit (Group share)                                                                        1,534.9                  1,609.4            
 Minority interests                                                                              59.8                     66.1               
 Adjustments :                                                                                                                               
 • Depreciation and amortization                                                                 1,154.9                  1,231.8            
 • Change in deferred taxes                                                                      99.6                     52.0               
 • Increase (decrease) in provisions                                                             5.1                      (19.7)             
 • Share of profit of associates (less dividends received)                                       (17.9)                   (6.1)              
 • Profit/loss on disposal of assets                                                             (108.3)                  (20.9)             
 Cash flow from operating activities before changes in working capital                           2,728.1                  2,912.6            
 Changes in working capital                                                                      (192.8)                  (67.3)             
 Other                                                                                           (109.5)                  (136.8)            
 Net cash flows from operating activities                                                        2,425.8                  2,708.5            
                                                                                                                                             
 Investing activities                                                                                                                        
 Purchase of property, plant and equipment and intangible assets                                 (1,755.0)                (2,007.9)          
 Acquisition of subsidiaries and financial assets                                                (99.5)                   (879.4)            
 Proceeds from sale of property, plant and equipment and intangible assets                       180.9                    49.1               
 Proceeds from sale of financial assets                                                          1.3                      1.2                
 Net cash flow used in investing activities                                                      (1,672.3)                (2,837.0)          
                                                                                                                                             
 Financing activities                                                                                                                        
 Dividends paid                                                                                                                              
 • L'Air Liquide S.A.                                                                            (679.2)                  (722.6)            
 • Minority interests                                                                            (42.2)                   (58.0)             
 Proceeds from issues of share capital                                                           51.5                     37.3               
 Purchase of treasury shares                                                                     (93.8)                   (104.2)            
 Increase (decrease) in borrowings                                                               237.2                    373.5              
 Transactions with minority shareholders                                                         (3.3)                    (10.5)             
 Net cash flows from (used in) financing activities                                              (529.8)                  (484.5)            
                                                                                                                                             
 Effect of exchange rate changes and change in scope of consolidation                            6.5                      (12.9)             
 Net increase (decrease) in net cash and cash equivalent                                         230.2                    (625.9)            
 NET CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                            1,482.2                  1,712.4            
 NET CASH AND CASH EQUIVALENTS AT END OF PERIOD                                                  1,712.4                  1,086.5            
                                                                                                                                             
 The analysis of net cash and cash equivalents at the end of period as follows:                                                              
                                                                                                                                             
 In millions of euros                                                                            2011                     2012               
 Cash and cash equivalents                                                                       1,761.1                  1,154.2            
 Bank overdraft (included in current borrowings)                                                 (48.7)                   (67.7)             
 Net cash and cash equivalents                                                                   1,712.4                  1,086.5            
                                                                                                                                             
                                                                                                                                             
 Net indebtedness calculation                                                                                                                
                                                                                                                                             
 In millions of euros                                                                            2011                     2012               
 Non-current borrowings (long-term debt)                                                         (5,662.5)                (5,789.0)          
 Current borrowing (short-term debt)                                                             (1,373.5)                (1,484.7)          
 TOTAL GROSS INDEBTEDNESS                                                                        (7,036.0)                (7,273.7)          
 Cash and cash equivalents                                                                       1,761.1                  1,154.2            
 Derivative instruments (assets) - fair value hedge of borrowings                                26.8                     17.0               
 Derivative instruments (liabilities) - fair value hedge of borrowings                           0                        0                  
 TOTAL NET INDEBTEDNESS AT THE END OF THE PERIOD                                                 (5,248.1)                (6,102.5)          
                                                                                                                                             
                                                                                                                                             
 Statement of changes in net indebtedness                                                                                                    
                                                                                                                                             
 In millions of euros                                                                            2011                     2012               
 Net indebtedness at the beginning of the period                                                 (5,039.3)                (5,248.1)          
 Net cash flows from operating activities                                                        2,425.8                  2,708.5            
 Net cash flows used in investing activities                                                     (1,672.3)                (2,837.0)          
 Net cash flows used in financing activities excluding increase                                  (767.0)                  (858.0)            
 (decrease) in borrowings                                                                                                                    
 Total net cash flow                                                                             (13.5)                   (986.3)            
 Effect of exchange rate changes, opening net indebtedness of newly                              (195.3)                  132.1              
 acquired companies and others                                                                                                               
 Change in net indebtedness                                                                      (208.8)                  (854.4)            
 NET INDEBTEDNESS AT THE END OF THE PERIOD                                                       (5,248.1)                (6,102.5)          
                                                                                                                                             


 Reallocation of Specialty ingredients within Healthcare                                                               
 business line - 2011                                                                                                  
                                                                                                                       
 Revenue                           Q1 11             Q2 11             Q3 11             Q4 11             2011        
 In millions of euros              published         published         published         published         published   
 Large Industries                  1,133             1,121             1,157             1,174             4,585       
 Industrial Merchant               1,2               1,199             1,238             1,256             4,892       
 Electronics                       343               336               317               291               1,286       
 Healthcare                        509               515               511               539               2,076       
 Revenue Gas & Services            3,185             3,171             3,223             3,26              12,839      
 Engineering & Construction        134               156               158               258               705         
 Other Activities                  224               246               216               227               913         
 GROUP REVENUE                     3,543             3,573             3,597             3,745             14,457      
                                                                                                                       
                                                                                                                       
 Revenue                           Q1 11             Q2 11             Q3 11             Q4 11             2011        
 In millions of euros              revised           revised           revised           revised           revised     
 Large Industries                  1,133             1,121             1,157             1,174             4,585       
 Industrial Merchant               1,2               1,199             1,238             1,256             4,892       
 Electronics                       343               336               317               291               1,286       
 Healthcare                        564               579               564               592               2,301       
 Revenue Gas & Services            3,24              3,235             3,276             3,313             13,064      
 Engineering & Construction        134               156               158               258               705         
 Other Activities                  169               182               163               174               688         
 Group REVENUE                     3,543             3,573             3,597             3,745             14,457      


Air Liquide
Corporate Communications
Corinne Estrade-Bordry, + 33 (0)1 40 62 51 31
or
Garance Bertrand, +33 (0)1 40 62 59 62
or
Investor Relations
Virginia Jeanson, +33 (0)1 40 62 57 37
or
Annie Fournier, +33 (0)1 40 62 57 18 

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