Credit Investor Presentation - Air Liquide · Full Year 2018 Credit Investor A world leader in...

Credit Investor Presentation

Strong growth reinforced throughout the year and solid performance

Significant debt and gearing reduction

Full Year 2018

Agenda

1 Business Model

2 FY 2018 Activity

3 Business Development

4 Group Credit Profile

5 2019 Outlook

Full Year 2018 Credit Investor A world leader in gases, technologies and services for Industry and Health2

3

Business Model

Full Year 2018 Credit Investor A world leader in gases, technologies and services for Industry and Health


A New Dimension and Strong Fundamentals

80Countries

65,000 Employees

>3.5 mCustomers

and Patients

>€21 bnof Sales in 2018

>€2bn

>€4bn

>€46bn

Net Profitin 2018

Cash Flow in 2018

Market Capitalization*

* on December 31, 2018

4


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


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)

CAG Rover 30 years

(2)

+5.8%CAG R

over 30 years(2)

+6.9%

CAG Rover 30 years

(2)

+6.5%CAG R

over 30 years(2)

+8.3%

6

7

FY 2018 Activity



FY 2018 Highlights

+6.1% +60bps

+30bps +22%

Strong sales growth in all markets and geographies

ROCEramping up

Improved G&SOperational margin

Record level ofinvestment decisions

(1) Group comparable sales growth(2) Excluding energy impact

(2)

(1) (3)

(3) Excluding FX impact and positive impact on 2017 net profit of non-cash one-off items

8

Growth at the Top of NEOS Range


Note: NEOS sales growth objective between +6% and +8% CAGR 2016-2020, including Airgas scope effect in 2017 contributing +2% to the CAGR(1) Comparable sales growth: excluding currency, energy and significant scope impacts

(1) (1)

9


High Sales Growth, Markets Well Oriented

Group

Gas & Services

Comparable sales growth

-1%

0%

1%

2%

3%

4%

5%

6%

7%

H1 16 H2 16 H1 17 H2 17 H1 18 H2 18

Sales growth Markets

Chemicals

Oil & gas

Steel

Metal Fab.

Construction

Energy

Food & Pharma

Integrated Circuit

OutlookH1 19

IM

LI

EL

FY +6.1%

10


FY 2018 – All Performance Indicators Further Improving

ROCEG&S OIR/sales

+30bps

Net profit Net debt

+4.2%<€836m>

69%Excl. energy

Gearing

(1)

(1) Compared to recurring 2017 net profit, excluding non cash non recurring items and taxes

8.0%

+8.7%Excl. FX 8.3%

11


Dividend Proposal, 1 Free Share for 10 in 2019

(1) Excluding non-cash non-recurring items & taxes

(2) Historical data adjusted for attribution of free shares and for a factor 0.974 reflecting the value of the rights of the capital increase completed in October 2016

(3) Subject to approval at the combined shareholders’ meeting scheduled for 7 May 2019

Dividend Growth

0,0

0,4

0,8

1,2

1,6

2,0

2,4

2,8

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

20 yrsCAGR

+8.8%Dividend(2)

in € per share

€2.65

Net Profit

€2.1bn

(3)

As published

+ 4.2%

Compared to 2017 Recurring Net Profit(1)

12

Positive Environment, Softening FX Headwind

World IP at High Level in 2018


Neutral Forex Impact in Q4 2018(2)

Q4 2018

-0.1%

FY 2018

-3.6%

Higher Positive Energy impact(2)

+2.4% +1.3%

Q4 2018 FY 2018

Industrial Production growth in % YTD 2018(1)

+4.0%+3.0%

U.S.World

+4.5%+1.2%

DevelopingEconomiesEuro zone

(1) End of Nov. 2018, except U.S. end of Dec. 2018 (2) On Group sales

13

Q4 - Strong Growth Drivers Across Geographies and WBLs

Comparable G&S sales growth

ASIA

INDUSTRIALMERCHANT

AMERICAS

HEALTHCARE +5%

+9%


+13%

DEVELOPING ECONOMIES

+6%

ELECTRONICS

+5%

LARGE INDUSTRIES +3%

+18%

14

Base Business Operating at Highest Level


G&S Quarterly Sales Growth Analysis

(1) Comparable growth based on 2016 adjusted sales

+29%+31%+14%

15

Q4 – Strong Momentum in Americas, Solid Europe

AMERICASF Y 2 0 1 8

€7,982m

EURO PEF Y 2 0 1 8

€7,111m

Dynamic activity in all WBLs

• LI: high H2, start-ups in air gases

• IM: high growth with increased pricing; most markets well-oriented, very strong Metal Fabrication

• Dynamic HC in the U.S. and South America

• EL: high Advanced Materials, buoyant E&I

• LI: HyCO turnarounds, start-up in Turkey

• IM: growth in all countries; high bulk and cylinders;stronger pricing

• HC: HHC driving growth especiallydiabetes in Nordics

High IM and HC

G&S Comparable Sales Growth

16 Full Year 2018 Credit Investor A world leader in gases, technologies and services for Industry and Health

Q4 – Very Dynamic Asia, Major Start-Up in South Africa

IM boosted by China, buoyant EL

• LI: 3 start-ups including Fujian but majorH2 turnaround in Singapore

• IM: China driving growth with high cylinder volumes,softer pricing; dynamic SEA

• EL: buoyant activity with double-digit growthin CG and AM, very dynamic E&I

Full impact of major start-up in LI

• LI: Sasol start-up in South Africa in Dec. 17

• IM: high growth in Egypt and India

• HC: major contribution from acquisition in Saudi Arabia

ASIA-PACIF I CF Y 2 0 1 8

€4,359m

MIDDLE-EAST& AFRICA

F Y 2 0 1 8

€655m



FY 18 : +15.5%

17

Continued Recovery in E&C, High Growth in GM&T


E&C - Strong Improvement

Sales FY 2018*

+31%

Order Intake FY 2018

+11%

GM&T - Strong Sales and Order Intake

+30%

+31%

Sales FY 2018*

Order Intake FY 2018

€807m €460m

€430m €474m

* Comparable sales growth

18


Improved OIR Margin in line with NEOS

19

Note: Group FY 18 OIR Margin as published at 16.4%


$300m Airgas Synergies Fully Delivered Beginning 2019

$290m

Costs ~$230m

Revenue ~$60m

$300m synergies expected in Q1 2019, one year ahead initial target

Airgas fully integrated

From 2019, future Airgas contribution to the efficiency program

Cumulatedsynergies

End of 2018

20

21

Efficiencies Outpaced NEOS Target of €300m per Year

€351m


FY 2018 Efficiencies

NEOS Cumulated Efficiencies

as defined in initial target

2020

2019

2018

2017

>€1,200m

>€900m

€674mas of 31/12/2018

22

Strengthened Efficiency Program Starting in 2019


0

100

200

300

400

Initial target New target

50% Airgas efficiencies

50% o Organization

agility –Mutualization

o Leverage on digital

>€300m

>€400m

Annual target Cumulated NEOS forecast in 2020

Update

>€1.2bn

>€1.5bn

Update

23

Net Profit Recurring Excluding Currency +8.7%


(1) Excluding non-cash one-off items in 2017 net profit

24

Dynamic Business Development

Full Year 2018 A world leader in gases, technologies and services for Industry and HealthCredit Investor

25

Very High Decisions & Increasing Opportunities

InvestmentOpportunities(1)

12-month portfolio

2018 Investment Decisions(1)

2018Start-up/Ramp-up

Sales Growth Contribution

€270m€2.6bn

• Selectivity in thriving bidding activity

• Medium-size opportunities

• Record level

• Very high in LI, EL and GM&T

• 1/3 of decisions in the U.S.

• 17 start-ups

(1) See definitions in appendix


€3.1bn

Record Level for Investment Decisions, >€3bn


Reinforcing presence in key basins

Strategic positionsin growing markets

Opening innovative new markets

~40%

2018 investment decisions

~40%

~20%

Large Industries

Industrial Merchant

Electronics

Global Markets & Technologies

26

27

Strong Backlog

(1) See definitions in appendix


Dec 2015 Dec 2016 Dec 2017 Decisions Start-ups Dec 2018

Start-upsDecisions

Yearly Sales Backlog(1)

after full Ramp-ups

€2.3bn

€2.1bn €2.1bn

€2.2bn

€ 0.9bn

in €bn

28 Full Year 2018 Credit Investor A world leader in gases, technologies and services for Industry and Health

Start-Ups Outlook for 2019

Major start-ups

Sales growth contribution

€270m >€300m

FY 2019FY 2018

Note: TO = Take Over

LITO

China

FujianShenyuan

China

PemexTO

Mexico

20182019

Q1 Q2 Q3 Q4

Yanchang

China

LIProjects

Middle-East

ELProjects

Asia

ELProjects

Asia

SteelProjects

Europe

LIProjectArgentina

ELProjects

Asia

Group Credit Profile



1,61 1,59 1,63 1,70

3,302,60 2,40

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

2,40x

DEBT/ EQUITY

69%

30

31

Significant Debt and Gearing Reduction


CASH FLOW

+10.9%

(1) Including acquisitions, transactions with minority shareholders, net of divestitures.

(2) Including share purchases and capital increases.

GEARING

80%GEARING

69%

Net Debt31 Dec. 2017

Net Debt31 Dec. 2018

32

A Well-diversified Financing Structure

As of December 31, 2018

(1)Others: finance leases and put options granted to minority shareholders


BANK DEBT

7%

PRIVATE PLACEMENTS

OTHERS(1)

COMMERCIAL PAPER

BONDS

MARKET DEBT

93%

75%

12%

5%1%

Sources Currencies - Net debt

RMB

3% EUR

45%

USD

37%

OTHERS

12%

JPY

3%

33

Visibility of Financing costs


Average cost of net debt

2,00%

3,00%

4,00%

5,00%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

-20bps*

3%3,2%

*Excluding a non-recurring gain of around €55mn generated by the unwinding of hedging instruments relating to the debt reorganization in the US

Fixed/variable rates(gross debt)

FIXEDRATE

90%

VARIABLERATE

10%

34

Diversified Market Debt Well Spread over Time



2038

2046

35

Enhanced Liquidity Profile



< 1 year

> 5 years

Between1 and 5 years

Group gross debt maturity profile

€5,3bn

Available liquidity

CONFIRMED CREDIT LINES

68%

• 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

32%

- 12 bilateral facilities : €1,6bn

36

“A” Long Term Credit Rating Commitment


■ Long-term rating: A-

■ Short-term rating: A-2

■ Outlook: Stable on 11 October 2018

■ Rationale:

○ Excellent Business Risk as well as adequate Liquidity and asignificant Financial Risk. “S&P places a strong emphasison Air Liquide's earnings resilience and stable cash flowgeneration when analyzing its profitability and financialmetrics. Consequently, S&P views Air Liquide's profitabilityas less volatile than that of most rating peers in thechemicals sector.”

○ The stable outlook reflects S&P‘s expectation that thecompany will report overall resilient performance andstrong free operating cash flow generation that shouldallow FFO to debt to remain at about 25% in 2018 andexceedthat level in 2019.

■ Long-term rating: A3

■ Short-term rating: P-2

■ Outlook: Stable on 18 June 2018

■ Rationale:

○ “As a result of the acquisition Air Liquide's business profileis now stronger and, with higher revenue and stableprofitability, the company was free cash flow positive in2017. […] The rating also incorporates the high resilience ofrevenue and profits from long-term energy-indexed take-or-pay contracts, a well-balanced geographic diversification,and customers from various uncorrelated end markets.”

○ “Air Liquide managed to maintain its Moody's adjustedEBITDA margin at 26% in 2017, despite integrating lessprofitable Airgas and energy price headwinds, by realizinghigher-than expected synergies and costs savings.”

37

2019 Outlook


38

2019 Outlook

Profitable, consistent and responsible growth

Solid performance with continued margin improvement and strong cash flow

Dynamic business development

20192018


“Assuming a comparable environment, Air Liquide is confident in its abilityto deliver net profit growth in 2019, calculated at constant exchange rate.”

Continue to focus on growth and operational excellence

Strengthening efficiency program

Continue to seize strategic opportunities

39

2019 - Focus On NEOS Objectives

Full Year 2018

Strategic investments to support growth

Strengthening efficiencies

Focus on ROCE

Profitable growth

Consistentgrowth

Responsiblegrowth

Solid and resilient Business Model

Innovation and digital

Operational excellence

Climate objectives, 2015-2025o Reduce carbon intensity by 30%

o Develop new low carbon solutionsfor customers and ecosystems

A world leader in gases, technologies and services for Industry and HealthCredit Investor

40

Appendix


FY 2018 G&S Revenue Breakdown by Region

AMERICAS

€8.0bn

EUROPE

€7.1bn ASIA-PACIFIC

€4.4bn

Large Industries ElectronicsHealthcareIndustrial Merchant


€20,107m

41

42

Americas

Q4 Gas & Services Sales: €2,091m

INDUSTRIAL MERCHANT LARGE INDUSTRIES HEALTHCARE ELECTRONICS

• Very solid activity for all products: bulk, cylinders and hardgoods

• Very strong pricing +4.2%

• Well-oriented end-markets, particularly Manufacturing,Metal Fabrication and Construction in the U.S.

• Strong volumes of hydrogen in the U.S. and high cogen in Canada

• Ramp-ups in Argentina and the U.S.

• Limited customer turnarounds

• Solid growth in the U.S. and Canada for medical gases

• Limited contribution from bolt-on acquisitions

• Strong momentum in medical gases and HHC in Brazil

• Double-digit sales growth in Advanced and Specialty Materials

• Buoyant E&I sales


(1) Excluding energy impact

(1)

43

Europe


INDUSTRIAL MERCHANT LARGE INDUSTRIES HEALTHCARE

• High number of customer turnarounds in HyCO

• Softer volumes from steel customers

• Start-up in Turkey

• Growth in all countries

• ~+1 working day

• All markets positive; high Manufacturing and Craftsmen

• Strengthened pricing at +2.6%

• Very strong HHC, particularly inAir Liquide’s largest markets:sleep apnea and diabetes

• Limited bolt-on acquisitions

• Increased number of patients,especially in Northern Europe


(1)


44

Asia-Pacific


INDUSTRIAL MERCHANT LARGE INDUSTRIES ELECTRONICS

• 3 SUs in China

• H2 customer turnarounds

• Double-digit growth in China :very strong volumes in cylinders ; high demand for small on-site generators ; softer pricing

• Slight decrease in Japan

• High Fabrication and Craftsmen markets

• Double-digit growth in Carrier Gases and Advanced Materials in all countries

• Multiple Ramp-ups• Buoyant E&I sales


(1)

(1)


45

Q4 – Strong IM, Solid LI

LARG EINDUSTRIES

F Y 2 0 1 8

€5,685m

INDUSTRIALMERCHANT

F Y 2 0 1 8

€9,181m

Robust growth, several start-ups

• 5 SUs, contribution onlyend of Q4

• Strong H2 in Americas

• HyCO turnarounds in Europe and Asia

Favorable environment with price hikes

All end markets positive

Very strong fabrication market

Strong bulk, cylinders catching up

Increased pricing at +3.3%


Credit Investor A world leader in gases, technologies and services for Industry and Health

FY 18 : +4.5%

Full Year 2018

46

Q4 – Steady HC Growth, Buoyant EL

Very solid organic activity

• Double-digit growth in HHC,low level of bolt-on acquisitions

• Solid business model

• High Medical Gases in Americasdriven by Proximity Care

Record sales growth

• Strong demand fromIC market

• Very high growth ofCG and AM

• Very dynamic E&I

HEALTHCAREF Y 2 0 1 8

ELECTRO NICSF Y 2 0 1 8

€1,755m€3,486m



47

Industrial Merchant Pricing


Progressive Improvement in E&C, Dynamic GM&T

48

Sales and Order intake(1) – in €m


0

100

200

Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18

Sales Order intake

0

100

200

Q1-17 Q2-17 Q3-17 Q4-17 Q1-18 Q2-18 Q3-18 Q4-18

Sales Order intake

(1) Group and third-party order intake

E&C GM&T

Consolidated P&L


50

Consolidated Balance Sheet Simplified - In €m

* Including fair value of derivatives


51

Cash Flow Statement

* PPE: Property, plant and equipment


52

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).


For further information, please contact:

Investor Relations

Aude Rodriguez + 33 (0)1 40 62 57 08

Louis Laffont + 33 (0)1 40 62 57 18

Ludmilla Binet + 33 (0)1 40 62 57 37

Muriel Légeron + 33 (0)1 40 62 50 18

Jérôme Zaman + 33 (0)1 40 62 59 38

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

Aurélien de Chomereau + 33 (0)1 40 62 53 74

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 2,361,264,235 euros

Corporate Headquarters:

75, Quai d’Orsay

75321 Paris Cedex 07

Tel : +33 (0)1 40 62 55 55

RCS Paris 552 096 281

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