Air Liquide: 3rd Quarter Revenue: Noticeable Increase in Activity Compared to Previous Quarters

Thu Oct 22, 2009 1:30am EDT

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http://www.businesswire.com/news/home/20091021006680/en

2009 Objectives Maintained
PARIS--(Business Wire)--
Regulatory News:

Air Liquide:(Paris:AI)

3rd quarter 2009 revenue published comparable*
09/08 09/08
Group revenue €2,980 M -8.2% -5.2%
Gas & Services €2,514 M -8.9% -5.2%

*on a comparable basis: excluding exchange rates and natural gas

In an environment which is recovering progressively, 3rd quarter 2009 Group
revenue was €2,980 million, a limited decline of -5.2% on a comparable basis
against the very high 3rd quarter 2008. Gas & Services sales reached €2,514
million, down -5.2% on a comparable basis.

The Gas & Services activity showed a marked upturn in volume demand from the
Group`s customers. Thus, 3rd quarter sales were up by more than 3% compared to
2nd quarter 2009, at constant exchange rates and natural gas prices.

Healthcare continues to grow, bolstered by both homecare and hygiene. The
resumption of growth in Emerging Economies, particularly in Asia, and the
recovery of volumes in Electronics specialty gases have been confirmed. Sales in
Large Industries were affected by declines in natural gas and electricity
prices. Industrial Merchant recorded a slight increase in volumes, notably in
bulk, and continued to benefit from the positive impact of pricing campaigns.

Commenting on the 3rd quarter 2009, Benoît Potier, Chairman and CEO of Air
Liquide, stated:

"This quarter has once again shown the resilience in our sales. The increase in
volumes compared to the 2nd quarter is noticeable, even if they have not yet
returned to the high 2008 levels.

The contribution from the ALMA program continues. It is visible in structural
efficiency gains, in cash generation and in the control of the debt level. The
Group achieved cost reductions of more than €230 million in the first three
quarters of 2009.

The ALMA contribution is also demonstrated in the acceleration of our
development in Emerging Economies, with a share of Group revenue that will have
doubled over 6 years.

The positive signs observed at the end of the first half have therefore been
confirmed, signaling a trend reversal in several sectors.

In this context, we maintain our objective for 2009, of revenue and net income
close to 2008 levels."

3rd quarter highlights

* Continued strong momentum in Healthcare, particularly in hygiene due to H1N1
flu
* Start-up of two very large oxygen production units in China for the steel
manufacturer Jiangsu Shagang
* Start-up of a very large hydrogen production unit in the United States for a
refinery customer
* Electronics: major contract signed in China for semiconductors
* Construction of a nitrogen production unit for the photovoltaic industry in
Germany
* ALMA Efficiency program ahead of objectives

Upcoming events

Actionaria Shareholders` Fair:
November 20 and 21, 2009

2009 Annual Results:
February 15, 2010

www.airliquide.com

Third quarter 2009 Revenue

In millions of euros Q3 2008 Q3 2009 09/08 09/08 09/08
published change comparable*
change excluding change
natural gas
Group revenue 3,247 2,980 -8.2% -3.8% -5.2%
of which Gas and Services revenue 2,760 2,514 -8.9% -3.7% -5.2%

Comparable: excluding impact of currency and natural gas

In the third quarter 2009, Group revenue was 2,980 million euros, down -8.2%.
The positive impact of the increase in the dollar and the yen (+1.4%) has
subsided quarter on quarter, while the revenue impact of declining natural gas
prices passed through to customers (-4.4%) has increased. Accordingly, at
comparable exchange rates and natural gas prices, the decrease in revenue is
limited to -5.2%, despite a strong comparative base. Gas and Services revenue
also declined by -5.2% on a comparable basis, demonstrating yet again its
resilience.

The last three months have seen higher volumes and sequential sales growth.
However, a lower contribution from start-ups and the effect of declining
electricity costs in certain regions, directly passed through to customers,
weighed on comparable growth.

The effort put into the Cost, Cash and Capex projects as part of ALMA 2009 has
been fruitful. Efficiencies generated by the end of September are ahead of plan,
cash and investments have been tightly controlled. As a result, the operating
margin (before and after depreciation and amortization) has improved and net
debt has fallen compared to June, in line with the objective of no increase in
debt for the year.

1.1 Gas and Services

All growth figures in the text below are on a comparable basis, excluding
currency and natural gas impacts.

In the third quarter 2009, Gas and Services revenue was 2,514 million euros,
down by -5.2%. The Gas and Services activity indicator has improved sequentially
from its low point in April 2009.

Revenue Q3 2008 Q3 2009 Q3 09/08 change Q2 09/08 Q1 09/08
in millions of euros comparable* comparable*
published comparable*
Industrial Merchant 1,154 1,069 -7.3% -8.8% -10.5% -7.7%
Large Industries 931 764 -17.9% -3.4% +1.0% +2.2%
Healthcare 418 454 +8.5% +8.7% +6.3% +5.4%
Electronics 257 227 -11.7% -18.8% -22.1% -26.5%
Gas and Services 2,760 2,514 -8.9% -5.2% -5.1% -4.2%

* Comparable: excluding impact of currency and natural gas

Despite confirmed volume improvements, sales performance remained contrasted by
activity and location, with a speedier recovery in emerging economies. Start-ups
and acquisitions contributed +3% to growth over the quarter. There was an
improvement in Industrial Merchant salestrend with a decline of -8.8% compared
to -10.5% in the second quarter 2009.This sequential recovery in Bulk and
Cylinder volumes was helped by a significant positive pricing impact. Activity
in Large Industries was up sequentially during the quarter. The -3.4% decline in
revenue was due to falling electricity pass-through in certain countries,
particularly in the United States, and a high 2008 comparison helped by
start-ups.The gradual recovery of Electronics activity continued in the third
quarter, with sequential growth in electronics specialty gas (ESG) sales of
approximately +18%, representing a year-on-year decline limited to -18.8%.
Equipment and Installation sales remained low. Quarterly growth accelerated in
Healthcare to +8.7% on the same period last year, as demand for hygiene products
was stimulated by preventive measures against H1N1 pandemic flu.

Revenue Q3 2008 Q3 2009 Q3 09/08 change Q2 09/08 Q1 09/08
In millions of euros comparable* comparable*
published comparable*
Europe 1,505 1,404 -6.7% -2.9% -3.1% -0.4%
Americas 683 552 -19.2% -8.0% -4.1% -4.1%
Asia-Pacific 517 490 -5.3% -11.2% -14.7% -18.2%
Middle-East and Africa 55 68 +22.8% +20.4% +19.2% +24.5%
Gas and Services 2,760 2,514 -8.9% -5.2% -5.1% -4.2%

* Comparable: excluding impact of currency and natural gas

Europe

In the third quarter 2009, revenue was 1,404 million euros, down -2.9%. Key
features of the quarter included a solid performance from Healthcare, and a more
pronounced recovery in Eastern Europe. However, as anticipated, the
contributions from pricing in Industrial Merchant and start-ups in Large
Industries, were less positive than in previous quarters.

Industrial Merchant sales decreased by -8.7%. The impact of the pricing
campaigns conducted in 2008 and the beginning of 2009 remains positive. There
was a clear sequential improvement in Bulk volumes, and a slight recovery in
Cylinder volumes in September. Activity is picking up in the emerging European
economies.

There was sequential growth in Large Industries volumes, particularly in air
gases. Sales were down -3.6% relative to third quarter 2008, with volume
improvements masked by a high 2008 comparison and a smaller contribution from
start-ups.

Up +8.2%,Healthcare growth accelerated sequentially driven by substantial demand
for hygiene products due to H1N1 flu preventive measures in hospitals as well as
in the work-place. Growth was sustained in homecare and hospital gases, in line
with previous quarters.

Electronics was down slightly, by -1.7%, a clear turnaround compared to previous
quarters. This was due largely to a recovery in ESG sales, associated with an
upturn in fab activity, as well as solid equipment sales in the photovoltaic
sector.

Americas

Revenue for the Americas was 552 million euros, down -8.0%. The pace of growth
in South America recovered following a slight downturn in the second quarter
2009. In the United States, revenue was negatively impacted by the decline in
electricity prices passed through to customers.

Industrial Merchant sales fell by -11.4%. Pricing remained positive across the
region, particularly in South America. Liquid and cylinder volumes in the United
and States and Latin America gradually improved over the quarter compared to
second quarter 2009, but remain below previous year levels.

The sequential recovery in Large Industries volumescontinued throughout the
region. Chemical sector demand returned to close to 2008 levels, while in the
Steel sector, two blast furnaces were restarted in Canada. In Latin America,
volumes showed a clear sequential improvement. Nevertheless, revenue was
impacted by the pass-through to customers of the significant decline in
electricity prices, particularly in the United States. As a result, sales
decreased by -6.8% in the period.

Electronics sales declined by -15.8%. Although ESG demand recovered
sequentially, Equipment & Installations sales continued to decline
significantly, in the absence of new investments in the sector.

Growth in Healthcare was strong at +11.9%, driven by higher demand for hospital
equipment in North America and dynamic homecare sales in Latin America.

Asia-Pacific

Asia-Pacific revenue was 490 million euros, down by -11.2% in the third quarter.
There were sequential improvements throughout the region but activity in Japan
remained weak. Electronics benefited from recovery in ESG volumes, while growth
in China remained dynamic.

Industrial Merchant sales fell by -10.7%, with weak industrial activity in Japan
offsetting a significant upsurge in China, from new filling capacity and
stronger demand.

With a -24.3% drop in sales, the trend in Electronics has again improved
sequentially in the third quarter (+12%), despite significantly lower year on
year Equipment and Installations. This trend is due to the steady performance of
carrier gas sales and the strong recovery of ESGs. Semi-conductor and flat
screen customers saw a pick-up in their activity during the summer to meet
year-end seasonal demand. Despite evident excess capacity in the photovoltaic
industry, demand for solar panels and the number of construction projects for
new facilities remained high.

Large Industries sales grew by +5.4% for the period, positive for the first time
since third quarter 2008. With the ramp-up of two new major units for the steel
industry, China now has the scale to offset the sharp drop in activity in Japan.

Middle-East and Africa

Revenue for the Middle-East and Africa region was 68 million euros, up +20.4%.
The combination of the ramp-up of numerous Large Industries units and the
recently acquired Bulk and Cylinder distribution capabilities in the Middle East
is generating commercial synergies in the industrial basins where the Group is
present.

1.2 Engineering and Construction

Third-party Engineering and Construction sales were 282 million euros, up +10%
due to the progress of major projects in China, Korea and South Africa. As a
result, year-to-date sales totaled 787 million euros, in line with the one
billion euro revenue target for the year. Order-intake was low, with a slow-down
in the client decision-making process seen, particularly during the summer.
Total order-intake since the beginning of the year reached 437 million euros.

1.3 Other activities

Revenue Q3 2008 Q3 2009 Q309/08
In millions of euros

change
Published
Welding - Cutting 143 92 -35.2%
Diving and Specialty Chemicals 90 92 +1.6%
Other activities 233 184 -20.9%

Other activities revenue was 184 million euros, a -21.0% decrease.

Welding - Cutting continues to be affected by the decline in industrial activity
in the main European countries.

Specialty Chemicals improved on a sequential basis due to the steady performance
of the vaccine and pharmaceutical sales. Diving benefited from a major contract
during the period.

2. Strategic developments in the third quarter 2009

In the third quarter 2009, Air Liquide pursued its growth momentum in emerging
economies, with several acquisitions and start-ups in the Middle East and Asia.
Furthermore, the company confirmed its position as leader in the photovoltaic
sector.

* Air Liquide maintained its growth in the Middle East with the commissioning of
a new nitrogen production unit in Oman and the start-up of a new oxygen
production unit in Egypt.
* With the acquisition of 75% of Al Khafrah Industrial Gases in Saudi Arabia,
whose annual revenue exceeds 20 million dollars, Air Liquide strengthened its
distribution network, thus consolidating its leading position in a high
potential region.
* Two air separation units (ASU) with a daily production capacity of 4,000 tons
were commissioned in China at the end of July, representing an investment of
around 90 million euros. They meet the needs of the main production site of
steelmaker Jiangsu Shagang, located about 100 km east of Shanghai, as well as
those of other local industrial customers. This long-term partnership with
Jiangsu Shagang is the largest "Over the Fence" contract (industrial gases
supplied by pipeline) in China.
* In early October, a long-term carrier gas supply agreement was signed with
Semiconductor Manufacturing International Corporation (SMIC), the leading
manufacturer of integrated circuits in China, for its new wafers production
plant. Air Liquide will invest around 13 million euros in the project`s initial
phase. A partner since 2001, Air Liquide already serves SMIC sites in Shanghai,
Peking, Tianjin, Chengdu and Wuhan.
* Air Liquide will also build a production unit at the Thalheim high-tech
business park in Germany, representing an investment of around 10 million euros.
The unit, which will begin operations in 2010, will eventually produce 38,000
tons of nitrogen per year to meet the growing demands of all solar cell
manufacturers in the region.
* Air Liquide`s latest world scale hydrogen production unit began operations on
September 29, 2009 in California, on the north eastern shore of the San
Francisco Bay. US production capacity has thus been more than doubled within the
last five years.
* In addition, two small acquisitions in the Healthcare sector were completed
during the quarter in Europe to strengthen the Group`s positions in Germany and
the Netherlands.

At the end of September 2009, the Group`s portfolio of opportunities increased
to 2.9 billion euros compared to the end of June 2009. Emerging economies and
Energy account for 80% and 46% of the portfolio, respectively. Over 20% of the
portfolio, at the end of September 2009, consists of plant take-over projects in
exchange for long-term gas supply contracts.

Investment decisions have dwindled since the beginning of the year due to
extended tender processes. For the first nine months of 2009, decisions amounted
to 640 million euros.

Capital expenditure is in line with the 2009 objective of 1.6 billion euros.

A total of 36 units are forecast to start up in 2009 and 2010. A few projects
that had been planned to start at the end of 2009 have been postponed to early
2010 and the target contribution of one billion euros from all start-ups since
2006 should now be reached in 2011.

3. Alma 2009 ahead of its yearly objectives

The adaptation of the Alma project to the 2009 context led to tight management
focus on reducing costs, working capital and capital expenditure (Cost, Cash &
Capex). The results are visible.

The operating margin (before and after depreciation and amortization) improved,
partly due to the decrease in natural gas prices but mostly due to the numerous
efficiency programs implemented across the Group. Efficiency gains accelerated
in the third quarter, reaching a total of over 230 million euros since the start
of the year, ahead relative to our full year objective of 300 million euros. The
improvement of the operating margin also benefited from positive pricing in
Industrial Merchant.

Tighter monitoring of customer receivables helped limit payment defaults and the
provisions recorded in the accounts at the end of 2008 are adequate to cover
client risks to date.

Capital expenditure amounted to 1.1 billion euros for the first nine months, in
line with the annual objective of 1.6 billion euros.

As of September 30, the Group`s net debt decreased compared to end of June, in
line with the Group`s flat debt objective for 2009.

4. Outlook

This quarter has once again shown the resilience in our sales. The increase in
volumes compared to the 2nd quarter is noticeable, even if they have not yet
returned to the high 2008 levels.

The ALMA contribution is also demonstrated in the acceleration of our
development in Emerging Economies, with a share of Group revenue that will have
doubled over 6 years.

The positive signs observed at the end of the first half have therefore been
confirmed, signaling a trend reversal in several sectors.

In this context, we maintain our objective for 2009, of revenue and net income
close to 2008 levels.

----*------*-----*----*----*----*----*----*----*----*----*---

APPENDIX (1)

CURRENCY AND NATURAL GAS IMPACTS

In addition to the comparison of published figures, the financial information is
presented excluding currency translation effects and the impact of natural gas
price fluctuations.

Since industrial and medical gases are rarely exported, the impact of currency
fluctuations on revenue and results is limited to the translation effects in
euros of the financial statements of the Group`s subsidiaries outside the
Euro-zone. Fluctuations in natural gas prices are generally passed on to
customers through indexation clauses.

Consolidated third quarter 2009 revenue includes the following items:

In millions of euros Revenue Q3 09/08 Foreign Natural gas Q3 09/08

exchange price Comparable*
Published impact impact % change

Group 2,980 -8.2% 44 (142) -5.2%
Gas and Services 2,514 -8.9% 41 (142) -5.2%

* Comparable: excluding impact of currency and natural gas

Group:

* The positive currency impact represents +44 million euros, or +1.4% on Group
growth, essentially due to the appreciation of the U.S. dollar and the yen
against the euro.
* Natural gas prices have significantly declined since the start of the year.
The change in natural gas prices represents a negative impact of -142 million
euros or -4.4% on Group revenue.

Gas and Services:

* The positive currency impact represents +41 million euros, or +1.5% on Gas and
Services growth, essentially due to the appreciation of the U.S. dollar and the
yen against the euro.
* Natural gas prices have significantly declined since the start of the year.
The change in natural gas prices represents a negative impact of -142 million
euros or -5.2% on Gas and Services revenue.

APPENDIX (2)

REVENUE BY ACTIVITY

In millions of euros Total 9 months of 2009
2008 2009 09/08 09/08
published comparable*

% change
% change
Gas and Services 8,103 7,536 -7.0% -4.8%
Industrial Merchant 3,424 3,189 -6.9% -9.0%
Large Industries 2,688 2,371 -11.8% -0.1%
Electronics 739 639 -13.5% -22.4%
Healthcare 1,252 1,337 +6.8% +6.8%
Engineering and Construction 757 787 +3.9% +3.0%
Welding - Cutting 466 312 -33.0% -32.6%
Other Activities 290 282 -2.7% -4.9%
TOTAL 9,617 8,918 -7.3% -5.6%

* Comparable: excluding impact of currency and natural gas

GAS AND SERVICES REVENUE BY GEOGRAPHICAL AREA

In millions of euros Total 9 months of 2009
2008 2009 09/08 09/08
published comparable*

% change
% change
Europe 4,477 4,277 -4.5% -2.1%
Americas 1,993 1,697 -14.8% -5.4%
Asia-Pacific 1,491 1,387 -7.0% -14.6%
Middle East and Africa 143 175 +22.9% +21.2%
Gas and Services 8,103 7,536 -7.0% -4.8%

* Comparable: excluding impact of currency and natural gas

Air Liquide
Corporate Communications
Anne Lechevranton, +33 (0)1 40 62 50 93
Corinne Estrade-Bordry, + 33 (0)1 40 62 51 31
or
Investor Relations
Virginia Jeanson, +33 (0)1 40 62 57 37
Annie Fournier, +33 (0)1 40 62 57 18