(2) Compared with restated 3(rd) quarter 2019 following changes in 2019 annual financial statements: financial costs before taxes linked to IFRS 16 are reclassified in other financial expenses whereas they were included in net finance costs on 30 september 2019. A distinction is now made between other non-cash items under which the adjustment of this cost is recognized as well as income and expenses under IAS 19 and IFRS 2 and other cash items

Outlook

This 3(rd) quarter saw a marked recovery in sales. Compared with the 2(nd) quarter of 2020, which was impacted by the pandemic, all business lines and all regions improved. Group revenue reached 5 billion euros, -0.9% on a comparable basis (-8.7% as published, reflecting the negative currency, energy price and significant scope impacts).

Gas & Services, which represent 96% of Group sales, were almost flat, with contrasted situations. Momentum in Healthcare and Electronics remained particularly good; Large Industries sales recovered, whereas Industrial Merchant, which showed a marked sequential improvement, still remained at a level below 2019. By region, sales in Europe and Asia were stronger than in the 3(rd) quarter of 2019 on a comparable basis, and the Americas improved compared with the 2(nd) quarter of 2020.

Global Markets & Technologies also saw a return to growth, whereas Engineering & Construction sales demonstrated progressive improvement, compared to previous quarters.

The Group continued its drive to improve its operating margin, delivering 311 million euros of efficiencies over the first nine months, in line with its annual target of more than 400 million euros, and the additional cost containment plan continued to deliver.

The continued improvement in performance translated into cash flow from operating activities which reached nearly 24% of sales. The investment cycle remains well oriented and the 12-month portfolio of investment opportunities, which is refocused on growth markets, stands at a high level. Investment decisions, which ensure future growth, were significant at 2.1 billion euros at the end of September, almost one third relating to the energy transition.

In a context of limited local lockdowns and progressive recovery until the end of 2020, Air Liquide is confident in its ability to further increase its operating margin and to deliver net profit(3) close to preceding year level, at constant exchange rates.

________________________

(3) 2020 recurring net profit: excluding exceptional and significant items that have no impact on the operating income recurring.

Appendices - Performance indicators

Performance indicators used by the Group that are not directly defined in the financial statements have been prepared in accordance with the AMF position 2015-12 about alternative performance measures.

The performance indicators are the following: 


   -- Currency, energy and significant scope impacts 
 
   -- Comparable sales change

Definition of Currency, energy and significant scope impacts

Since industrial and medical gases are rarely exported, the impact of currency fluctuations on activity levels and results is limited to euro translation impacts with respect to the financial statements of subsidiaries located outside the euro zone. The currency effect is calculated based on the aggregates for the period converted at the exchange rate for the previous period.

In addition, the Group passes on variations in the cost of energy (electricity and natural gas) to its customers via indexed invoicing integrated into their medium and long-term contracts. This indexing can lead to significant variations in sales (mainly in the Large Industries Business Line) from one period to another depending on fluctuations in prices on the energy market.

An energy impact is calculated based on the sales of each of the main subsidiaries in Large Industries. Their consolidation allows the determination of the energy impact for the Group as a whole. The foreign exchange rate used is the average annual exchange rate for the year N-1. Thus, at the subsidiary level, the following formula provides the energy impact, calculated for natural gas and electricity respectively:

Energy impact =

Share of sales indexed to energy year (N-1) x (Average energy price in year (N) - Average energy price in year (N-1))

This indexation effect of electricity and natural gas does not impact the operating income recurring.

The significant scope effect corresponds to the impact on sales of all acquisitions or disposals of a significant size for the Group. These changes in scope of consolidation are determined: 


   -- for acquisitions during the period, by deducting from the aggregates for 
      the period the contribution of the acquisition, 
 
   -- for acquisitions during the previous period, by deducting from the 
      aggregates for the period the contribution of the acquisition between 
      January 1 of the current period and the anniversary date of the 
      acquisition, 
 
   -- for disposals during the period, by deducting from the aggregates for the 
      previous period the contribution of the disposed entity as of the 
      anniversary date of the disposal, 
 
   -- for disposals during the previous period, by deducting from the 
      aggregates for the previous period the contribution of the disposed 
      entity.

Comparable sales change 


 
                         Q3                                                       Q3 
                         2020/2019             Natural               Significant  2020/2019 
(in millions of   Q3     Published   Currency   gas     Electricity   scope       Comparable 
euros)            2020   change       impact    impact   impact       impact      change 
Revenue 
Group             4,980  -8.7%       (202)     (61)     (19)         (143)        -0.9% 
Impacts in %                         -3.7%     -1.1%    -0.4%        -2.6% 
Gas & Services    4,777  -8.9%       (198)     (61)     (19)         (143)        -0.9% 
Impacts in %                         -3.8%     -1.2%    -0.3%        -2.7% 
 
 
                          YTD                                                      YTD 
                          2020/2019             Natural               Significant  2020/2019 
(in millions of   YTD     Published   Currency   gas     Electricity   scope       Comparable 
euros)             2020   change       impact    impact   impact       impact      change 
Revenue 
Group             15,253  -7.0%       (191)     (300)    (80)         (188)        -2.4% 
Impacts in %                          -1.1%     -1.9%    -0.5%        -1.1% 
Gas & Services    14,697  -6.8%       (188)     (300)    (80)         (188)        -2.1% 
Impacts in %                          -1.1%     -1.9%    -0.6%        -1.1%

Year to date revenue

By Geography 


 
                                                 YTD            YTD 
Revenue                                           Published      Comparable 
 (in millions of euros)      YTD 2019  YTD 2020   change         change 
Americas                     6,354     5,891     -7.3    %      -4.5     % 
Europe                       5,353     5,055     -5.6    %      0.3      % 
Asia-Pacific                 3,612     3,337     -7.6    %      -0.9     % 
Middle East & Africa         459       414       -9.9    %      -4.8     % 
GAS & SERVICES REVENUE       15,778    14,697    -6.8    %      -2.1     % 
Engineering & Construction   257       164       -36.4   %      -36.0    % 
Global Markets & 
 Technologies                371       392       5.7     %      6.1      % 
GROUP REVENUE                16,406    15,253    -7.0    %      -2.4     %

By Business Line 


 
                                              YTD            YTD 
Revenue                                        Published      Comparable 
 (in millions of euros)   YTD 2019  YTD 2020   change         change 
Large Industries          4,278     3,642     -14.9   %      -1.6    % 
Industrial Merchant       7,298     6,726     -7.8    %      -7.3    % 
Healthcare                2,736     2,825     +3.3    %      +8.6    % 
Electronics               1,466     1,504     +2.6    %      +3.3    % 
GAS & SERVICES REVENUE    15,778    14,697    -6.8    %      -2.1    %

The slideshow that accompanies this release is available as of 9:00 am (Paris time) at www.airliquide.com.

Throughout the year, follow Air Liquide on Twitter: @AirLiquideGroup. 


 
UPCOMING EVENTS 
 
2020 Full Year results: 
February 10, 2021 
 
Sustainability Day: 
March 23, 2021 
 
 
 
A world leader in gases, technologies and services for Industry and Health, 
Air Liquide is present in 80 countries with approximately 67,000 employees and 
serves more than 3.7 million customers and patients. Oxygen, nitrogen and 
hydrogen are essential small molecules for life, matter and energy. They 
embody Air Liquide's scientific territory and have been at the core of the 
company's activities since its creation in 1902. 
 
Air Liquide's ambition is to be a leader in its industry, deliver long term 
performance and contribute to sustainability. The company's customer-centric 
transformation strategy aims at profitable, regular and responsible growth 
over the long term. It relies on operational excellence, selective 
investments, open innovation and a network organization implemented by the 
Group worldwide. Through the commitment and inventiveness of its people, Air 
Liquide leverages energy and environment transition, changes in healthcare and 
digitization, and delivers greater value to all its stakeholders. 
 
Air Liquide's revenue amounted to 22 billion euros in 2019 and its solutions 
that protect life and the environment represented more than 40% of sales. Air 
Liquide is listed on the Euronext Paris stock exchange (compartment A) and 
belongs to the CAC 40, EURO STOXX 50 and FTSE4Good indexes.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201022006108/en/

 
    CONTACT: Investor Relations

IRTeam@airliquide.com

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