Increase in revenue, net profit, and earnings per
share
Regulatory News:
Air Liquide (Paris:AI):
2016 Key Figures
- Group revenue: 18,135 million euros
+14.6%*
- Net profit (Group share): 1,844 million
euros +5.0%
- Net earnings per share: 5.11
euros +2.4%
- Proposed 2016 dividend of 2.60 euros per
share +2.7%
- Attribution of 1 free share for 10 existing
- Cash flow: 3.7 billion
euros +30.5%
2016 Highlights
- Airgas: Completion of the acquisition on May 23,
refinancing and disposal of assets in the United States, operations
merged on October 1, first synergies achieved.
- NEOS: Launch of the Group’s new company program for
2016-2020.
- New contracts in growing markets: energy (China and
Argentina), space (Europe), biogas purification (Europe).
- Portfolio management of businesses: Disposal of Aqua
Lung, divestment of Air Liquide Welding under review, acquisitions
in Healthcare and Industrial Merchant.
- Innovation and Technologies: New Research and Technology
Center (Shanghai), storage facilities for pure helium (Germany) and
hydrogen (United States), project for the plant of the future
certified “technological showcase” (France)
* Excluding Welding and Diving, restated as discontinued
operations.
Commenting on the 2016 results, Benoît Potier, Chairman and
CEO of Air Liquide, stated:
"With the acquisition of Airgas, a major achievement of the
past year, the Group has taken a major step forward in its
geographic expansion and the extension of its markets. Its
performance in 2016, which includes Airgas for a portion of the
year, is solid with an increase in revenue, net profit, and net
earnings per share despite unfavorable currency and energy
effects.
In the context of moderate global growth, activity was buoyed
by higher volumes in Large Industries, the strength of the
Healthcare sector, and the promising markets served by the new
entity Global Markets & Technologies. All geographies are
growing on a comparable basis, benefiting from stronger growth in
developing economies.
The Group continues to deliver efficiency gains, to which are
added this year the first Airgas synergies. The balance sheet is
strong, reinforced by solid growth in cash flow and success of the
capital increase, thus containing the debt below our
forecasts.
With the integration of Airgas and the launch of the NEOS
program for the period 2016-2020, Air Liquide is implementing its
transformation, which combines targeted industrial investments,
digital development, and innovations to fuel growth in the coming
years.
Assuming a comparable environment, Air Liquide is
confident in its ability to deliver net profit growth in
2017.”
Consolidated revenue in 2016 reached €
18,135 million, an increase of +14.6% on a reported
basis1, as compared with 2015, integrating the consolidation
of sales from Airgas since May 23, 2016. It was up +18.2% excluding
the impact of currency (-1.4%) and energy (-2.2%). In the fourth
quarter of 2016, both the currency and energy impact were slightly
positive. On a comparable basis2, Group revenue in 2016 was up
+0.9% as compared with 2015, impacted by lower Engineering and
Construction revenue.
Gas & Services revenue for 2016, which reached €
17,331 million, rose by +17.5% on a reported basis
versus 2015, and by +21.3% excluding the impact of currency and
energy. On a comparable basis, revenue grew by +2.7%.
Developing economies posted solid growth in 2016, with
Gas & Services revenue up +8.0% on a comparable
basis.
Overall, all businesses of Gas & Services revenue
rose on a comparable basis, with the exception of Industrial
Merchant, which remains contrasted:
- Large Industries, with revenue
up +5.4% in 2016, grew across all geographies, benefiting
from start-ups and ramp-ups of production units primarily located
in Germany, Poland, Americas, and China. Sales were also driven in
the first quarter of 2016 by the contribution of the two hydrogen
production units at the Yanbu site, which started up in the second
quarter of 2015. The fourth quarter was marked by several temporary
turnarounds of customer units for planned maintenance operations,
by high air gas demand, especially in the United States, and
exceptional revenue linked to a contract in Europe.
- Following the acquisition of Airgas,
Industrial Merchant revenue rose by nearly +45% in 2016.
Excluding Airgas, this activity was down -1.6% on a
comparable basis. The situation for Industrial Merchant remains
contrasted by country and by market segment.In Europe, sales
were stable in 2016, supported by increasing bulk volumes,
relatively solid demand in France, Spain, and the United Kingdom,
and high demand in Poland and Russia. The cylinder business, which
was generally weak in 2016, showed some signs of improvement at the
end of the year. In North America, energy and metal
fabrication markets are down as compared with 2015, while Agri-Food
and Pharmaceuticals are growing. In Asia-Pacific, sales in
Japan, down over 12 months, recorded a slight increase in the
second half of 2016, while China posted solid growth over the full
year and strong growth in the fourth quarter. Overall, the price
effect over the year is slightly positive at +0.5% in a
globally low inflation environment. In the fourth quarter, there
was higher price leverage (+0.9%) globally.
- For Electronics, up +4.3%
in 2016, sales in the first half of the year were strong. The
second half was slower and was marked in particular by slower sales
of Equipment and Installations and by a comparison basis that was
unfavorable as compared with 2015 due to the exceptionally high
price of neon in 2015. Over the full year, growth was driven by
China, Singapore, and Taiwan. It was also driven by solid sales of
carrier gases in Asia and continued strong overall demand for
Advanced Materials, with sales growth of nearly +20% in 2016.
- Healthcare revenue was up +11.2%
including the contribution of Airgas via its sales of Medical Gases
to hospitals. On a comparable basis, sales were up a solid
+4.9%, benefiting from strong demand for Home Healthcare
services and robust Hygiene sales (+15.1%). Revenue rose in all
geographies, including at double digit for the developing
economies.
Engineering and Construction revenue, at € 474
million, was down sharply (-38.0%) on a comparable basis
versus 2015, adversely impacted by the slowdown in large-scale
projects related to energy and by the low number of new
projects.
Revenue from Global Markets & Technologies reached
€ 330 million, up +13.6% on a comparable basis.
Growth was primarily driven by Space, Biogas, and Maritime
businesses.
______________________________
1 Excluding Welding and Diving, restated as discontinued
operations.2 Estimated comparable: excluding significant scope
(Airgas), currency and energy (natural gas and electricity)
impact.
________
The Group, which continues to reinforce its
competitiveness, generated recurrent efficiency gains totaling €
315 million in 2016. This high level is in line with the
target, as of 2017, of more than € 300 million on average per year
of the NEOS plan. In addition to these efficiencies, the first
synergies related to Airgas reached 45 million USD in
2016. As a reminder, Air Liquide is forecasting a total of more
than 300 million USD of synergies with Airgas, including all cost
synergies (a total of more than 200 million USD) before the end of
2018.
Operating income recurring rose by +5.9% to €
3,024 million. The Group’s operating margin at
16.7%, reflects the effect of the Airgas consolidation. As
announced in the first half of 2016, the capital gains on the sale
of business assets in the United States required by the Federal
Trade Commission (FTC) offset the one-off costs incurred in
relation to the acquisition of Airgas. Net profit (Group
share) totaled € 1,844 million, up +5.0%,
and net earnings per share, after taking into account the
dilution related to the capital increase, increased by
+2.4%, in line with the guidance.
Cash flow before change in Working Capital Requirements
(WCR) reached € 3,523 million, which is 19.4% of the year’s
total revenue. Net cash flow from operating activities,
after change in WCR, increased by +30.5% compared with 2015
and reached 20.4% of sales. Net debt stood at
€ 15,368 million on December 31, 2016. The excellent
cash flow and the capital increase with preferential subscription
rights achieved in late September 2016 helped to reduce debt in the
second half of the year. The debt-to-equity ratio was
lowered to 90% at the end of the year, exceeding forecasts.
The return on capital employed after tax (ROCE) stood
at 7.8%. ROCE, calculated by consolidating the Airgas
acquisition over the full year, is estimated at 6.9%. The Group’s
target, set as part of its NEOS program, is to reach again ROCE
above 10% in the next 5 to 6 years.
Performance in 2016
In
millions of euros
2016/2015
Reported
2016/2015
Excluding currency and
energy impact
2016/2015
Comparable1
Group revenue2
o/w Gas & Services
18,135 M€
17,331 M€
+14.6%
+17.5%
+18.2%
+21.3%
+0.9%
+2.7%
Operating Income Recurring2
3,024 M€ +5.9% - -
Net profit (Group share) 1,844 M€ +5.0% - -
Net debt as of 12/31/20162
15,368 M€
1 Estimated comparable: excluding significant scope (Airgas),
currency and energy (natural gas and electricity) impact.2
Excluding Welding and Diving, restated as discontinued
operations.
________
Air Liquide’s Board of Directors, which met on February
14, 2017, approved the audited financial statements for fiscal year
2016. A report with an unqualified opinion is being issued by the
Statutory Auditors.
At the next Annual General Meeting of Shareholders, the Board of
Directors will propose the payment of a dividend totaling 2.60
euros per share. Taking into account the restatement related to
the rights issue, the dividend increases by +2.7%. The
ex-dividend date has been set for May 15, 2017 and
payment scheduled for May 17, 2017. Furthermore, the Board
of Directors decided the attribution in the second half of 2017 of
1 free share for 10 existing.
The Board also approved the draft resolutions that will be
submitted to the shareholders at the Annual General Meeting on May
3, 2017, in particular:
- The reappointment for a four-year term
of Mr. Thierry Peugeot, a member of the Board of Directors of the
Company since 2005.
- The appointment of one new Board
member, for a term of four years, Mr. Xavier Huillard.
Mr. Xavier Huillard, Chairman and CEO of Vinci, will bring to
the Board his experience as the CEO of a large multinational
company.
The Board of Directors has noted that the term of office of Mr.
Thierry Desmarest will expire at the end of the Annual General
Meeting of Shareholders of May 3, 2017, in accordance with the
Board of Directors' internal regulations. Thierry Desmarest has
been a member of the Board since 1999 and has provided extensive
experience and expertise in many areas for the Board, where he had
served as Lead Director since 2014. The Board warmly thanked him
for his outstanding contribution to the development of Air Liquide
throughout the years. The Board further advised that it intends to
appoint Mr. Jean-Paul Agon as Lead Director as of that date.
Mr. Pierre Dufour also announced his decision to assert his
retirement rights in 2017 and not to seek the renewal of his term
as Senior Executive Vice-President, which expires following the
General Meeting of May 3, 2017. The Board of Directors warmly
thanked him for his commitment and outstanding contribution to the
Group's development during the 10 years at the General Management
and in particular in the context of the acquisition of Airgas. He
will remain a Director of the Company within the framework of the
term of office renewed at the Annual General Meeting of
Shareholders on May 12, 2016, and will also retain his role as a
Board member of Airgas.
At the end of the Annual General Meeting on May 3, 2017, the
Board of Directors will be composed of 12 members, 11 of them
elected and one Director representing the employees. The Board will
be composed of five women and six board members who are foreign
nationals.
In addition, the Board set executive compensation for 2016 and
2017, details of which will be published on the
Air Liquide’s website. In line with the recommendations of the
Afep/Medef Code, 2016 executive compensation is subject, as was the
case last year, to the opinion of shareholders under two specific
resolutions.
This year, for the first time, shareholders will also be asked
to approve the principles and criteria for determining the
remuneration of Executive Officers, applicable from 1 January 2017,
in accordance with the new Sapin 2 law.
Lastly, the Board of Directors decided to set up a fourth
specialized committee to examine environmental and societal issues
in 2017.
________
Benoît Potier also comments on the Group’s
2016 results in a video interview, available in French and in
English at www.airliquide.com.
The slideshow that accompanies this release
is available as of 9:15 am (Paris time) on
www.airliquide.com.
Throughout the year, follow Air Liquide on
Twitter: @AirLiquideGroup.
________
UPCOMING EVENTS
2017 1st Quarter Revenue:
April 26, 2017
Annual General Meeting of
Shareholders:
May 3, 2017
The world leader in gases, technologies and services for
Industry and Health, Air Liquide is present in 80 countries with
approximately 67,000 employees and serves more than 3 million
customers and patients. Oxygen, nitrogen and hydrogen are essential
small molecules for life, matter and energy. They embody Air
Liquide’s scientific territory and have been at the core of the
company’s activities since its creation in 1902.
Air Liquide’s ambition is to lead its industry, deliver long
term performance and contribute to sustainability. The company’s
customer-centric transformation strategy aims at profitable growth
over the long term. It relies on operational excellence, selective
investments, open innovation and a network organization implemented
by the Group worldwide. Through the commitment and inventiveness of
its people, Air Liquide leverages energy and environment
transition, changes in healthcare and digitization, and delivers
greater value to all its stakeholders.
Air Liquide’s revenue amounted to € 18.1 billion in 2016 and its
solutions that protect life and the environment represented more
than 40% of sales.
Air Liquide is listed on the Euronext Paris stock exchange
(compartment A) and belongs to the CAC 40, Dow Jones Euro STOXX 50
and FTSE4Good indexes.
2016 Results
Management Report
_______________
2016 PERFORMANCE
2
2016 Key Figures 2 2016 Highlights 3 2016 Income Statement 7
2016 Cash Flow and Balance Sheet 17
INVESTMENT CYCLE AND FINANCING
STRATEGY
20 Investments 20 Financing Strategy 22
OUTLOOK
26
APPENDICES
27 4th Quarter 2016 Revenue 27 Significant scope, currency
and energy impact 28 Geographic and Segment Information 29
Consolidated Income Statement 30 Consolidated Balance Sheet 31
Consolidated Cash Flow Statement 32 Discontinued activities 34
Estimated revenue and operating income recurring 2016, including
Airgas as of 1 January 35
2016 PERFORMANCE
The Group achieved solid performance in 2016, a year of
transformation, marked by the acquisition of Airgas and a
refocusing on Gas & Services activities. Group revenue for 2016
totaled 18,135 million euros, up +14.6% as published compared
to 2015, driven by the consolidation of Airgas sales from
23 May 2016 but penalized by negative currency impact of -1.4%
and by adverse energy impact of -2.2%. Comparable Gas &
Services sales growth, outperforming the market, was +2.7%.
The development of activity in 2016 was mainly driven by the
ramp-up of production units in Large Industries, solid sales growth
in Healthcare, double-digit growth for the new Global Markets &
Technologies activity and dynamic developing economies.
The operating margin was 16.7% in 2016, reflecting the new
business mix following the integration of Airgas; it also includes
the contribution from 315 million euros of efficiencies and
the first Airgas synergies for 45 million US dollars. Net
profit (Group share) reached 1,844 million euros, up +5.0%
compared with 2015. Net earnings per share, after taking account of
the dilutive impact of the capital increase, were 5.11 euros,
up +2.4% compared with 4.99 euros per share in 2015.
Net cash after change in working capital requirements was up
+30.5% compared with 2015 and represented 20.4% of sales, driven
notably by a good level of operating cash flow and an improvement
in WCR. Following the capital increase, the net debt-to-equity
ratio reached 90% at the end of December 2016, sharply down
compared with the exceptional level of 151% at the end of June
2016, five weeks after the Airgas acquisition.
The Group pursued its growth initiatives with investment
decisions of 2.2 billion euros. The average size of projects
in the portfolio of opportunities is more modest, which contributes
to a better distribution of risk.
The Board of Directors proposed a nominal dividend to be
submitted to the Annual General Meeting of 3 May 2017 at
2.60 euros per share. Taking into account the restatement
related to the rights issue, this dividend represents an increase
of +2.7% for the shareholder. The pay-out ratio is estimated at
56%.
2016 Key Figures
(in millions of euros)
2015(a)
2016
2016/2015
published
change
2016/2015
comparable
change (b)
Group Revenue 15,818 18,135 +14.6%
+0.9% of which Gas & Services 14,752 17,331
+17.5% +2.7% Operating income recurring 2,856
3,024 +5.9% Operating income recurring
(as % of revenue) 18.1 % 16.7% -140 pbs
Net profit (Group share) 1,756 1,844
+5.0% Adjusted earnings per share (in euros)
4.99 5.11 +2.4% Adjusted dividend per
share (in euros) 2.53 2.60(c) +2.7%
Net cash flows from operating activities (d) 2,832
3,697 +30.5% Net capital expenditure
(e) 2,292 13,609 Net debt
7,239 15,368
Debt-to-equity ratio 56.7% 89.6%
Return On Capital Employed – ROCE after tax (f) 10.3%
7.8%
(a) 2015 figures have been restated to account for IFRS 5,
discontinued operations.(b) Excluding significant scope, currency
and energy impact.(c) Subject to the approval of the 3 May 2017
Annual General Meeting.(d) Cash flow from operating activities
after change in working capital requirements and other elements.(e)
Including transactions with minority shareholders.(f) Return On
Capital Employed after tax: ((net profit after tax before deduction
of minority interests - net cost of debt after taxes) over
2016)/(average of (shareholders’ equity + minority interests + net
indebtedness) at the end of the three last semesters (H2 2015, H1
2016 and H2 2016)).Air Liquide - 2016 Results
2016 Highlights
A MAJOR ACQUISITION: AIRGAS
Completion of the Acquisition
On 23 May 2016, Air Liquide completed the acquisition of the
American company Airgas. The combined businesses including
Airgas will generate worldwide annual sales of more than
20 billion euros.
Operational Merger and First Synergies
- The integration process took a major
step forward with the effective merger of the two
organizations on 1 October 2016. The Group's Industrial
Merchant and Healthcare customers in the United States are now
served by this new organization which is supervised from the Radnor
site in Pennsylvania. The Large Industries and Electronics business
lines in the United States remain supervised independently from the
Houston site in Texas.
- The expected synergies amount to
more than 300 million US dollars. For approximately 70%, the
costs synergies result from optimization in cylinder and bulk
operations, process, procurement and back-office. For approximately
30%, sales synergies correspond to the deployment of Air Liquide
offering through the Airgas network and of Airgas offers in Canada
and Mexico. They also include the increase in sales of air gases
and helium based on the production capacity of Air Liquide.
- Airgas cost synergies should be fully
achieved by the end of 2018, thus earlier than initially
anticipated. Operational integration is proceeding as planned,
including the closure of 18 cylinder filling stations or storage
sites to optimize product flows, which contributed to logistics
synergies. The projects which will generate revenue synergies have
also started, notably with the launch of the Group's on-site
(FloxalTM) offering to Airgas customers and the training of sales
teams on the combined product offerings.
Successful Refinancing of the Transaction
- On 6 June 2016, Air Liquide
placed 3 billion euro bond issue with a weighted
average rate of 0.65%. This operation was the first step of the
refinancing process. It involved the issuances of several bond
tranches ranging from 2 to 12 years, with a weighted
average maturity of 7.3 years. The 3 billion euros raised
enabled the Group to refinance a portion of the bridge loan of
12 billion US dollars.
- On 12 September 2016,
Air Liquide launched a share capital increase with
preferential subscription rights for existing shareholders (the
“Rights Issue”) as part of the refinancing of the Airgas
acquisition. This transaction, for which the subscription period
lasted from 14 September to 28 September included,
constituted the second step of refinancing of this acquisition. The
parity was 1 new share for 8 existing shares and a
subscription unit price of 76 euros for each new share. The
final gross proceeds amounted to 3.3 billion euros
resulting in the issuance of 43,202,209 new shares. The total
subscription rate reached 191.2%.
- On 23 September 2016,
Air Liquide successfully placed five US dollar-denominated
senior bonds for an aggregate amount of 4.5 billion
US dollars, which constitute the third and last step in
refinancing its acquisition of Airgas. These bond issuances have
maturities ranging from 3 to 30 years, for an average
weighted maturity of 10.6 years and an average weighted rate
of 2.3%.
- These refinancings allow as well to
continue to sustainably finance the Group’s long-term growth.
Realization of Divestments
- In accordance with the divestiture
process described in the FTC (US Federal Trade Commission) press
release of 13 May 2016, an agreement has been concluded with
Matheson Tri-Gas, Inc. (“Matheson”), a subsidiary of
Taiyo Nippon Sanso Corporation (Tokyo, Japan), concerning
the sale of certain assets in the United States. This
transaction, concluded at the beginning of September, included the
sale of 18 air separation units in 16 locations;
2 nitrous oxide production facilities; 6 carbon dioxide
production facilities; and 3 Airgas retail packaged welding
gas stores in Alaska. Under the terms of the agreement, Matheson
has acquired production facilities, equipment, inventory,
distribution assets, and customer contracts, and has also hired
employees related to the divested assets.
- The transaction, valued at
781 million US dollars, generated a net gain after tax
of approximately 250 million US dollars for
Air Liquide. This gain offset the totality of the
exceptional costs relative to the Airgas acquisition,
integration and financing for the year.
- Air Liquide also finalized, in December
2016, the sale of 2 units in Iowa which produce liquid
carbon dioxide and dry ice, corresponding to the remaining
divestitures required by the American anti-trust authority (FTC) in
connection with the Airgas acquisition.
LAUNCH OF THE NEW CORPORATE PROGRAM 2016-2020: NEOS
The Group acquires a new dimension following the acquisition of
Airgas and thus enters a new phase of its development. On
6 July 2016, Air Liquide published its new company mid-term
program NEOS for the period 2016-2020.
Air Liquide’s strategy for profitable growth over the long-term
is a customer-centric transformation. It will be based on
operational excellence and the quality of its investments, on open
innovation and the network organization already implemented by the
Group worldwide. Air Liquide’s ambition is to lead its industry,
deliver long-term performance and contribute to sustainability.
Air Liquide has identified 3 major long-term trends, which
are sources of growth for all of its businesses. These trends are
energy and environment transition, changes in healthcare, and
digitization.
Air Liquide, as part of its NEOS Program, is aiming for
revenue compound annual growth rate (CAGR), over the 2016-2020
period, of +6% to +8%, including Airgas scope effect in 2017,
contributing +2% CAGR. The Group intends to generate substantial
recurrent efficiency gains of more than 300 million euros
on average per year from 2017, in addition to synergies related
to Airgas acquisition for a total amount above 300 million
US dollars. The Group is targeting a return on capital
employed (ROCE) in excess of 10% after 5 to 6 years.
Lastly, maintaining a long-term minimum “A” range rating
(from Standard & Poor’s and Moody’s rating agencies) thanks to
the strength of its balance sheet remains a priority.
As for sustainable development, which lies at the heart
of its ambition alongside performance, the Group will reinforce its
actions aimed at improving the air quality for better
environment and health. Air Liquide will pursue an active
dialogue with its stakeholders to contribute to a more sustainable
world.
DEVELOPMENT OF INDUSTRIAL ACTIVITY
In Large Industries:
- In China, Air Liquide signed a new
long-term contract with Xinneng Energy Company, a subsidiary
of ENN Ecological Holdings Company (ENN). Under the terms of the
new agreement, Air Liquide will invest more than
60 million euros in an ASU (Air Separation Unit), with a total
capacity of 2,700 tonnes of oxygen per day. This new unit is
expected to start operations in the second quarter of
2018.
- Air Liquide also signed a new
long-term contract with Maoming Petrochemical Co. (MPCC), a
subsidiary of China Petroleum & Chemical Corp. (Sinopec Corp.),
one of the largest integrated energy and chemical companies in
China. Under the terms of the new agreement, Air Liquide will
invest around 40 million euros in a new state-of-the-art ASU,
with a total capacity of 850 tonnes of oxygen per day.
Expected to start operations in the second quarter of 2017, the new
ASU will supply industrial gases including oxygen and nitrogen to
the customer’s new ethylene oxide plant as well as to its existing
one. MPCC’s decision to outsource their needs for industrial gases
on this new project demonstrates their confidence in Air Liquide’s
capability to provide innovative solutions and deliver safe
operations.
- In South America, Air Liquide
signed a new long-term contract with Axion Energy Argentina,
subsidiary of Bridas Corporation and leading refiner in Argentina.
Under the terms of the new contract, Air Liquide will invest
55 millions euros in a second hydrogen production unit (Steam
Methane Reformer - SMR) for Axion. Implanted in Campana, Buenos
Aires, this SMR will raise the hydrogen production capacity of the
site to 37,000 Nm³ per hour. Operations are expected to start
in the second half of 2018.
In Industrial Merchant:
- Air Liquide has signed
2 multi-year contracts for a total worth of 20 million
euros, for the supply of high purity xenon in the
all-electric propulsion satellite market: one with Airbus
Defence and Space, the world leader in high power electric
satellites and one with Thales Alenia Space, leader in High
Throughput Satellites.
- Cryo International, an Air Liquide
subsidiary specializing in temperature-controlled logistics
solutions, has acquired PDP Couriers, a major player in the
customized transport of highly value-added products for the
pharmaceutical and biotechnology industries. The company
generated revenues of approximately 21 million euros in
2015. PDP Couriers has grown significantly in Eastern Europe, Latin
America and Asia over the past few years.
- Air Liquide’s partnership with US
start-up Solidia Technologies® (Solidia), provides new
equipment for carbon dioxide (CO2) injection for
the production of Solidia Concrete™. Due to Solidia’s patented
processes which cure concrete with CO2 instead of water, this next
generation of cement will allow the entire industrial chain to
reduce up to 70% the environmental footprint of pre-cast concrete.
The breakthrough technology results in reduced concrete curing
times of less than 24 hours and lower water consumption. In
addition to capturing large amounts of CO2, the quality of the
concrete is significantly improved.
In Global Markets & Technologies:
- Air Liquide commissioned
7 biogas purification units in Europe in 2016. The
Group has developed technologies and expertise that span the entire
biomethane value chain: purification of biogas into biomethane,
injection into the natural gas network, liquefaction, and
distribution for clean transportation fleets. The purification and
biogas valorization is a very promising example of a circular
economy, which helps reduce greenhouse gas emissions and which
could contribute to solutions for the zero emission transportation
of tomorrow.
- In July 2016, Air Liquide
announced the commissioning of a world premiere pure helium
storage facility close to Düsseldorf, Germany. This site offers
its customers service to secure their helium supply. With this
initiative, Air Liquide will better address customer needs in
offering reliable and complete helium provisioning.
- Air Liquide has signed several
contracts for the supply of cryogenic equipments for the
propulsion of the future European launcher Ariane 6, as
well as for the design and production of the cryogenic fluid
systems of the new Ariane Launcher System (ELA4) of the Guiana
Space Center (GSC). The contracts for the sale of those equipments,
amounting to more than 100 million euros, will be executed
over the next three years.
DEVELOPMENT IN HEALTHCARE
- Air Liquide pursued its external
growth strategy in Healthcare. The Group announced the acquisition
by its subsidiary Schülke, a specialist in hygiene and hospital
disinfection, of Vic Pharma, the second largest independent
player in the Brazilian hygiene market. It offers a broad
range of products for disinfecting surfaces, instruments and
medical devices, as well as antiseptic solutions for pre- or
post-operative care. Present mainly in the hospital and medical
settings, the company generated revenue of
approximately 8 million euros in 2015.
- Air Liquide announced on 13
October that its subsidiaries SEPPIC, healthcare specialty
ingredients manufacturer, and Schülke, hygiene specialist, broke
ground on a shared state of the art production facility in
Sandston - Virginia, United States. This plant is expected to start
operations in the first half of 2018 and will produce ingredients
destined to the worldwide cosmetic and pharmaceutical markets. The
planned investment is over 60 million US dollars.
NEW PROJECTS IN INNOVATION AND TECHNOLOGIES
- Air Liquide has inaugurated its
new Shanghai Research & Technology Center (SRTC). This
new center will ultimately host 250 employees, including
researchers, experts in customer applications and business
development teams. It will become a major center for the
Group’s innovation in the Asia-Pacific region. This opening
follows the celebration of the twentieth anniversary of the Group’s
Engineering & Construction facilities in Hangzhou, a city of
Zhejiang province, illustrating the long-term commitment of the
Group in China.
- Air Liquide was certified as a
“technological showcase” in France by the Industry of the Future
Alliance. Air Liquide decided in 2016 to invest
20 million euros in Large Industries in the project
called “Connect”. The Group creates a remote operations and
optimization center in France which is unique in the industrial
gases industry, able to control and optimize the production,
energy, efficiency and reliability of the Large Industries sites,
or carry out predictive maintenance actions.
- ALIAD, the venture capital arm of the
Air Liquide Group, strengthened its position in future
industries with new equity investments in technology start-ups:
Carmat, Inpria, Poly-Shape, Solidia Technologies, and Proxem.
ALIAD has thus made 27 investments since its creation in 2013 for a
total commitment of over 66 million euros. The investment
strategy of ALIAD, coherent with the Group’s strategy, targets
sectors linked to the energy transition, healthcare, and high
tech.
PORTFOLIO MANAGEMENT
Air Liquide is focused on its Gas & Services activities
following the Group’s acquisition of Airgas, as well as on the
implementation of its company program NEOS for the 2016-2020
period.
Air Liquide is considering various options for the
divestment of its subsidiary Air Liquide Welding,
specialized in the manufacturing of welding and cutting
technologies, with the intention to provide it with the best
opportunities for its long-term development.
At the end of December, Air Liquide finalized the
divestment of Aqua Lung a key player in personal
aquatic equipment for recreational and professional use, to Montagu
Private Equity, a leading European private equity firm. Montagu
will support Aqua Lung’s next phase of growth and enable the
company to deliver on its strategy.
2016 Income Statement
Comparable basis: excluding significant scope, currency,
energy (natural gas and electricity) impact
Applied method
In addition to the comparison of published figures, financial
information is given excluding significant scope, currency, and
natural gas and electricity price fluctuation impact.
- The significant scope effect corresponds to the impact on
sales of all acquisitions or disposals of a significant size for
the Group. These changes in scope of consolidation are
determined:
- for acquisitions during the period, by
deducting from the aggregates for the period the contribution of
the acquisition,
- for acquisitions during the previous
period, by deducting from the aggregates for the period the
contribution of the acquisition between January 1 of the
current period and the anniversary date of the acquisition,
- for disposals during the period, by
deducting from the aggregates for the previous period the
contribution of the disposed entity as of the anniversary date of
the disposal,
- for disposals during the previous
period, by deducting from the aggregates for the previous period
the contribution of the disposed entity.
- 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. The
currency effect is calculated based on the aggregates for the
period converted at the exchange rate for the previous period.
- In addition, the Group passes on variations in the cost of
energy (electricity and natural gas) to its customers via indexed
invoicing integrated into their medium and long-term contracts.
This indexing can lead to significant variations in sales (mainly
in the Large Industries Business Line) from one period to another
depending on fluctuations in prices on the energy market.
An energy impact is calculated based on the sales of each of the
main subsidiaries in Large Industries. Their consolidation allows
the determination of the energy impact for the Group as a whole.
The foreign exchange rate used is the average annual exchange rate
for the year N-1.
Thus, at the subsidiary level, the following formula provides
the energy impact, calculated for natural gas and electricity
respectively:
Energy impact = Share of sales index to energy year (N-1) x
(Average energy price over the year (N) - Average energy price over
the year (N-1))
Neutralizing the impact of variations in energy prices against
sales allows analysis of evolution in revenue on a comparable
basis.
Main impact 2016
Considering the disposal of Aqua Lung, closed on 30 December
2016, and the fact that Air Liquide is considering various options
for the divestment of its subsidiary Air Liquide Welding
communicated on 15 December 2016, “Other activities” have been
reallocated to “Net Profit From Discontinued Operations” in the
2016 Income Statement, in accordance with IFRS 5. The 2015
Income Statement has been restated in an identical manner. Assets
and liabilities held for sale have also been reported in a
dedicated line in the Balance Sheet.
As a consequence, the comments below concern 2015 restated
figures and 2016 data in accordance with IFRS 5 as stated
above.
Moreover, on account of the 1 October 2016 operational merger
of Industrial Merchant and Healthcare activities of Airgas and Air
Liquide in the United States, it is no longer possible to isolate
Air Liquide and Airgas activities as to the former scope. In
consequence, comparable sales growth for the fourth quarter 2016
and for full year 2016 in the Americas region results from internal
estimates.
The main impact on revenue in 2016 was:
(in millions of euros)
Group
Gas & Services
Revenue 2016
18,135
17,331
2016/2015 published change (in %) +14.6% +17.5% Significant scope
impact + 2,735 + 2,735 Currency impact (210) (203) Natural gas
impact (272) (272) Electricity impact (84)
(84)
2016/2015 comparable change(a) (in
%)
+0.9%
+2.7%
(a) Estimated comparable growth excluding significant scope,
currency and energy impact.
REVENUE
Revenue
(in millions of euros)
2015 2016
2016/2015
published
change
2016/2015
comparable
change (a)
Gas & Services 14,752 17,331 +17.5%
+2.7% Engineering & Construction 775 474
-38.8% -38.0% Global Markets & Technologies 292
330 +13.2% +13.6%
TOTAL REVENUE
15,819 18,135 +14.6%
+0.9%
(a) Excluding significant scope, currency and energy impact.
Group
Group revenue in 2016 totaled 18,135 million
euros, up +14.6% as published compared to 2015, driven
by consolidation of Airgas sales from 23 May 2016 but penalized by
negative currency impact of -1.4% and by adverse energy impact of
-2.2%. Excluding currency and energy impact, growth stood at
+18.2%. In the fourth quarter, the currency and energy
impact reversed, becoming slighly positive, respectively +0.1% for
currency and +0.4% for energy.
Excluding Airgas, currency and energy impact, comparable
sales growth in 2016 for the Group was +0.9%. It
benefited from solid growth in Gas & Services sales although
the activity level remained weak in Engineering & Construction
in a difficult environment.
Revenue by quarter
(in millions of euros)
Q1 16 Q2 16 Q3 16
Q4 16 Gas & Services 3,548 4,070
4,783 4,930 Engineering & Construction 124
130 105 115 Global Markets & Technologies
65 81 73 111
TOTAL REVENUE
3,737 4,281 4,961
5,156 2016/2015 Group published change
-2.9% +7.9% +25.1%
+27.8% 2016/2015 Group comparable change (a)
+2.8% +1.3% -0.8%
+0.5% 2016/2015 Gas & Services comparable change
(a) +4.2% +3.1%
+2.0% +1.7%
(a) Excluding significant scope, currency and energy impact.
Gas & Services
Unless otherwise stated, all the changes in revenue outlined
below are on a comparable basis: excluding Airgas
consolidation impact and excluding currency and energy (natural gas
and electricity) impact.
Gas & Services revenue totaled 17,331 million
euros, up +17.5% as published. It benefited from the
consolidation of Airgas sales since 23 May 2016 but was penalized
by negative currency impact of -1.4% and adverse energy impact of
-2.4%. Growth including Airgas, excluding currency and energy
impact was +21.3%.
Excluding the Airgas contribution and excluding currency and
energy impact, comparable sales growth was +2.7%,
driven by a solid increase in sales in Large Industries, in
Healthcare and in developing economies.
Revenue
(in millions of euros)
2015 2016
2016/2015
published
change
2016/2015
comparable
change (a)
Europe 6,749 6,593 -2.3% +2.0% Americas
3,595 6,230 +73.3% +1.8% Asia-Pacific
3,850 3,936 +2.2% +4.2% Middle-East and
Africa 558 572 +2.5% +7.6%
GAS &
SERVICES 14,752 17,331
+17.5% +2.7% Large Industries 5,201
5,037 -3.1% +5.4% Industrial Merchant
5,229 7,565 +44.7% -1.6% Healthcare
2,799 3,111 +11.2% +4.9% Electronics
1,523 1,618 +6.2% +4.3%
(a) Excluding significant scope, currency and energy impact.
Europe
Revenue from the Europe region totaled 6,593 million
euros in 2016, increasing +2.0% and confirming a
progressive recovery. Large Industries, up +2.6%, was penalized by
several temporary customer maintenance turnarounds. Industrial
Merchant sales were stable over the year, with slight improvement
in the fourth quarter and encouraging signs in the cylinder
activity. Healthcare pursued solid development at close to +4%.
Europe Gas & Services 2016
Revenue
[OBJECT OMITTED]
- Large Industries sales
progressed +2.6% in 2016. Demand in air gases was strong
throughout the year. Although first quarter revenue benefited from
the ramp-up of the Dormagen HyCO unit in Germany, the second and
third quarters were penalized by temporary customer maintenance
turnarounds. The fourth quarter benefited from an exceptional
indemnisation related to a customer contract. Eastern Europe
continued to expand, particularly in Russia, Poland and
Turkey.
- Industrial Merchant revenue was
stable over the year (+0.0%). Sales were up in Food,
Beverage and Pharma markets whereas the manufacturing sector
remained difficult. Liquid oxygen and nitrogen volumes were up over
the year. At the end of the year, the small customers market,
mainly cylinders, showed encouraging signs. Sales in Southern
Europe, in particular in Iberia, were relatively strong. Eastern
European countries continued their sustained growth, particularly
in Russia and Poland. The price impact in the region was negative
over the year at -0.7% against a backdrop of quasi-zero inflation
and a price decrease for customers with contracts indexed to energy
costs.
- Healthcare posted sustained
growth of +3.9% over the year. The Home Healthcare activity
pursued its dynamic organic development with an increase in the
number of patients and an expansion of its portfolio of therapies
treated. The incremental contribution of small acquisitions was
relatively low in 2016. In Medical Gases for hospitals, pricing
pressure continued to penalize revenue. Sales in Hygiene and
Specialty Ingredients activities grew significantly.
- Electronics revenue was down
-6.0% over the year, penalized by Equipment &
Installation sales which were down -17%.
Americas
Gas & Services revenue in the Americas region totaled
6,230 millions euros in 2016, up +77.8%
excluding currency and energy impact; and up +1.8% excluding
Airgas. Driven by start-ups, sales were up strongly in Large
Industries, with solid volumes, whereas they remained down in
Industrial Merchant in North America, as manufacturing output and
construction remained slow in the United States and Canada.
Business continued to expand dynamically in South America, in
particular in Large Industries and Healthcare.
Americas Gas & Services 2016
Revenue
[OBJECT OMITTED]
- Large Industries posted strong
growth in sales, up at +7.4% over the year, in particular driven by
the ramp-up of several units in the United States and South
America. Air gases volumes rose sharply. The commissioning of the
hydrogen cavern at the end of the year reinforced reliability for
customers, flexibility of production units for increased efficiency
and allows development of on-demand hydrogen sales.
- Industrial Merchant was up
+153.6% excluding currency impact over the year, and down
-4.2% excluding Airgas, with a second half to a lesser
extent at -2.9%. In North America, sales were penalized by weak
manufacturing activity, notably in the Energy, Metal Manufacturing
and Construction sectors. Demand remained strong in Food, Beverage
and Pharma markets. In South America, revenue increased by more
than +10%. The price impact in the region was positive +2.5% over
the year.
- Healthcare revenue showed strong
growth, increasing +73.4% excluding currency impact for the
year and +11.2% excluding impact of Airgas. Sales in Canada
were sustained by solid organic growth and contribution from
acquisitions in Home Healthcare. In South America, business
continued dynamic expansion with double-digit growth in Brazil and
Argentina.
- Electronics sales presented an
evolution of -1.6% in 2016. Following growth at +3.2% in the
first half, driven in particular by high Equipment &
Installation sales, revenue was down in the second half due to a
sharp fall in Equipment & Installation sales in the fourth
quarter.
Asia-Pacific
Revenue in the Asia-Pacific region increased +4.2% in
2016 and reached 3,936 million euros, driven notably by
Large Industries and Electronics. Performance was contrasted by
country: sales in China climbed +7.8% over the year, with solid
contribution from all activities; Japan benefited at the end of the
year from improvement in Industrial Merchant but was penalized by
weaker Electronics sales.
Asia-Pacific Gas & Services 2016
Revenue
[OBJECT OMITTED]
- Large Industries sales
progressed +5.4% over the year, driven by the ramp-up of
units, in particular in China and a start-up in Australia in the
third quarter. Sales in the fourth quarter were penalized by
several temporary customer maintenance turnarounds.
- Industrial Merchant revenue
posted a slight decline of -0.7% in 2016, with the fourth
quarter presenting slightly positive growth. Performance was
contrasted by country. Sales in China posted solid growth over the
year, with double-digit growth for liquid gas and cylinder volumes
in the fourth quarter. In Japan, sales were down over 12 months but
presented slight growth in the second half. Business in Australia
returned to growth in the fourth quarter. Performance in South East
Asia remained irregular. The price impact was negative in the
region, at -0.3% over the year.
- Electronics sales were up
+8.6% in 2016, with contrasted performance over the year.
Revenue was up +17.7% in the first half, driven by double-digit
growth in China, Japan, Singapore and South Korea; all business
lines contributed to growth, in particular Advanced Materials and
Equipment & Installation (E&I). In the second half,
sales remained slightly up but were penalized by a drop in the
E&I activity after several very dynamic quarters and by weaker
sales of electronics speciality materials after a period of marked
increase. It should be noted that the price of neon was
exceptionally high in the fourth quarter of 2015. Sales of carrier
gases were strong, up more than +5%, reinforced notably by the
start-up of several units in Singapore, China and Japan over the
year. Advanced Materials continued their strong double-digit growth
in 2016.
Middle-East and Africa
Revenue from the Middle East and Africa region totaled 572
million euros, up +7.6%. During the first quarter, sales
benefited from the final contribution of the ramp-ups of two
large-scale hydrogen production units in Yanbu in Saudi Arabia
which had started-up in the second quarter of 2015; conversely,
fourth quarter sales were penalized by the scheduled customer
maintenance turnaround which lasted four weeks. Business was
dynamic in Egypt where sales were boosted by the pre-loading of a
Large Industries production unit and the development of the
Industrial Merchant activity with glassmaking and steel customers.
South Africa grew in Large Industries. Healthcare continued to grow
in the region.
Engineering & Construction
Engineering & Construction revenue totaled
474 million euros, down -38.0% as compared with
2015. It was affected by the slowdown in major energy-related
projects and the low number of new projects in a still difficult
global environment.
Total order intake reached 389 million euros, a decrease as
compared with 936 million euros in 2015. The vast majority of
projects concerned Air Separation Units (ASU).
Global Markets & Technologies
Global Markets & Technologies revenue was up +13.6%
at 330 million euros. Sales were significant in the
Space, Maritime and Biogas sectors.
Total order intake saw spectacular growth and reached 405
million euros in 2016.
OPERATING INCOME RECURRING
Operating Income Recurring before depreciation and
amortization totaled 4,611 million euros, up
+9.4% as published compared to 2015 and up +10.9%
excluding currency impact, reflecting the integration of Airgas
over seven months in 2016.
Purchases increased by +13.6%, at a slightly lower rate than
published sales growth of +14.6%. Personnel costs and other
expenses grew at a faster rate than sales (+19.6%), mainly due to
the change in business mix. Indeed, Industrial Merchant, which now
accounts for close to half of sales, requires more staff than other
activities such as Large Industries.
Over the year, efficiencies totaled 315 million
euros, exceeding the annual objective of more than 250 million
euros. They represent savings of 2.7% of the cost basis. Slightly
less than half correspond to logistics and industrial gains: these
include optimizing operations at plants linked to the pipeline
network, improving plant reliability, launch of the remote
operation and optimization center in France and logistics
efficiencies in a context of lower consumption by Industrial
Merchant customers. Purchasing efficiencies account for
approximately one-third of the total. They are mainly related to
gains on energy and Home Healthcare in Europe. The remaining
efficiencies include the effects of realignment plans in several
countries, notably in Engineering & Construction. Industrial
Merchant is the business line which generates the most
efficiencies, accounting for 36% of the total.
The first Airgas synergies, notably with the operational
merger of Industrial Merchant and Healthcare activities in the
United States since 1 October 2016, materialized. They
represent 45 million US dollars, divided into four main
categories: cylinder operations which concern site closures and
restructuring, liquid gas operations which are optimized from gas
sourcing to delivery logistics to customers, review of process and
procurement, and back-office.
Depreciation and amortization reached
1,587 million euros, up +16.8% and +18.1%
excluding currency impact, in particular due to start-ups during
the year, the integration of Airgas and additional depreciation and
amortization of intangible assets resulting from the Airgas
acquisition.
The Group’s operating income recurring (OIR) reached
3,024 million euros in 2016, an increase of
+5.9% over 2015, or +7.5% excluding currency
impact. Operating margin (OIR to revenue) evolved from 18.1% in
2015 to 16.7% in 2016, reflecting the new business mix
following the integration of Airgas. Excluding energy impact, the
operating margin was 16.4%.
Gas & Services
Operating income recurring in the Gas & Services
activity amounted to 3,239 million euros, an
increase of +9.4% compared to 2015. The OIR margin on
published revenue stood at 18.7%, reflecting the new
business mix following the integration of Airgas; excluding the
energy impact, the operating margin reached 18.3%.
Gas & Services 2016 operating income
recurring
[OBJECT OMITTED]
Gas & Services Operating margin (a)
2015 2016 Europe
19.6% 20.0% Americas
23.5% 17.3% Asia-Pacific
18.2% 18.5% Middle-East and
Africa 15.9% 19.9%
TOTAL 20.1%
18.7%
(a) Operating income recurring/revenue, as published
figures.
Operating income recurring in Europe was
1,319 million euros, down slightly (-0.5%) from 2015.
Excluding energy impact, the operating margin was down by
-30 basis points and stood at 19.3%. This result can be
mainly explained by Industrial Merchant activity with volumes down
in cylinder activity in certain countries; efficiencies partially
offset the slightly negative price effect.
Operating income recurring in the Americas reached
1,076 million euros, an increase of +27.7%. The
operating margin, excluding energy impact, was down -630 basis
points to 17.2%. It reflects the change in business mix
following the acquisition of Airgas with reinforcement of the
relative weight of Industrial Merchant. Significant work on fixed
costs is underway in the United States as a result of divestitures
made in connection with the acquisition of Airgas and the
operational merger of activities in October.
In the Asia-Pacific region, operating income recurring
amounted to 730 million euros, an increase of
+4.0%. The operating margin, excluding energy impact, was
stable at 18.2%. The improvement of the margin in Electronics,
benefiting in particular from a favorable business mix, enabling to
offset the decrease in prices of certain products in Industrial
Merchant.
Operating income recurring in the Middle-East and Africa
region amounted to 114 million euros, a significant
increase of +28.3%. The operating margin, excluding energy
impact, increased by +430 basis points to 20.2%. It
incorporates an exceptional profit linked to a customer
indemnisation.
Engineering & Construction
Operating income recurring for Engineering &
Construction was 5.1 million euros and 1.1% of
revenue, penalized by limited activity in a still difficult
environment. The Group’s mid-term target range remains between 5%
and 10%.
Global Markets & Technologies
Operating income recurring from Global Markets &
Technologies was 34 million euros, slightly down
from 36 million euros in 2015. The operating margin was
10.3%. The margin level for this activity is dependent on
the nature of the projects carried out during the period and may
vary quite markedly from one year to the next.
Research & Development and corporate costs
Research & Development (R&D) and corporate costs
included the intersectoral consolidation adjustments and amounted
to 254 million euros, up +22.5% as compared to
2015. The evolution in R&D and corporate costs accounts for
two-thirds of this increase, the remainder being due to currency
effects and consolidation adjustments.
NET PROFIT
Other operating income and expenses showed a positive
balance of 35.6 million euros. The capital gain on the
divestitures pursuant to the American anti-trust authorities (FTC)
relative to the Airgas acquisition compensates all one-off costs of
the year related to the acquisition and integration of Airgas, as
well as other one-off costs such as those relating to realignment
plans realized in different countries for more than 60 million
euros.
The financial result of -403 million euros
was +54.1% higher as compared with 2015. Net finance costs
were up +74.5% due to the financing of the Airgas
acquisition. Nevertheless, the average cost of net debt was
2.9%, decreasing as compared with 3.7% in 2015. It reflects
the mix between the financing of the Airgas acquisition realized at
a historically low rate, financing in strong currencies for which
interest rates have continued to decrease and in currencies of
developing economies where interest rates remain high. The decrease
in “other financial income and expenses” is mainly due to foreign
exchange gains on financing transactions, in particular relating to
the acquisition of Airgas.
The capital gain on divestitures requested by the American
anti-trust authorities (FTC) within the framework of the Airgas
acquisition also allows an offset of approximately 30 million
euros of non-recurring financial expenses.
Taxes totaled 747 million euros, up +13.0%. The
effective tax rate over the year was 28.2%, greater
than the 2015 rate (26.8%). This rate reflects the mix between a
low rate (23.8%) in the first half of 2016 which includes
exceptional items (tax gains relating to the implementation of a
decision by the European Court of Justice and favorable evolution
of several tax audits) and a higher rate in the second half (31.3%)
due to exceptional items relating to the Airgas acquisition.
The share of profit of associates contributed
6.6 million euros. Minority interests were
globally stable at 82.7 million euros.
Net profit from discontinued operations reached
11.1 million euros in 2016, a decrease as compared with
14.6 million euros in 2015. The capital gain on the disposal
of Aqua Lung offset the provisions made for the Welding activity in
light of preparing the divestment.
Overall, net profit (Group share) amounted to
1,844 million euros in 2016, up +5.0% as
compared with 2015.
After taking into account the dilution impact of the capital
increase, net earnings per share were 5.11 euros, up
+2.4% compared with 4.99 euros per share in 2015. It
may be noted that net earnings per share for previous fiscal years
have been restated for the impact of the preferential subscription
rights allocated to Group shareholders as part of the
3.3 billion Euro capital increase carried out in September
2016 to finance the Airgas acquisition. The average number of
outstanding shares used for the calculation of net earnings per
share as of 31 December 2016 was 360,751,910.
Change in the number of shares
2015 2016 Average number of
outstanding shares (a) 351,963,761 360,751,910
(a) Used to calculate earnings per share;
2015 figure restated for the impact of the preferential
subscription rights allocated to
shareholders as part of the capital increase
Number of shares as of 31 December 2015 344,163,001 Capital
Increase 43,202,209 Options exercised during the year
511,408 Capital increase reserved for employees 999,143
NUMBER OF SHARES AS OF 31 DECEMBER 2016
388,875,761
DIVIDEND
At the Annual General Meeting on 3 May 2017, the payment of
a dividend of 2.60 euros per share will be proposed to
shareholders for fiscal year 2016. Taking into account the
restatement related to the rights issue, this dividend represents
an increase of +2.7%. Total estimated pay-out taking into account
share buybacks and cancellations will amount to 1,032 million
euros, representing a pay-out ratio of 56%.
The ex-dividend date is scheduled for 15 May 2017 and the
payment is scheduled for 17 May 2017.
2016 Cash Flow and Balance Sheet
(in millions of euros)
2015 2016
Cash flow from operating activities before change in working
capital 3,149 3,523 Change in
working capital requirements (258) 331 Other items
(59) (158)
Net cash flow from operating
activities 2,832 3,696 Dividends
(975) (1,019) Purchases of property, plant and
equipment and intangible assets, net of disposals (a)
(2,292) (13,609) Increase in share capital 86
3,361 Purchase of treasury shares (178) 4 Impact of
exchange rate changes and net indebtedness of newly consolidated
companies & others (405) (563)
Change in net
indebtedness (932) (8,129) Net
indebtedness as of December 31 (7,239) (15,368)
Debt-to-equity ratio as of December 31 57%
90% (a) Including transactions with minority
shareholders.
NET CASH FLOW FROM OPERATING ACTIVITIES
Cash flow from operating activities before changes in working
capital requirements amounted to 3,523 million euros, up
+11.9% as compared with 2015. This amount corresponded to
19.4% of Group revenue.
Net cash flow from operating activities after changes in
working capital requirements amounted to 3,697 million
euros, up +30.5% as compared with 2015 and reached
20.4% of sales. This performance is the result of measures
taken to reduce working capital requirements.
CHANGES IN WORKING CAPITAL REQUIREMENTS
The working capital requirements (WCR) decreased by
331 million euros in 2016. This amount includes the change
in the WCR of Airgas; it excludes, however, the scope effect which
was reallocated to “Acquisition of consolidated companies and
financial assets”.
The improvement in WCR comes from Gas & Services, the WCR of
Engineering & Construction presented an increase linked to the
cycle of projects. The decrease in WCR is mainly due to the
decrease in trade receivables due to factoring measures, a decrease
in late payments for certain customers and an improvement in North
America due to greater proficiency in using the new ERP which was
rolled out in 2015. The working capital requirements stood at
7.2% of sales, based on annualized Airgas revenue, a
decrease compared with the ratio of 8.0% at the end of 2015
(following IFRS 5). This performance is mainly due to measures
implemented to reduce trade receivables which greatly offset the
integration of Airgas whose activity requires WCR higher than Group
average.
CAPITAL EXPENDITURE
In 2016, gross capital expenditures totaled
14,439 million euros, including transactions with
minority shareholders. This amount includes 12,004 million
euros in financial investments relating to the Airgas
acquisition.
(in millions of euros)
Industrial
investments
Financial
investments (a)
Total Capital
Expeditures
2011 1,755 103 1,858 2012 2,008
890 2,898 2013 2,156 401 2,557 2014
1,902 273 2,175 2015 2,028 395
2,423
2016 2,259 12,180
14,439
(a) Including transactions with minority shareholders.
Proceeds from the sale of fixed assets, for a total of
830 million euros, mainly relate to the divestments
requested by the American anti-trust authorities (FTC) as part of
the Airgas acquisition for 424 million euros after tax and the
after-tax disposal of Aqua Lung for 229 million euros.
Thus, net capital expenditures, including the buyout of
minority shareholders, amounted to 13,609 million
euros, of which 11,580 million euros in financial
investments linked to the acquisition of Airgas, net of
disposals.
Industrial investments
Gross industrial capital expenditures for the Group amounted to
2,259 million euros in 2016, up +11.4% compared with
2015. Airgas investments accounted for the vast majority of this
increase.
(in millions of euros)
Gas & Services
Europe Americas Asia-Pacific
Middle-East
and Africa
Total 2015 549 731 475
129 1,884
2016 566 737
599 155 2,057
Financial investments
Financial investments amounted to 12,180 million
euros, including minority interest transactions of
15 million euros. This amount included 12,004 million
euros related to the Airgas acquisition.
NET INDEBTEDNESS
Net indebtedness as of 31 December 2016 stood at
15,368 million euros, up 8,129 million euros
compared with the end of 2015 and down 4,492 million euros
compared with the end of June 2016.
The increase in debt during the first half was mainly due to the
financing of the Airgas acquisition which was completed 23 May 2016
(value of shares for 10.7 billion US dollars), the refinancing
of part of Airgas’ debt (for 0.9 billion US dollars) and the
consolidation of Airgas’ non-refinanced debt (1.8 billion US
dollars).
The very good level of cash flow during the second half of the
year and the capital increase with preferential subscription rights
carried out in September 2016 contributed 4,492 million euros
for the reduction in debt during the second half.
The debt-to-equity ratio reached 90% at the end of
December 2016 (versus 57% at the end of 2015), strongly down
compared with the exceptional level of 151% reached at end of June
2016, five weeks after the Airgas acquisition.
ROCE
The return on capital employed after tax was 7.8%. The
restated ROCE, taking into account the acquisition of Airgas for
the entire year, reached 6.9% and 7.1% excluding the currency
impact.
The Group confirmed the NEOS objective of returning to a ROCE in
excess of 10% in the next five to six years.
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. Investment projects in
the industrial gas business are spread throughout the world, highly
capital intensive and supported by long-term contracts, in
particular 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 prudent management of the
balance sheet and innovative financing methods. This financing
strategy is fundamental for the Group’s continued development.
Investments
INVESTMENT OPPORTUNITIES
As of 31 December 2016, the 12-month portfolio of
opportunities totaled 2.2 billion euros, down
400 million euros as compared to the end of 2015 and
stable since the end of June 2016. New projects entering the
portfolio partly offset those signed by the Group, awarded to the
competition or delayed. In a context of continuing low energy
prices, certain customers have postponed their decisions. The
global portfolio, which includes projects that may be signed before
or after 12 months, remains solid between 4.5 and
5 billion euros.
Developing economies represent half of the portfolio, down when
compared with the breakdown as of 31 December 2015, new
projects being mainly located in mature geographic regions. North
America is the first geographic region for investment
opportunities, followed by Europe, South America and China.
Half of the portfolio of opportunities corresponds to projects
with investments of less than 50 million euros and only a few
projects are greater than 100 million euros. The average size
of projects is more modest, thus contributing to a better
distribution of risk.
INVESTMENT DECISIONS AND INVESTMENT BACKLOG
Investment decisions
(in billions of euros)
Industrial
investment
decisions
Financial investment
decisions
(acquisitions)
Total
investment
decisions
2012 2.0 0.9 2.9 2013 2.2 0.5
2.7 2014 1.9 0.2 2.1 2015 1.9
0.5 2.4
2016 2.0
12.2 14.2
In 2016, excluding the Airgas acquisition, industrial and
financial investment decisions reached 2.2 billion
euros.
Industrial investment decisions represented more than 90% of
this amount and were greater than in 2015. Industrial Merchant
represented more than 35% of investment decisions following the
integration of Airgas, Large Industries approximately 30%,
Healthcare 15%, with the remainder in Electronics and Global
Markets & Technologies.
Industrial decisions in 2016 concerned projects located in
Europe for more than 40%, in the Americas for one-third, in
Asia-Pacific for one-fifth and Middle-East & Africa for the
balance.
Excluding the acquisition of Airgas, financial investment
decisions reached approximately 200 million euros
in 2016, a decrease of 300 million euros as compared with
2015. These decisions mainly included small acquisitions in Home
Healthcare and Industrial Merchant.
The total investment backlog amounted to
2.1 billion euros, a decrease as compared with
2.3 billion euros at the end of 2015. This change is explained
by the start-up of several units, in particular in Brazil, the
United States, Australia and Singapore. The investment backlog
should lead to a future contribution to revenue of
approximately 0.8 billion euros per year after full
ramp-up.
START-UPS
In 2016, 14 new units started up: five units in the
Americas region and one in Australia, four ultra-pure nitrogen
production units for Electronics in China, Japan and Singapore,
three units for Industrial Merchant in Asia. The hydrogen storage
cavern in the United States was also commissioned.
Financing Strategy
The financing strategy is regularly reviewed to best provide
support to the Group’s development and take into account the
evolution in financial market conditions, while respecting a credit
profile compatible with a minimum long-term rating in category “A”
by rating agencies Standard & Poor’s and Moody’s. This credit
profile is measured in particular by ratios of net debt-to-equity
and cash flow from operating activities before changes in working
capital requirements to net debt.
Following the acquisition of Airgas, and as was expected,
Air Liquide’s long-term credit rating was downgraded two
notches, from “A+” to “A-”, by Standard & Poor’s on 24 May
2016. With this acquisition and in preparation of its funding, it
was decided to add the long-term credit rating of a second rating
agency, Moody’s. The long-term credit rating attributed to
Air Liquide by Moody's is “A3”, the equivalent of Standard
& Poor’s “A-”. Both agencies have removed their negative watch
and upgraded their outlook to stable. Moreover, the short-term
credit ratings have been downgraded one notch, from “A1” to “A2”
and from “P1” to “P2”.
In 2016, the existing principles of prudence were
maintained:
- pursuing the diversification of
financing sources and spreading of debt maturities in order to
minimize refinancing risk;
- backing commercial paper issues with
confirmed credit facilities;
- hedging interest rate risk to ensure
visibility of financing costs, in line with long-term investment
decisions;
- funding investments in the currency of
the operating cash flows, to ensure a natural currency
hedging;
- a permanent centralization of funding
and excess cash through Air Liquide Finance, a wholly-owned
entity of L’Air Liquide S.A.
The net debt-to-equity ratio is under control at
90% at the end of 2016 (as compared with 57% at the end of
2015). This evolution is due to the financing of the Airgas
acquisition. The equivalent ratio calculated using the American
method of net indebtedness/(net indebtedness + shareholder equity)
reached 47% at the end of 2016, as compared with 36% at the end of
2015. The financial expenses coverage ratio (operating income +
share of profit of associates)/(net finance costs) decreased to 7.9
in 2016 as compared with 12.2 in 2015.
DIVERSIFYING FINANCING SOURCES
Air Liquide diversifies its financing sources by accessing
various debt markets: commercial paper, bonds and banks.
In 2016, capital markets were used, moreover, with a capital
increase, as part of the Airgas acquisition.
Air Liquide uses the short-term commercial paper market, in
France, through two French Commercial Paper programs of up to an
outstanding maximum of 3 billion euros each, 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
12 billion euros. As of the end of 2016, outstanding bonds
issued under this program amounted to 8.1 billion euros
(nominal amount). The Group’s EMTN program allows, in particular,
for bonds to be issued in the principal currencies (euro, US
dollar, Japanese yen) as well as in other currencies (Chinese
renminbi, Swiss franc, pound sterling and ruble).
Thus, in 2016, under its EMTN program, the Group conducted two
public bond issues for an amount of 300 million euros in April
and 3.0 billion euros in June. Both of these issues enabled
the Group to meet its financing needs and, for the June issue,
equally to reimburse a portion of the bridge loan contracted for
the Airgas acquisition. To complete the refinancing of the Airgas
acquisition, these issues were accompanied, in September, by a bond
issue of 4.5 billion US dollars in 144A format, a public
American format for which securities issued are not registered with
the Securities and Exchange Commission ("SEC").
As of 31 December 2016, funding through capital markets
accounted for 90% of the Group’s total gross debt, for an amount of
bonds outstanding of 14.6 billion euros, across all programs,
and 0.6 billion euros of commercial paper. The total amount of
bonds outstanding includes the five Airgas issues, previous to the
acquisition, for a total of 1.55 billion US dollars
(equivalent to 1.5 billion euros), guaranteed by
L’Air Liquide S.A. on 23 May 2016.
The Group also raises funds through bank debt (loans and credit
facilities).
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 an amount
which is covered by committed credit facilities. As of
31 December 2016, the amount of committed credit facilities
totaled 3.1 billion euros, as compared with 2.6 billion
euros as of 31 December 2015. In December 2016, certain
bilateral credit facilities were renewed, their amount increased by
185 million euros. New contracts were, also, signed for an
amount of 350 million euros, taking the total amount of
bilateral credit facilities to 1.8 billion euros. Moreover,
the Group has a syndicated credit facility of 1.3 billion
euros, which reaches maturity in November 2020.
As of 31 December 2016, the amount of debt maturing in 2017
was 2.0 billion euros.
The bridge loan, signed on 17 December 2015, to finance the
Airgas acquisition as closed on 23 May 2016, was drawn up to
11.6 billion US dollars, and refinanced in June by a
3.0 billion euro bond issue, in September by a
4.5 billion US dollar bond issue (equivalent of
4.3 billion euros), in October by a 3.3 billion euro
capital increase with retention of preferential subscription
rights, and the balance by the asset divestitures as requested by
the American anti-trust authority (FTC), as part of the Airgas
acquisition.
Net indebtedness by currency
2015 2016 Euro 24%
25% US dollar 44% 59% Japanese yen 9%
4% Chinese renminbi 12% 5% Other 11% 7%
TOTAL 100% 100%
Investments are generally funded in the currency in which the
cash flows are generated, creating a natural currency hedge. As of
31 December 2016, to improve the balance between the weight of
debt in US dollars and that of cash flows in this currency for
the entire Group, the Airgas acquisition was financed in euros
(6.3 billion euros) and US dollars (4.5 billion
US dollars). Air Liquide’s indebtedness is thus principally
denominated in euros and US dollars. The debt denominated in
Chinese renminbi has decreased, following the repayment of the
first tranche of the September 2011 bond issue, which was partially
refinanced. The debt denominated in Japanese yen has decreased,
also following the repayment of a local loan and the August 2012
private placement of 13.5 billion Japanese yen, which had
reached maturity, both of which were not replaced
CENTRALIZATION OF FUNDING AND EXCESS CASH
To benefit from economies of scale and facilitate capital
markets financing (bonds and commercial paper), the Group uses a
dedicated subsidiary, Air Liquide Finance. As of 31 December
2016, this subsidiary centralized the vast majority of the Group’s
financing transactions. This centralization continued in 2016, in
particular for the financing of Airgas in the United States. It
also hedges currency, interest rate and energy risk for the Group’s
subsidiaries in those countries where it is permitted by law.
In the countries where local regulations permit,
Air Liquide Finance also centralizes cash flow balances
through direct or indirect daily cashpooling of these outstanding
balances or through term loans. When this method is not possible,
there exist nonetheless local cashpoolings which allow periodic
intercompany loans to Air Liquide Finance. In 2016,
Air Liquide Finance included the US dollar in its daily
cashpooling in Europe.
As of December 31, 2016, Air Liquide Finance had
granted, directly or indirectly, the equivalent of
17.3 billion euros in loans and received 4.9 billion
euros in excess cash as deposits. These transactions were
denominated in 26 currencies (primarily the euro, US dollar,
Japanese yen and Chinese renminbi) and extended to approximately
240 subsidiaries.
Due to the currency matching within Air Liquide Finance,
resulting from the currency hedging of intra-group loans and
borrowings, these internal financing transactions do not generate a
foreign exchange risk for the Group.
Furthermore, the purpose of the European Market Infrastructure
Regulation (EMIR) covering OTC (“Over the Counter”) derivatives is
to improve the transparency of OTC markets and reduce the systemic
risk of financial markets. It applies to all derivative
transactions carried out by entities within the European Union.
Pursuant to this regulation which came into force in August
2012, Air Liquide Finance S.A., the Group’s centralizing
entity for financial transactions continues to be classified as a
non-financial counterparty (NFC-), since the transactions were
still below the clearing thresholds at the end of 2016. It is thus
required to apply risk mitigation measures and report all its
derivative transactions to the chosen trade repository, "DTCC", in
accordance with the technical standards published by ESMA. The
mandatory reporting arising from the 2010 Dodd-Frank Act of the
United States is also centralized via the “DTCC”.
Furthermore, in certain specific cases (e.g. regulatory
constraints, high country risk, joint ventures, etc.), the Group
limits its risk by setting up specific finance in the local banking
market, and by using credit risk insurance.
DEBT MATURITY AND SCHEDULE
In order to minimize the refinancing risk related to the debt
maturity schedules, the Group diversifies financing sources and
spreads maturity dates over several years. This refinancing risk is
also reduced by the regularity of the cash flow generated from
Group activities.
The average of the Group’s debt maturity is 6.2 years, as
of 31 December 2016, an increase as compared with
31 December 2015 due to the issues which permitted the Airgas
refinancing; in five tranches ranging from two to 12 years, of
an average weighted length of 7.3 years, for the
euro-denominated issue; and in five tranches ranging from three to
30 years, of an average length of 10.6 years, for the US
dollar-denominated issue.
The following chart represents the Group’s debt maturity
schedule. The single largest annual maturity represents
approximately 12% of gross debt.
Debt maturity schedule (in millions of
euros)
[OBJECT OMITTED]
BANK GUARANTEES
The Group’s subsidiaries grant bank guarantees essentially in
favor of Engineering & Construction and Healthcare customers
either during the tender period (bid bond), or after contract
award, during contract execution until the end of the warranty
period (advance payment bond, retention bond, performance bond, and
warranty bond).
The most common bank guarantees extended to customers to secure
the contractual performance are advance payment guarantees and
performance guarantees.
In the Group’s ordinary course of business, certain subsidiaries
are required to provide financial payment guarantees to secure
rental or insurance obligations.
The projects, for which these guarantees are granted, are
regularly reviewed by Management and when guarantee payment calls
become probable, the necessary provisions are recorded in the
consolidated financial statements.
OUTLOOK
With the acquisition of Airgas, a major achievement of the past
year, the Group has taken a major step forward in its geographic
expansion and the extension of its markets. Its performance in
2016, which includes Airgas for a portion of the year, is solid
with an increase in revenue, net profit, and net earnings per share
despite unfavorable currency and energy effects.
In the context of moderate global growth, activity was buoyed by
higher volumes in Large Industries, the strength of the Healthcare
sector, and the promising markets served by the new entity Global
Markets & Technologies. All geographies are growing on a
comparable basis, benefiting from stronger growth in developing
economies.
The Group continues to deliver efficiency gains, to which are
added this year the first Airgas synergies. The balance sheet is
strong, reinforced by solid growth in cash flow and success of the
capital increase, thus containing the debt below forecasts.
With the integration of Airgas and the launch of the NEOS
program for the period 2016-2020, Air Liquide is implementing its
transformation, which combines targeted industrial investments,
digital development, and innovations to fuel growth in the coming
years.
Assuming a comparable environment, Air Liquide is confident in
its ability to deliver net profit growth in 2017.
APPENDICES
________________
4th Quarter 2016 Revenue
By Geography
Revenue
In millions of euros
Q4 2015 Q4 2016
Published
Change
Change with
Airgas,
excluding
currency and
energy
Comparable
change (a)
Europe 1,713 1,767 +3.2% +4.2%
+4.2% Americas 899 2,003 +122.9%
+120.1% -0.2% Asia-Pacific 995 1,019
+2.4% +0.5% +0.5% Middle-East and Africa 161
141 -12.1% -7.6% -7.6%
Gas and
Services Revenue 3,768 4,930
+30.8% +30.4% +1.7% Engineering
& Construction 174 115 -34.0%
-34.5% -34.5% Global Markets & Technologies 93
111 +19.5% +20.0% +20.0%
Group
Revenue 4,035 5,156
+27.8% +27.3% +0.5%
By World Business Line
Revenue
In millions of euros
Q4 2015 Q4 2016
Published
Change
Change with
Airgas,
excluding
currency and
energy
Comparable
change (a)
Large industries 1,324 1,388 +4.8%
+4.2% +4.2% Industrial Merchant 1,314 2,293
+74.5% +74.3% -1.1% Electronics 405
403 -0.5% -3.5% -3.5% Healthcare
725 846 +16.7% +17.4% +4.8%
Gas and
Services Revenue 3,768 4,930 +30.8%
+30.4% +1.7%
(a) Excluding significant scope, currency and energy impact.
Significant scope, currency and energy impact
In addition to the comparison of published figures, financial
information for 4th quarter 2016 is provided before significant
scope impact and currency and energy price fluctuations. As of 1
January 2015, the energy impact includes impacts of natural gas and
electricity. In the future, it may also include other energy Large
Industries feedstocks.
Since gases for industry and health 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 and electricity prices are passed on to
customers through price indexation clauses.
Consolidated 2016 4th quarter revenue includes the following
impact:
In millions of euros RevenueQ4 2016
Q4 2016/2015
published
change
Currency Naturalgas
Electricity
Significant
scope(Airgas)
Q4 2016/2015
comparablechange
(a)
Group
5,156 +27.8% +3.5 +12.7
+2.7 +1,081.3 +0.5% Gas &
Services
4,930 +30.8% +3.1 +12.7
+2.7 +1,081.3 +1.7%
(a) Excluding significant scope, currency and energy impact.
For the Group,
- The currency impact was +0.1%.
- The impact of natural gas price
fluctuations was +0.3%.
- The impact of electricity price
fluctuations was +0.1%.
- The significant scope impact was
+26.8%.
For Gas & Services,
- The currency impact was +0.0%.
- The impact of natural gas price
fluctuations was +0.4%.
- The impact of electricity price
fluctuations was +0.0%.
- The significant scope impact was
+28.7%.
Geographic and Segment Information
2015 2016
(in millions of euros and %)
Revenue Operatingincomerecurring OIRmargin
Revenue Operatingincomerecurring OIRmargin
Europe 6,749.4 1,325.9 19.6% 6,593.1
1,318.7 20.0% Americas 3,595.3 843.1
23.5% 6,229.7 1,076.4 17.3%
Asia-Pacific 3,849.6 701.6 18.2%
3,936.2 729.6 18.5% Middle-East and Africa
558.0 88.9 15.9% 572.0 114.1
19.9%
Gas and Services 14,752.3
2,959.5 20.1% 17,331.0
3,238.8 18.7% Engineering & Construction
774.7 67.5 8.7% 473.8 5.1
1.1% Global Markets & Technologies 291.5 36.4
12.5% 330.0 33.9 10.3% Reconciliation
- (207.2) - - (253.9) -
Total Group 15,818.5 2,856.2
18.1% 18,134.8 3,023.9
16.7%
Consolidated Income Statement
Considering the disposal of Aqua Lung as announced on 30
December 2016, and the fact that Air Liquide is considering
various options for the divestment of its subsidiary
Air Liquide Welding, communicated on 15 December 2016, “Other
activities” have been reallocated to “Net
Profit from Discontinued Operations” in the 2016 Income
Statement, in accordance with IFRS 5. The 2015 Income
Statement has been restated in an identical manner.
In the same manner, “Other activities” have been reallocated
to “Assets held for sale” and “Liabilities held for sale” on
the balance sheet.
(in millions of euros)
2015
2016 Change 16/15 Revenue
15,818.5 18,134.8 +14.6%
Other income 187.7 173.9 -7.4% Purchases
(5,890.0) (6,692.8) +13.6% Personnel expenses
(2,928.5) (3,659.4) +25.0% Other expenses
(2,972.2) (3,345.3) +12.6%
Operating income
recurring before depreciation and amortization
4,215.5 4,611.2 +9.4%
Depreciation and amortization expense (1,359.3)
(1,587.3) +16.8%
Operating income recurring
2,856.2 3,023.9 +5.9% Other
non-recurring operating income 38.9 451.0
Other non-recurring operating expenses (162.2)
(415.4)
Operating income 2,732.9
3,059.5 +12.0% Net finance costs
(223.0) (389.1) +74.5% Other financial income
14.1 17.6 Other financial expenses
(52.7) (31.6) Income taxes (661.5)
(747.4) Share of profit of associates
14.3 6.6
Net income from continuing
operations 1,824.1 1,915.6
+ 5.0% Net income from discontinued operations
14.6 11.1 Profit for the
period 1,838.7 1,926.7 +
4.8% - Minority interests 82.3 82.7
- Net profit (Group share) 1,756.4
1,844.0 + 5.0% Basic earnings
per share (in euros)
4.99 5.11
+2.4% Diluted earnings per share (in euros)
4.97 5.10 +2.6%
Consolidated Balance Sheet
ASSETS (in millions of euros)
December 31,
2015 December 31, 2016 Goodwill 5,730.2
13,889.5
Other intangible assets 849.1 1,887.4 Property, plant
and equipment 15,706.3 20,115.7
Non-current
assets 22,285.6 35,892.6
Non-current financial assets 485.1 584.0 Investments
in associates 115.9 134.2 Deferred tax assets
235.2 181.9 Fair value of non-current derivatives (assets)
100.1 60.1
Other non-current assets
936.3 960.2 TOTAL NON-CURRENT ASSETS
23,221.9 36,852.8 Inventories and
work-in-progress 980.6 1,323.1 Trade receivables
2,981.1 3,115.0 Other current assets 596.6
697.5 Current tax assets 132.9 277.4 Fair
value of current derivatives (assets) 62.8 53.2 Cash
and cash equivalents 965.5 1,523.0
TOTAL CURRENT
ASSETS 5,719.5 6,989.2 ASSETS
HELD FOR SALE - 275.8 TOTAL
ASSETS 28,941.4 44,117.8
EQUITY AND LIABILITIES (in
millions of euros)
December 31, 2015
December 31, 2016 Share capital 1,892.9
2,138.8 Additional paid-in capital 15.6 3,103.3
Retained earnings 8,861.8 9,767.4 Treasury shares
(121.0) (111.7) Net profit (Group share)
1,756.4 1,844.0
Shareholders' equity
12,405.7 16,741.8 Minority interests
365.1 383.2 TOTAL EQUITY
12,770.8 17,125.0 Provisions, pensions and
other employee benefits 2,113.2 2,592.4 Deferred tax
liabilities 1,321.8 2,378.2 Non-current borrowings
6,290.7 14,890.1 Other non-current liabilities
243.8 270.6 Fair value of non-current derivatives
(liabilities) 231.3 233.7
TOTAL NON-CURRENT
LIABILITIES 10,200.8 20,365.0
Provisions, pensions and other employee benefits 271.2
279.5 Trade payables 2,269.3 2,485.9 Other
current liabilities 1,302.4 1,473.3 Current tax
payables 156.8 144.3 Current borrowings
1,912.7 2,001.0 Fair value of current derivatives
(liabilities) 57.4 63.0
TOTAL CURRENT
LIABILITIES 5,969.8 6,447.0
LIABILITIES HELD FOR SALE -
180.8 TOTAL EQUITY AND LIABILITIES
28,941.4 44,117.8
Consolidated Cash Flow Statement
(in millions of euros)
2015
2016 Operating activities
Net profit (Group share) 1,756.4
1,844.0 Minority interests 82.3
82.7 Adjustments: •
Depreciation and amortization 1,371.6 1,599.5 •
Changes in deferred taxes 107.3 105.2 • Increase
(decrease) in provisions (64,2) 90.3 • Share of
profit of associates (less dividends received) (3.3)
0.8 • Profit/loss on disposal of assets (100.6)
(290.4) • Net cost of debt related to the Airgas acquisition
91.1
Cash flow from operating activities
before changes in working capital 3,149.5
3,523.2 Changes in working capital requirements
(258.4) 331.0 Other (58.7) (157.7)
Net cash flow from operating activities
2,832.4 3,696.5 Investing activities
Purchase of property, plant and
equipmentand intangible assets (2,027.7) (2,258.6)
Acquisition of consolidated companies and financial assets
(384.4) (12,165.3) Proceeds from sale of property, plant and
equipment and intangible assets 129.6 828.3 Proceeds
from sale of financial assets 1.4 1.3
Net cash
flow used in investing activities (2,281.1)
(13,594.3) Financing activities
Dividends paid • L'Air
Liquide, S.A. (924.3) (947.4) • Minority interests
(50.8) (71.6) Proceeds from issues of share capital
85.8 3,361.1 Purchase of treasury shares
(178.3) 3.8 Increase (decrease) in borrowings 651.4
8,152.0 Transactions with minority shareholders
(11.1) (14.4)
Net cash flow from (used in) financing
activities (427.3) 10,483.5 Impact
of exchange rate changes and change in scope of consolidation
(103.5) (30.6)
Net increase (decrease) in net cash
and cash equivalents 20.5 555.1
NET CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD
854.9 875.4 NET CASH AND CASH
EQUIVALENTS AT THE END OF THE PERIOD 875.4
1,430.5
The analysis of net cash and cash equivalents at the end of
period as follows:
(in millions of euros)
2015 2016 Cash
and cash equivalents 965.5 1,523.0 Bank overdrafts
(included in current borrowings) (90.1) (92.5)
Net
cash and cash equivalents 875.4
1,430.5
Net indebtedness calculation
(in millions of euros)
2015 2016
Non-current borrowings (long-term debt) (6,290.7)
(14,890.1) Current borrowings (short-term debt) (1,912.7)
(2,001.0)
TOTAL GROSS INDEBTEDNESS
(8,203.4) (16,891.1) Cash and cash
equivalents 965.5 1,523.0 Derivates
Instruments (assets) – fair value hedge of borrowings (0.8)
TOTAL NET INDEBTEDNESS AT THE END OF THE
PERIOD (7,238.7) (15,368.1)
Statement of changes in net indebtedness
(in millions of euros)
2015 2016 Net
indebtedness at the beginning of the period
(6,306.3) (7,238.7) Net cash flow from
operating activities 2,832.4 3,696.5 Net cash flow
used in investing activities (2,281.1) (13,594.3) Net
cash flow used in financing activities excluding increase
(decrease) in borrowings (1,078.7) 2,331.5
Total
net cash flow (527.4) (7,566.3)
Impact of exchange rate changes and net indebtedness of newly
consolidated companies and others (405.0) (563.1)
Change in net indebtedness (932.4)
(8,129.4) NET INDEBTEDNESS AT THE END OF THE PERIOD
(7,238.7) (15,368.1)
Discontinued activities
Considering the disposal of Aqua Lung as announced on 30
December 2016, and the fact that Air Liquide is considering
various options for the divestment of its subsidiary
Air Liquide Welding, communicated on 15 December 2016, “Other
activities” have been reallocated to “Net
Profit from Discontinued Operations” in the 2016 Income
Statement, in accordance with IFRS 5. The 2015 Income
Statement has been restated in an identical manner.
In the same manner, “Other activities” have been reallocated
to “Assets held for sale” and “Liabilities held for sale” on
the balance sheet.
In conformity with IFRS 5, the “Net income from
discontinued activities” is thus presented:
Agregated income statement
(in millions of euros)
2015 restated
2016 Revenue 561.3 525.1
Profit before
taxes 19.5 11.9 Income tax
(4.9) (2.2) Gain on disposal / impairment related to fair
value reevaluation of discontinued activities, after tax -
1.5
Net income from discontinued activities
14.6 11.1 - Minority interests 0.8
0.7 - Net profit (Group share) 13.8 10.4
Cash flow
The after-tax disposal of Aqua Lung for 229 million
euros has been stated on the line “Profit from sale of property,
plant and equipment."
Estimated revenue and operating income recurring 2016,
including Airgas as of 1 January
The Industrial Merchant and Healthcare activities of Air Liquide
and Airgas in the United States were merged as of 1 October 2016.
The impact on revenue of the Airgas acquisition from 23 May 2016 to
31 December 2016, net of disposals, was 2,734.7 million euros.
If the Airgas acquisition and the related
divestments had been realized as of 1 January 2016, the
revenue and the operating income recurring would have been:
(in millions of euros)
2016 Revenue
19,811.9 Operating income recurring
3,189.3
The amounts presented are not comparable to those of the 2015
pro forma as reported in the update of the 2015 Reference Document,
as published in August 2016.
- The 2015 pro forma does not take into
account the restatement of the Diving and Welding activities in
discontinued activities.
- The currency and energy impact have
evolved in a significant manner between the two fiscal years..
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version on businesswire.com: http://www.businesswire.com/news/home/20170214006506/en/
Corporate CommunicationsAnnie Fournier, +33 (0)1 40 62 51
31Caroline Brugier, +33 (0)1 40 62 50 59Aurélie Wayser-Langevin,
+33 (0)1 40 62 56 19orInvestor RelationsParis, +33 (0)1 40
62 50 87Radnor, +1 610 263 8277
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