UpdateEmerging markets growth drives Air Liquide 2012 profit

14 February 2013 11:37  [Source: ICIS news]

SINGAPORE (ICIS)--Air Liquide Group’s full year 2012 net profit rose by 4.9% year on year to €1.6bn ($2.16bn), as sales from its gas & services segment in developing countries increased, the French industrial gases firm said on Thursday.

The company’s revenue rose by 6% year on year to €15.3bn, buoyed by an 11% increase in sales growth from its gas & services unit in developing countries, the company said in a statement.

The company has expanded its reach with new projects in developing countries such as Russia, China, Poland and Brazil.

Gas and services revenues increased by 6.5% during the year to €13.9bn, compared with €13bn in 2011, with sales from developing economies rising during the year to comprise 23% of the division’s sales in 2012.

Growth was flat in Europe, but potential declines in light of the weak operating environment were offset by additional investment in healthcare gases, which increased from 16% to 18% of the gas and service division’s revenues during the year.

Engineering and construction division revenue rose by 11% year on year to €785m, driven by an increase in projects for third-party customers during the year. Revenues for other group activities fell by 8% to €629m as a result of the disposal of certain industrial specialty chemicals assets in the second half of 2011, Air Liquide said.

“In 2012, the total amount of investment decisions rose to €2.9bn… and the scheduled commissioning of 50 plants in the next two years confirm customer confidence in the medium-term,” said Benoit Potier, chairman and CEO of the Air Liquide Group.

Highlights of the year included sustained growth in large industries, notably from the increase in hydrogen demand for refining and chemicals in Asia and the US, the company said. Air Liquide forecast that the strong growth generated in emerging markets during the year will continue into 2013, with slower growth anticipated in mature markets, leading to continued net profit growth compared to 2012.

“Barring a degradation of the environment, Air Liquide is confident in its ability to deliver another year of net profit growth in 2013,” Potier added.

US financial analyst Bernstein Research which has earmarked Air Liquide as one of three companies most likely to outperform the general chemical market in 2013 said that the company’s earnings during the second half of 2012 were ahead of its expectations.

Air Liquide generated operating income recurring of €1.31bn during the period, 3% above Bernstein’s €1.28bn estimate and 2% ahead of consensus estimates, Bernstein said.

Bernstein attributed Air Liquide’s above-expectation performance to the strong emerging market sales growth and a slight uptick in developed markets sales during 2012 for the company’s gas and services division.

An especially strong performance for the division in the fourth quarter of 2012 may translate into an upward earnings revision of several per cent, the firm added.

Bernstein said: “We expect relative outperformance since Air Liquide's sales are more resilient to the weak European economy than they first appear and the project pipeline is healthy. Volumes could surprise positively if electronics volumes improve through 2013.

“In addition, we expect gradual pricing improvements and continued cost-cutting,” the firm added.

Netherlands-based paintings and coatings company AkzoNobel and Norwegian fertilizer company Yara are Bernstein’s other top outperform picks for chemicals companies in 2013.

($1 = €0.74)

Additional reporting by Surinder Malhi.

By: Tom Brown
+44 208 652 3214

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