(News Bulletin 247) – The industrial gases specialist published growth above expectations in the fourth quarter and now plans to increase its operating margin by 320 basis points over the period 2022-2025, compared to 160 points previously. The group will again distribute free shares to its holders in June.

Flagship action for small carriers, Air Liquide does not disappoint. The specialist in industrial gases, 35% of whose capital is held by individual shareholders, has passed the annual results test perfectly.

Portfolio value par excellence, the stock rose 5.8% around 12:05 p.m. this Tuesday, to 181.50 euros, and reached a new historic high at 9:14 a.m. at 182.66 euros. Air Liquide’s market capitalization exceeded 95 billion euros, at 95.2 billion. The symbolic milestone of 100 billion dollars that the group had already reached in the past has also been crossed (102.3 billion).

At the rate at which Air Liquide is progressing, the group could become by the end of the year the eighth CAC 40 group to cross the 100 billion euro mark in market capitalization, behind LVMH, L’Oréal, Hermès, Totalenergies, Airbus, Schneider Electric and Sanofi.

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Return to growth among major clients

But for now let’s return to Air Liquide’s publication, which, to summarize, ticked a lot of good boxes. Over the last three months of 2024, the gas specialist achieved like-for-like growth of 3.7% year-on-year. This increase in turnover took analysts by surprise since the Vara Research consensus stood at 2.3% on a comparable basis.

In its main division, “gas and services”, the company accelerated, with revenues increasing by 4.6% compared to 1.7% over the previous three months.

Air Liquide benefited from significant growth in the so-called “industrial merchant” segment, i.e. small industrial customers (such as food and pharmaceuticals) as opposed to the “large industry” which brings together more energy-intensive companies (metallurgy, chemicals, refining).

Industrial merchant customers represent a little less than 40% of the company’s revenues. This segment posted 6% growth in the fourth quarter, driven by further price increases at resilient volumes, notably in automotive, research and integrated circuit assembly.

At the same time, “large industry” returned to growth, growing by 2% over the last three months of 2023, after six consecutive quarters in the red. Air Liquide notes that demand has stabilized in steel and chemicals, while volumes have increased in refining.

Two years ahead on margins

Over the whole of 2023, Air Liquide generated revenues of 27.608 billion euros, down 7.8% based on published data but up 3.7% like-for-like.

The difference between the published and comparable variation is explained by the very heavy impacts of foreign exchange (-4.2%) and especially energy (-7.6%). Air Liquide must, in medium and long-term contracts for its largest customers, reflect variations in the costs of natural gas and electricity, which fell sharply in 2023. In 2022, the “energy effect” had at least On the contrary, Air Liquide’s revenues were inflated by more than 15% in published data.

Air Liquide achieved current operating income of 5.07 billion euros in 2023, up 11.4% like-for-like, which slightly exceeded the 5.02 billion euros consensus. As a result, Air Liquide’s current operating margin stood at 18.4% (compared to 18.2% expected), an increase of 220 basis points (2.2%) over one year and 80 basis points excluding energy effect.

Above all, Air Liquide improved its current operating margin by 150 basis points cumulatively, excluding the “energy effect”, compared to 2021. The group has thus almost achieved its objective set in March 2022, two years in advance, namely increase its profitability by 160 basis points over the entire period 2022-2025.

“I am proud to underline that we have, in two years, practically achieved the ambition of increasing the margin that we had set for 2025 as part of our ADVANCE strategic plan. Consequently, we are announcing today “today double our initial ambition,” said François Jackow, the company’s managing director, in a press release.

Air Liquide has, in fact, decided to increase its objective of increasing its operating margin to 320 basis points by 2025 compared to 2021.

A significant discount against Linde

Regarding other account lines, Air Liquide’s recurring net income increased by 5% to 3.32 billion euros, while net income increased by 11.6% to 3.08 billion euros.

For 2024, the company intends to both increase its operating margin and achieve growth in its recurring net income at constant exchange rates.

Building on these results, the group will propose a dividend of 3.20 euros per share for the 2023 financial year, an increase of 8.5% over one year. “In addition, an allocation of free shares is planned for June 2024, at the rate of one share for every 10 shares held,” the company announced.

Morgan Stanley appreciates “a robust end to the year”. Oddo BHF, for its part, welcomes “solid results in the fourth quarter, which bode well for the 2024 financial year”. The design office notably expects growth of 13% per year on average in hydrogen over the period 2022-2030. This while Air Liquide trades (at Monday’s close) at a discount of 29% compared to its great German rival Linde, based on expected profits in 2024, notes Oddo BHF, which reiterates its advice to ” outperformance.