Bloomberg News

Air Liquide Will Reassess Goals on Shale Gas, European Economy

February 14, 2013

Air Liquide SA may revise its 2015 goals in December as the French maker of industrial gases shifts focus to adjust to European economic woes, cheaper U.S. gas, and rising demand for health care and electronic gadgets.

“The crisis has shown that the center of gravity is moving, so we need to align our structures to markets,” Chief Executive Officer Benoit Potier said at a press conference in Paris today. “New capacities are in emerging markets, and old capacities are closing, or restructuring or undergoing investment to make energy savings in advanced economies.”

Potier said he will disclose in December whether he’s sticking to a goal set last year to boost sales by 8 percent to 10 percent on average through 2015, including acquisitions. Revenue rose 6 percent in 2012, less than the 7.2 percent gain a year earlier, on a decline in demand from European steelmakers, carmakers and solar panel makers, and weaker sales to Japanese electronics manufacturers, the Paris-based company said today.

The development of cheap shale gas in North America, and of coal in China, as well as an “upheaval” in nuclear energy, may force Air Liquide to follow customers such as steelmakers and chemical producers that are shifting production to low-cost regions, the CEO said. Air Liquide also plans to boost its supply of healthcare services and gases through acquisitions, and increase sales to industries from smartphones to transport.

Air Liquide “wants to strengthen its competitiveness and innovation for profitable growth over the long term,” Potier said. “Some markets will develop faster” than estimated two years ago and “some will fall in volume.”

Stock Performance

The shares fell 1.2 percent to 91.10 euros at 2:16 p.m. in Paris, extending the decline this year to 4.2 percent. The company’s competitors include Munich-based Linde AG, which has dropped about 0.5 percent this year.

Air Liquide already gets more than 100 million euros ($133 million) in annual revenue by selling nitrogen and carbon dioxide to shale gas operators, which use the gases to reduce water needs by as much as 50 percent, Potier said. Water availability is also becoming key to investment decisions in nations such as China, he said.

The company, which bought French and Spanish providers of medical gases and services in 2012, will probably acquire more businesses in Europe, and may grab opportunities in Asia and the Middle East, Potier said. It will also seek to boost sales to makers of chips, smartphones and tablets, transporters of fresh food, and owners of hydrogen-powered cars.

Purchase Contribution

Acquisitions helped increase revenue last year to 15.3 billion euros, the company said today. Like-for-like sales of gas and services, which provide the bulk of Air Liquide’s revenue, rose 4.6 percent in the fourth quarter.

“It’s too early to extrapolate on the fourth-quarter rebound,” Potier said. “We’ve got a portfolio of investment in engineering and projects which is well-filed, so we’re little worried about the medium term, and confident over the long term.”

Air Liquide plans 50 startups of industrial projects by the end of 2014, up from 17 last year, when some of its Chinese customers delayed investments, Potier said. Business in China is off to a good start this year, he said.

The company today raised its savings target for the 2011 to 2015 period by 30 percent to 1.3 billion euros. Last year, Air Liquide realized 284 million euros in efficiencies, exceeding a goal of 200 million euros.

Net income climbed 4.9 percent in 2012 to 1.61 billion euros, matching the average estimate in a Bloomberg survey of 11 analysts.

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

The company will propose a dividend of 2.5 euros per share, in line with a Bloomberg forecast.

To contact the reporter on this story: Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net

To contact the editor responsible for this story: Simon Thiel at sthiel1@bloomberg.net


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