30-07-2025
Air Liquide SA (AIQUF) (H1 2025) Earnings Call Highlights: Resilient Growth Amidst Challenges
Sales Growth: Sales grew by 2% on a comparable basis.
Gas and Services OIR Margin Improvement: Improved by 130 basis points, excluding energy patrol effect.
Efficiencies: Achieved EUR287 million, a 23% increase compared to H1 2024.
Recurring ROCE: Improved to 11% despite increased investments.
Investment Backlog: Reached a record high of EUR4.6 billion.
Group Sales: Up 1.8% on a comparable basis for the first half.
Order Intake: Reached EUR3,642 million, up 41% versus last year.
Americas Sales Growth: Increased by 3% on a comparable basis.
Healthcare Growth: Vigorous growth at 11.2% in the Americas.
Operating Margin Improvement: Group operating margin improved by 100 basis points.
Net Profit Growth: 8% excluding FX, with recurring net profit up 10.3%.
Net Debt: EUR9.8 billion as of June 2025.
Gearing: Stable at around 33.5% adjusted for dividend payment seasonality.
Investment Opportunities: EUR4.1 billion as of June 2025.
Investment Decisions: Recorded EUR2.3 billion for the first semester.
Sales Contribution from Start-up and Ramp-up: Achieved EUR1.157 million in H1.
Warning! GuruFocus has detected 2 Warning Signs with BOM:532388.
Release Date: July 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Air Liquide SA (AIQUF) achieved a 2% sales growth on a comparable basis, demonstrating resilience in a challenging macroeconomic environment.
The company reported a record gas and services operating income return (OIR) margin improvement of 130 basis points, excluding energy patrol effects.
Air Liquide SA (AIQUF) delivered record efficiencies, reaching EUR287 million, a 23% increase compared to the first half of 2024.
The company's recurring return on capital employed (ROCE) improved to 11%, despite increased investments.
Air Liquide SA (AIQUF) has a solid investment backlog of EUR4.6 billion, securing future growth with projects already under construction.
Negative Points
The company faced challenges in the electronics sector, with a decrease in sales of equipment and installation compared to a record level last year.
In Asia, merchant sales were generally soft, and pricing remained low due to neutral inflation.
The inflationary environment remains a concern, particularly in China, where pricing is neutral.
The company experienced a EUR190 million EBIT loss in the Non-gases & Services business, impacted by disposals in engineering.
There is uncertainty in the regulatory environment for energy transition projects, which can lead to customer hesitation on major investment decisions.
Q & A Highlights
Q: Can you discuss Air Liquide's current leverage and plans for future M&A activities? A: Jerome Pelletan, CFO, stated that Air Liquide's gearing is stable at 33.5%, providing a strong balance sheet to support future investments. The company is focused on industrial projects and may consider acquisitions if they align with strategic growth opportunities. If investment opportunities are limited, they may return more cash to shareholders.
Q: What are the plans for the remaining 40% capacity of the ELYgator project? A: Emilie Mouren Renouard, Group VP, explained that the ELYgator project will supply renewable hydrogen to TotalEnergies and other industries in the area. The project is connected to a pipeline network, offering flexibility to serve various customers, including mobility and transport markets.
Q: Regarding the electronics investment in Dresden, will this fulfill anticipated needs, and how is it recorded in the results? A: Emilie Mouren Renouard, Group VP, confirmed that the EUR250 million investment in Dresden is the largest for electronics in Europe and enhances Air Liquide's position in the semiconductor market. EUR124 million of this investment is already included in the backlog.
Q: How has the US legislative environment impacted Air Liquide's hydrogen projects? A: Adam Peters, CEO of North America, noted that the recent legislative changes, including the 45v tax credit, provide a favorable environment for low-carbon hydrogen projects. This clarity is expected to accelerate project developments, including potential collaborations with companies like Chevron.
Q: What is the expected impact of European Union subsidies on the ELYgator project? A: Emilie Mouren Renouard, Group VP, mentioned that the ELYgator project benefits from European and Dutch government funding, covering 30% to 50% of the CapEx, which supports the project's financial viability.
Q: Can you provide an update on Air Liquide's carbon capture projects for cement plants? A: Emilie Mouren Renouard, Group VP, stated that cement industry players are actively pursuing decarbonization, with projects depending on regulatory frameworks and funding. Air Liquide is working closely with these players to develop viable carbon capture solutions.
Q: How is Air Liquide's comparable growth progressing, and what is the outlook for the second half of the year? A: CEO Francois Jackow expects similar top-line momentum for the rest of the year, with resilient sales across geographies and business lines. While there are positive signs in electronics and US policy effects, the company remains cautious due to ongoing uncertainties.
Q: Will Air Liquide revisit its margin targets given the current performance? A: CEO Francois Jackow indicated that while it's early to update guidance, the company is confident in achieving its 200 basis points margin improvement target for 2025 and 2026, driven by ongoing transformation initiatives.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
