2
Agenda
1 Air Liquide Today
2 H1 2019 Activity
3 Business Development
4 Group Credit Profile
5 2019 Outlook
6 Appendix
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
3
Air Liquide Today
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
A New Dimension and Strong Fundamentals
80Countries
66,000 Employees
>3.6 mCustomers
and Patients
>€21 bnof Sales in 2018
>€2bn
>€4bn
>€46bn
Net Profitin 2018
Cash Flow in 2018*
Market Capitalization**
* cash flow from operating activities before changes of working capital** on December 31, 2018
4
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
A Strong Business ModelElectricity
Natural gas
Water
ESG(d)
Healthcare
Large Industries
Industrial Merchant
Electronics
Air Liquide Activities
Home healthcare
Patient
Filling
center
SMR(a)
ASU(b)
Filling center
On-site (c)
customer
Hospital
Bulk and Cylinder
Customer
Metal
Producer
Refinery
Chemical
Producer ESG(d)
Filling center
Electronics
Customer
ASU(b)
Mutualize assets
Liquefaction piggyback
Distributors, bolt-on acquisitions
1
2
3
(a) SMR: Hydrogen and carbon monoxide production unit (Steam Methane Reformer) (b) ASU: Air gases production unit (Air Separation Unit) (c) On-site: Small local production unit (d) ESG: Electronic Specialty Gases
5
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
A Balanced Footprint
Gas & Services revenue in 2018
of Group Revenue
96%
6
Large
Industries
28%
Electronics
9%
Healthcare
17%
Industrial
Merchant
46%
Asia-Pacific
22%
Africa
Middle-East
3%
Americas
40%
Europe
35%
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
0.0
0.5
1.0
1.5
2.0
2.5
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
0.0
1.0
2.0
3.0
4.0
5.0
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Regular and Sustained Performance - 2018
0
4 000
8 000
12 000
16 000
20 000
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
0
1 000
2 000
3 000
4 000
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Revenue (in €m) EPS(1) (in €)
Cashflow (in €m)
(1) Adjusted for the 2-for-1 share split in 2007, for attributions of free shares and for a factor of 0.974 reflecting the value of the rights of the capital increase completed in October 2016. (2) Calculated according to prevailing accounting rules over 30 years.
Dividend(1) (in € per share)
CAGRover 30 years
(2)
+5.8%CAGR
over 30 years(2)
+6.9%
CAGRover 30 years
(2)
+6.5%CAGR
over 30 years(2)
+8.3%
7
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
Financial Objectives
(1) Including Airgas scope effect in 2017 contributing +2% to the CAGR
+6% to +8%
CAGR 2016-2020(1)
>10%
In 2021-2022
Efficiencies >€300m on average/year(2)
+ Airgas synergies >$300m
(2) Upgraded from >€300m to >€400m as of 2019
Maintain
“A” range rating
Capex/Sales 2017-2020: 10% to 12%
8
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
A global
approach
Reduce our carbon intensity in 2025 vs. 2015 by
Act for clean industry by developing low-carbon solutions
Contribute to a new low-carbon society
CUSTOMERS
ASSETS
ECOSYSTEMS
Climate Objectives
-30%
AASSETS
CCUSTOMERS
EECOSYSTEMS
9
10
H1 2019 Activity
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
11
Very Solid Performance in H1 2019
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
(1) Group and G&S sales growth in H1 19(2) Operating Income Recurring on Sales; including +10bps from IFRS16; no energy impact in H1 2019
Balance SheetOperations
+70bps(2)Step-up in margin
+7.8%Sustained sales growth(1)
+12%(3)Recurring Net Profit growth
+30bps(4)ROCE ramping up
71%(5)Improved gearing at
(3) Excluding exceptional items: Fujian in 2019 and financial gain in 2018(4) Excluding Fujian exceptional impact in H1 2019; see reconciliation in appendix of Activity Report(5) Compared to June 2018 and adjusted for dividend seasonality; excluding lease liabilities (IFRS16)
+4.9%Comparable(1)
Sustained Sales Growth
12 H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
+2.5% FX Impact in H1 Neutral Energy Impact in H1
13
Robust Markets Through H2 2019
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
Markets
Chemicals
Oil & gas
Steel
Metal Fab.
Construction
Energy
Food & Pharma
Techno & Research
Integrated Circuit
IM
LI
EL
Outlook H2 2019
Strong Carrier Gases & Advanced Materials
Slightly lower E&I sales growth
Contrasted Chemicals
High demand from Oil & Gas in Europe
Active projects signing
Softer markets due to low investments in the short-term
Solid consumption-related sectors
Specific dynamic in China
14
Confirmed Growth Levers in Q2
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
Main Geographies contributingWBLs
+2%Industrial Merchant
+6%LargeIndustries
Healthcare +7%
+13%Electronics
Asia, Europe, Middle East
Asia, Europe
G&S comparable sales growth
Asia, Americas
Europe, Americas
15
Very Solid Level of Base Business
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
(1) Comparable growth based on 2016 adjusted sales
G&S quarterly growth analysis
Tech Air acquisition
Q2 - Steady Americas and Strong Europe
SalesH1 2019
€4,217m
SalesH1 2019
€3,611m
Americas – Solid HC, Pricing in IM
Europe – All WBLs Driving Growth
16 H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
G&S comparable sales growth
- high H2 for refining in Benelux- Ramp-Ups in Turkey and Kazakhstan
- high pricing- positive underlying volumes
- high organic growth in HHC
LI
IM
HC
EL
LI
IM
HC
- high O2 volumes- H2 Start-Up in Mexico
- strong pricing- contrasted end markets
- solid U.S. - strong HHC in South America
- still solid E&I- high Carrier Gases
Q2 – High Growth in Asia, Dynamic IM in AME
Asia – Strong LI and EL - O2 Ramp-Ups in China for Chemicals
- strong cylinder volumes in China- solid growth in South East Asia
- strong growth across the region- >+15% in Carrier Gases and Advanced
Materials- high E&I
AME – Major LI Turnaround
- major turnaround in South Africa
- continuous high growth in Middle-East,Egypt and India
SalesH1 2019
€2,405m
SalesH1 2019
€303m
17 H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
G&S comparable sales growth
LI
IM
EL
LI
IM
18
+70 bps OIR Margin improvement
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
H1 2019- including +10bps from IFRS 16 - no Energy impact
19 H1 2019 Credit investor A world leader in gases, technologies and services for Industry and Health
Pro-active Management of Pricing and Product Mix
Pricing aligned with cost inflation
Focus of sales teams
Leveraging competitive position on Helium market
Priority to added value services and products
Gas applications in China
Inteliox cylinders in US
IM pricing momentum
2017
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2016 2018 2019
+0.5%
+1.2%
+2.1%
+3.3%
+4.1%
Continuous improvement
14k employees trained out of 30k targeted
Extended procurement scope
Investment in efficiencies
+63% vs. H1 2018
20 H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
€197m Delivered Efficiencies in H1 19
Transformation
Closing of PG filling centers, logistics
Leveraging on 4 SIO centers
Business Support Centers extended Asia & Europe
Mutualization of WBLs technical teams Europe, Japan
3,000 Airgas trucks with on-board computers
Big data from LI production to IM logistics Italy
Argon production & supply chain US, Canada, France, Vietnam
Optimization of technicians’ time HHC Europe
ExamplesAccelerated momentum
Optimization
21 H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
Continuous Portfolio Management
Airgas - Refrigerant activity
- Onsite safety services
- Ophthalmic protection equipment
- 1 active project
China- Fujian assets
- IM JV swap
Europe- Intega EL E&I
- 3 active projects
Focus on core business
Densification of operations: swap, bolt-on acquisitions
Accretive impact on margin
Contribution to ROCEimprovement
Divestitures over last 2 years
AME- 2 active projects
*
*
Strong Recurring Net Profit
+12.1%* Recurring Net profit
Excluding one-offs: - Fujian in 2019 - financial gain in 2018
22 H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
23
ROCE Improvement
H1 2019
6%
8%
10%
Dec. 15 Dec. 16adjusted
Dec. 17 Dec. 18 Jun. 19 2021/222021/2022NEOS
objective
>10%
Airgasacquisition
10.3%
6.9%
ROCE – After tax
(1) Excluding positive impact on 2017 net profit of non-cash one-off items
(2) Excluding Fujian exceptional impact in H1 2019; see reconciliation in appendix of Activity Report
7.7%(1)8.0%
+30bps
Credit Investor A world leader in gases, technologies and services for Industry and Health
8.3%(2)
24
Dynamic Business Development
H1 2019 A world leader in gases, technologies and services for Industry and HealthCredit Investor
25
Very Active Business Development
InvestmentOpportunities(1)
12-month portfolio
H1 2019 Investment Decisions(1)
H1 2019Start-up/Ramp-up
Sales Growth Contribution
• Well-balanced by geography
• ~€20m average project size
• >1/3 of projects linked to climate objectives
• High level of signings
- 2 on U.S. pipeline network
- H2 energy
- Biomethane, Norway
• Acquisitions:
- Tech Air, major IM U.S. distributor
- Medidis in HHC Netherlands
• 5 Start-Ups in ELin Asia
• 1 CO2 purification plant in the U.S., circular economy
(1) See definitions in appendix
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
H1 2018 H1 2019
€2.7bn
H1 2018 H1 2019
€1.8bn
H1 2018 H1 2019
€185m
26
Steady Backlog > €2bn
See definitions in appendix
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
Dec 2016 Dec 2017 Dec 2018 Decisions Start-ups June 2019
Start-upsDecisions
Yearly Sales Backlogafter full Ramp-ups
€2.1bn €2.1bn
€2.2bn €2.2bn
€ 0.85bn
LIT/O
China
27 H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
Confirmed Start-Ups Forecast
PemexT/O
Mexico
Major Start-Ups
Sales growth contribution - FY 2019
~€300m
2019
Q1 Q2 Q3 Q4
LIProjects
Middle-East
ELProjects
Asia
ELProjects
Asia
SteelProject
Europe
LIProjectArgentina
ELProjects
Asia
Note: T/O = Take Over
Steady Backlog >€2bn
Yearly Sales Backlogafter full Ramp-ups
€ 0.85bn
Group Credit Profile
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health28
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
1.61 1.59 1.63 1.70
3.302.60
0.000.200.400.600.801.001.201.401.601.802.002.202.402.602.803.003.203.403.603.804.004.204.404.604.805.005.205.405.605.806.006.206.406.606.807.007.207.407.607.808.008.208.408.608.809.009.209.409.609.8010.00
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
2012 2013 2014 2015 2016 2017 2018
Net Debt Net Debt / EBITDA
Net Debt ratios under control
DEBT/ EQUITY
58%
DEBT/ EQUITY
56%
DEBT/ EQUITY
53%
DEBT/ EQUITY
57%
DEBT/ EQUITY
80%
In €m
DEBT/ EQUITY
90%
Following the acquisition of
13,37112,535
DEBT/ EQUITY
69%
29
2,40x
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
Solid Cash Flow
A world leader in gases, technologies and services for Industry and Health
CASH FLOW
+14.8%
+8.6%
excl. IFRS 16
Gearing
69%
(1) June 30 gearings adjusted for dividend seasonality(2) Including acquisitions, transactions with minority shareholders, net of divestitures
Gearing(1)
79%
GEARING (1)(4)
71%
(3) Including share purchases and capital increases(4) Net debt excluding lease commitments (IFRS 16)
30
31
A Well-diversified Financing Structure
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
CurrenciesNet debt (as of Dec 31 2018)
RMB
3% EUR
45%
USD
37%
OTHERS
12%
JPY
3%
Sources Gross debt (as of June 30 2019)
BANK DEBT
7%
PRIVATE PLACEMENTS
OTHERS(1)
COMMERCIAL PAPER
BONDS
MARKET DEBT
93%
77%
8%
7%
1%
32
Visibility of Financing costs
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
Average cost of net debt
2.00%
3.00%
4.00%
5.00%
2010 2011 2012 2013 2014 2015 2016 2017 2018 H1 2019
Constant3,0%3,0%
Fixed /Variable rates
(gross debt)
FIXEDRATE
88%
VARIABLERATE
12%
33
Diversified Market Debt Well Spread over Time
As of June 30, 2019
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
2038
2046
34
Enhanced Liquidity Profile
As of June 30, 2019
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
Group gross debt maturity profile
€4.6bn
Available liquidity
CONFIRMED CREDIT LINES
78%
• Holdings’ Confirmed Credit Lines are a mix of bilateralfacilities for €1.6bn and a €2bn Revolving Credit Facility
• “Adequate” liquidity profile (S&P)
- 1 syndicated credit line : €2bn
CASH ANDCASH EQUIVALENT
22%
- 12 bilateral facilities : €1,6bn
35
“A” Long Term Credit Rating Commitment
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
■ Long-term rating: A-
■ Short-term rating: A-2
■ Outlook: Positive on 22 July 2019
■ Rationale:
○ “L’Air Liquide has achieved internal cost savings andsynergies quicker than we expected following the Airgasacquisition. Moreover, the market environment forindustrial gases is supportive and the company hasimplemented a disciplined financial policy and thusimproved its balance sheet credit profile in the past years.”
○ “The outlook is positive because we may raise the rating inthe next 12-24 months, should we see adjusted FFO to debtimproving sustainably above 30%”.
■ Long-term rating: A3
■ Short-term rating: P-2
■ Outlook: Stable on 28 June 2019
■ Rationale:
○ “Air Liquide’s A3 rating reflects its leading position in theoligopolistic industrial gas market with a high degree ofrevenue visibility from long-term take or pay contracts. […]The rating furthermore benefits from a well spreadexposure across different customers, industries andgeographies as well as solid and stable profitability levels.”
○ “The stable outlook reflects our expectation that Air Liquidewill continue to reduce its leverage, albeit at a slow pace,and generate substantial cash over the next 18 months.”
36
2019 Outlook
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
37
2019 Outlook
Sustained sales growth
Step-up in margin
ROCE improvement
Very active business development
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
“Assuming a comparable
environment, Air Liquide is
confident in its ability
to deliver net profit growth
in 2019, calculated at
constant exchange rate”
2019H1 2019
38
Appendix
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
39
H1 2019 G&S Revenue Breakdown by Region
Americas
€4.2bn
Europe
€3.6bn Asia-Pacific
€2.4bn
Large Industries ElectronicsHealthcareIndustrial Merchant
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
€10,536m
40
Americas
Q2 Gas & Services Sales: €2,148m
INDUSTRIAL MERCHANT LARGE INDUSTRIES HEALTHCARE ELECTRONICS
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
(1)
(1) Refer to appendix for definitions(2) Excluding energy impact
(2)
• Strong pricing +4.8%
• Helium contributing to growth
• Contrasted end-markets:
- strong Food & Pharma
- lower Construction and Metal Fab in U.S., remaining solid in Canada
• High O2 volumes in U.S.
• Strong cogen in U.S. and Canada
• Start-up of T/O in Mexico
• Robust Metals in Canada
• Very solid medical gases in the U.S. for Proximity care
• Strong HHC in South America
• Very limited M&A
• High growth in Carrier Gases
• Still solid E&I
Note: T/O = Take Over
41
Europe
Q2 Gas & Services Sales: €1,782m
INDUSTRIAL MERCHANT LARGE INDUSTRIES HEALTHCARE
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
(1)
(2)
(1) Refer to appendix for definitions(2) Excluding energy impact
• High H2 sales for refining in Benelux
• Softer O2 volumes from steel customers
• Ramp-Ups in Turkey and Kazakhstan
• Further accelerated pricing at +3.8%
• Positive underlying volumes
• All major geographies contributing to growth
• High organic growth in HHC with strong diabetes activity in Nordics
• Very solid Hygiene
• Limited M&A
42
Asia-Pacific
Q2 Gas & Services Sales: €1,211m
INDUSTRIAL MERCHANT LARGE INDUSTRIES ELECTRONICS
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
(1)
(2)
(1) Refer to appendix for definitions(2) Excluding energy impact
• O2 Ramp-Ups in China
• High volumes for Chemicals
• Strong cylinder volumes in China
• High helium volume and priceacross the region
• Solid activity in South East Asia
• Strong growth in China, Korea, Singapore, Taiwan and very solid Japan
• >+15% sales growth in Carrier Gases and Advanced Materials
• High E&I sales, in particular in Singapore and China
43
Q2 - Resilient IM, High Growth in LI
SalesH1 2019
€2,904m
SalesH1 2019
€4,827m
Large Industries – High contribution from Ramp-Ups
Strong Oil & Gas in Benelux with high H2 volumes
Chemicals driven by Ramp-ups in China
Softer Metals in Europe
Industrial Merchant – Solid Performance
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
G&S comparable sales growth
Stronger pricing at +4.1%
Contrasted end markets:- Strong Food & Pharma - Flat automotive- Construction and Metal Fab
. lower in the U.S.
. solid in Europe and Canada
. strong in China
44
Q2 - Strong HC, High Growth in EL
Healthcare – Organic Growth Strong HHC across all of Europe,
diabetes therapy in Nordics
Solid Medical Gases in Americas
Electronics – High Carrier Gases & Advanced Materials
>+13% growth in Carrier Gases; 2 Start-Ups
Double digit growth in Advanced Materials
Solid sales to Integrated Circuit Memory market
Strong FPD in China
SalesH1 2019
SalesH1 2019
€984m
€1,821m
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
G&S comparable sales growth
45
Industrial Merchant Pricing
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
Americas
Europe
Asia-Pacific
Africa Middle-East
Q2 2019
H1 2019
+3.7%
+5.4%
+1.4%
+3.5%
+4.3%
+4.1%
+5.4%
+1.5%
+3.8%
+4.8%
TOTAL
INDUSTRIALMERCHANT
Q2 2019 – E&C and GM&T Activities
46 H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
E&C
Sales to third parties
-12%
Order Intake
-8%
GM&T
+7%
+27%
Sales
Order Intake
€233m €134m
€83m €129m
47
Consolidated P&L
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
48
Consolidated Balance Sheet Simplified - In €m
* Including fair value of derivatives (1) Excluding lease liabilities (IFRS16) (2) Adjusted for dividend seasonality
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
(1)
(1)
(2)
49
Cash Flow Statement
* PPE: Property, plant and equipment.
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
50
Investment Cycle – Definitions
● Investment opportunities at end of the period
– Investment opportunities under consideration by the Group for decision within 12 months.
– Industrial projects with investment value > €5m for Large Industries and > €3m for other business lines.
– Includes asset replacements or efficiency projects. Excludes maintenance and safety.
● Investment backlog at end of the period
– Cumulated industrial investment value of projects decided but not yet started.
– Industrial projects with value > €10m, including asset replacements or efficiency projects, excluding maintenance and safety.
●Sales backlog
– Cumulated expected sales per year generated by the current investment backlog after full ramp-up.
●Decisions of the period
– Cumulated value of industrial and financial investment decisions.
– Industrial, growth and non-growth projects including asset replacements, efficiency, maintenance and safety.
– Financial decisions (acquisitions).
H1 2019 Credit Investor A world leader in gases, technologies and services for Industry and Health
For further information, please contact:
Investor Relations
Aude Rodriguez + 33 (0)1 40 62 57 08
Ludmilla Binet + 33 (0)1 40 62 57 37
Muriel Légeron + 33 (0)1 40 62 50 18
Joseph Marczely + 1 610 263 8277
Group Financing and Rating
Jacques Molgo + 33 (0)1 40 62 57 75
Aude Revel + 33 (0)1 40 62 56 64
Thomas Lemée + 33 (0)1 40 62 58 25
www.airliquide.com Follow us on Twitter @AirLiquideGroup
L’Air Liquide S.A.
Corporation for the study and application of processes developed by Georges Claude
with registered capital of 2,361,913,658.50 euros
Corporate Headquarters:
75, Quai d’Orsay
75321 Paris Cedex 07
Tel : +33 (0)1 40 62 55 55
RCS Paris 552 096 281
A world leader in gases, technologies and services for Industry and HealthH1 2019 Credit Investor51