1er semestre 2016 : Bonne tenue des ventes Gaz & Services

* Variation H1 2016/H1 2015 excluding currency and energy impact

Commenting on the first six months of 2016, Benoît Potier, Chairman and CEO of Air Liquide, said:

'This first half has been characterized by the completion of the Airgas acquisition, which will be accretive in 2016, and its first contribution to the Group's performance. In a context of moderate global growth, Gas & Services sales posted robust growth. Growth is the result of dynamic Electronics sales, higher volumes in Large Industries, and rising Healthcare business. This first half is also characterized by a negative currency impact and lower energy prices.
All geographies are progressing on a comparable basis, benefiting notably from the slight improvement in demand in industry since the beginning of the year. This increase was more pronounced in Asia Pacific and the developing economies.
The Group continues to generate recurring efficiency gains, to which will be added the first benefits of synergies with Airgas in the second half of the year. The operational performance of Gas & Services is solid, as evidenced by the margin increase and strong cash flow growth.
The investment backlog, amounting to 2.1 billion euros, and recently signed new contracts, will contribute to growth in the coming years.
Following the completion of the acquisition of Airgas, Air Liquide is confident in its ability to generate growth in 2016, both in net profit and in net earnings per share, including the effect of the capital increase planned for September/October.'

Group revenue for the first half of 2016 was € 8,295 million, including € 511 million of Airgas sales consolidated as of 23 May 2016 (closing date of the acquisition). Revenue for the first half increased +2.2% on a reported basis and +8.0%, excluding the currency and energy impact, as compared with the first half of 2015. Excluding Airgas, comparable growth was +1.7%.
Gas & Services sales, at € 7,618 million including Airgas sales since 23 May 2016, grew by +4.3% on a reported basis and by +10.6%, excluding the currency and energy impact, compared with the first half of 2015. Excluding Airgas, comparable growth is +3.6%. For the first half, the currency impact (-2.6%) and the energy impact (-3.7%) are both unfavorable.
The developing economies continued to post strong growth, with Gas & Services sales up +11.4% on a comparable basis.
Overall, all Gas & Services activities progressed in the first half on a comparable basis, with the exception of Industrial Merchant, which remained contrasted:

• Large Industries revenue, sharply up +6.2%, saw growth in all geographic zones. It benefited from the ramp-up of our production units, especially in Germany, Eastern Europe, North and South America, and China. The contribution of the two hydrogen production units on the Yanbu site, which started up in Q2 2015, remained significant this half, especially in Q1. In the US, growth accelerated in Q2 thanks to the start-up of a new air separation unit, while in China volumes remained high throughout the first half of 2016.
• Industrial Merchant, down by -1.6%, remained contrasted. However, a slight improvement was noted in Q2. Sales in Europe, positive this first half, were up +2.7% for the second quarter, due mainly to higher bulk volumes. In North America, market segments related to energy and metal fabrication are still affected by weak demand for oil services and related industries, while the Agri-Food, Pharmaceutical, and Research markets are growing. This market dynamic is the same for Airgas, whose gas sales were slightly up in the first half. The situation is also contrasted in Asia Pacific, with sales down in Japan while volumes are rising sharply in China. The overall price effect remains modest at +0.4% against a global backdrop of low inflation.
• Electronics continued to post robust growth of +11.2%, driven by strong demand for equipment and installations and advanced materials sales, which rose by more than +25%. Activity was particularly strong in Asia Pacific, with double-digit growth in Japan, China, and Singapore.
• Healthcare, up by +4.8%, benefited from sustained high demand for home healthcare services, from dynamic hygiene sales, which rose by +19%, and from its expansion in the developing economies, Brazil and Argentina in particular. Including the contribution of Airgas via its sales of medical gases to hospitals, global Healthcare revenue in the second quarter was up +11.5%, excluding the currency impact.

Engineering and Construction revenue, which stood at € 254 million, fell sharply compared with the first half of 2015, adversely impacted by the slowdown in major projects related to energy and by the low number of new projects.

Global Markets & Technologies revenue amounted to € 146 million. It rose by +10.7% on a comparable basis, driven by markets related to maritime and space in the first quarter, as well as by dynamic biogas sales in the second quarter.

Adjusted for currency, energy and significant M&A impact (Airgas).

The Group, which continues to reinforce its competitiveness, generated € 143 million in recurring efficiency gains during first half, in line with our forecasts for the year. In the second half, these efficiencies will be enhanced by the first benefits of the synergies with Airgas, for which the integration process is progressing well. The Gas & Services operating margin, which is 19.6%, excluding the impact of Airgas, is up +20 basis points compared with the first half of 2015.

Net profit (Group share) reached € 811 million for the first half, € 842 million excluding the impact of the Airgas acquisition, a comparable basis increase of +1.1%. The first half of 2016 was impacted by exceptional costs linked to the acquisition of Airgas totaling around € 100 million before taxes. Once the proposed sales of assets in the United States are finalized, which is expected to occur in the second half of the year, the corresponding capital gain will offset the exceptional costs of the year related to the Airgas acquisition.

Cash flow (after changes in Working Capital Requirements), excluding Airgas, is up substantially at +23%. Net debt is € 19.9 billion as of 30 June 2016, while full payment of the Airgas acquisition has been completed. The net debt to equity ratio should fall to around 100% at the end of the year.

H1 2016 Performance

Adjusted for currency, energy, and significant M&A impact (Airgas).

The Air Liquide Board of Directors met on 29 July 2016. During this meeting, the Board reviewed the consolidated financial statements for the first half ending 30 June 2016.

Limited review procedures were completed with respect to the consolidated interim financial statements, and an unqualified review report is in the process of being issued by the statutory auditors.

In addition, the Board of Directors confirmed the company's intention to proceed with a capital increase with preferential subscription rights for shareholders, for an amount between 3 billion and 3.5 billion euros, expected in September/October, depending on market conditions.

It also decided on a special performance share grant to mark the company's recognition of the work accomplished by all of the teams that contributed to the Airgas acquisition, details of which will be published on the company website.