Air Liquide: 2012 Performance

  Air Liquide: 2012 Performance

Growth in Revenue and Profit

Investments in the Most Dynamic Markets

Business Wire

PARIS -- February 14, 2013

Regulatory News:

Air Liquide (Paris:AI):

Key figures

  *Group revenue of:

       *€ 15,326 million, up +6%
       *Net profit of € 1,609 million, up +4.9%
       *Proposed 2012 dividend of €2.50 per share, up +10.3%

Highlights

  *Continued expansion in Developing economies:  new projects in Russia,
    China, Poland, Brazil, Qatar, Mexico, South Africa…
  *New acquisitions in Home Healthcare: LVL Médical (France), Gasmedi (Spain)
  *New developments in hydrogen energy: Germany, Japan, Netherlands, Norway,
    Switzerland
  *Technological advances: extreme cryogenics and space (Ariane launcher,
    ITER ...)

Air Liquide’s Board of Directors, which met on February 13, 2013, adopted the
2012 audited financial statements. An unqualified report will be issued by the
external auditors.

2012 consolidated revenue reached € 15,326 million. In a contrasted global
economic environment, Gas & Services showed solid growth up +6.5%. On a
comparable basis, the developing economies, which now represent 23% of sales,
achieved double digit growth (+11%) when advanced economies reached +1%. The
fourth quarter showed an improvement in growth in all regions.

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 United States, and by the progression of Healthcare driven by organic
growth and acquisitions in Europe. Industrial Merchant activity  is slightly
up in a very competitive environment, while Electronics has seen signs of
recovery in the fourth quarter.

Operating Income Recurring is up +6.3% at € 2,560 million. The operating
margin, benefiting from efficiency gains of €284 million, is stable at 16.7%.
Net profit (Group share) is at € 1,609 million, up +4.9%. Cash flow (after
change in Working Capital Requirements) is up +11.7%. Net debt stands at €
6,103 million, stable excluding acquisitions, leading to a gearing ratio of
58%. The pro forma* Return on capital employed is preserved at 11.9%.

Commenting on the 2012 results, Benoît Potier, Chairman and CEO of the Air
Liquide Group, stated:

“In the context of the global economic slowdown in 2012, the Group’s
performance is solid. Our extensive geographic presence, our initiatives in
new markets and targeted acquisitions allow us to show further growth in
activity and operating results.

In 2012, the total amount of investment decisions rose to € 2.9 billion, the
highest level since 2007. The increase in the Engineering & Construction order
intake, the high level of our 12-month portfolio of investment opportunities
and the scheduled commissioning of 50 plants in the next two years confirm
customer confidence in the medium-term.

The Group continues to strengthen its competitiveness and innovation to ensure
profitable growth over the long-term, based upon a sustained investment
program and upon efficiencies for which the 2011-2015 objective is increased
by +30% to € 1.3 billion.

Barring a degradation of the environment, AirLiquide is confident in its
ability to deliver another year of net profit growth in 2013.”

* Pro forma: by including the annualized profit impact of the acquisition of
LVL Médical and Gasmedi.

                                   ________

At the next Annual General Meeting of Shareholders, the Board of Directors
will propose the payment of a dividend of 2.50 € per share, up +10.3%, taking
into account the attribution of 1 free share for 10 existing in 2012. The ex
date has been set for May 16,  and the payment date on May 22, 2013.

The Board also approved the draft resolutions to be submitted to the Annual
General Meeting, and in particular the renewal of Mr. Thierry Desmarest and
Mr. Thierry Peugeot, as directors, for a period of four years. Mr. Alain
Joly’s mandate will expire at the next AGM. Member of the Board since 1982,
Mr. Alain Joly was Chairman and CEO from 1995 to 2001, and then Chairman of
the Supervisory Board from 2001 to 2006. The Board expressed its deepest
thanks for his enormous contribution to Air Liquide’s development over these
years.

Furthermore, the Board set the compensation for the Executive officers for
2013: details will be published on the AirLiquide website.

                                   ________

Benoît Potier also comments the Group’s 2012 results in a video interview,
available in French and English  at 8.00am Paris time, at www.airliquide.com

 Follow the announcement of the results live on Twitter thanks to the hashtag
                                  #ALresults

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Upcoming events

First quarter 2013 revenue

Wednesday, April 24, 2013

Annual General Meeting of Shareholders

Tuesday, May 7, 2013

First half revenue and results

Tuesday, July 30, 2013

Air Liquide is the world leader in gases for industry, health and the
environment, and is present in 80countries with close to 50,000employees.
Oxygen, nitrogen, hydrogen and rare gases have been at the core of Air
Liquide’s activities since its creation in 1902. Using these molecules, Air
Liquide continuously reinvents its business, anticipating the needs of current
and future markets. The Group innovates for the good of society while
delivering growth and consistent performance.

Innovative technologies that curb polluting emissions, lower industry’s energy
use, recover and reuse natural resources or develop the energies of tomorrow,
such as hydrogen, biofuels or photovoltaic energy… Oxygen for hospitals, home
healthcare, fighting nosocomial infections… Air Liquide combines many products
and technologies to develop valuable applications and services not only for
its customers but also for society.

A partner for the long term, Air Liquide relies on employee commitment,
customer trust and shareholder support to pursue its vision of sustainable,
competitive growth. The diversity of Air Liquide’s teams, businesses, markets
and geographic presence provides a solid and sustainable base for its
development and strengthens its ability to push back its own limits, conquer
new territories and build its future.

Air Liquide explores the best that air can offer to preserve life, staying
true to its Corporate Social Responsibility and sustainable development
approach. In 2012, the Group’s revenues amounted to €15.3 billion of which
82% were generated outside France. AirLiquide is listed on the Paris Euronext
stock exchange (compartment A) and is a member of the CAC 40 and Dow Jones
Euro Stoxx 50 indexes.

                              www.airliquide.com

2012 key figures

In 2012, the Group once again achieved its objective of net profit growth due
to sound activity. Gas and Services activity continued to improve in all
divisions and across all regions, with +11% comparable growth for developing
economies, and more subdued +1% growth for advanced economies. Gas and
Services operating margin was preserved due to an efficiency retention rate of
29%. An overheads cost alignment program was also initiated.

Despite worldwide customer prudence due to short-term economic uncertainties,
the strong investment momentum was maintained with continued high level of
industrial investment decisions, a particularly significant level of
acquisitions and very strong engineering order intake. The Group’s financial
structure remained solid.

The Board of Directors therefore proposes to maintain the dividend par value
to be submitted to the Shareholders’ Meeting of May 7, 2013 at 2.50 euros per
share. Considering the free share attribution in May 2012, this dividend
guarantees an increase of +10.3% for each shareholder and a pay-out ratio of
49.9%.

(in millions of                                        2012/2011       2012/2011
euros)             2011          2012         published    comparable
                                                       change          change
Total revenue      14,457        15,326       + 6.0%       + 2.5%^(a)
Of which Gas       13,064^(b)    13,912       + 6.5%       + 2.8%^(a)
and Services
Operating
income             2,409         2,560        + 6.3%       
recurring
Operating
income             16.7%         16.7%        =            =^(c)
recurring as %
of revenue
Net profit –       1,535         1,609        +4.9%        
Group share
Net earnings
per share (in      4.93^(d)      5.17         + 4.9%       
euros)
Adjusted
dividend per       2.27^(d)      2.50^(e)                 
share (in
euros)
Cash flow from
operating
activities
before change      2,728         2,913        + 6.8%       
in working
capital
requirement
Net capital        1,676         2,848        +70.0%       
expenditure^(f)
Net debt           5,248         6,103                    
Debt-to-equity     53%           58%                      
ratio
Return On
Capital            12.1%         11.9%^(h)                
Employed — ROCE
after tax^(g)

(a) Excluding natural gas, currency and significant scope impacts. Natural gas
is an essential raw material for the production of hydrogen and the operation
of cogeneration units. All Large Industries hydrogen and cogeneration
contracts have clauses indexing sales to the price of natural gas. Hence, when
the price of natural gas varies, the price of hydrogen or steam for the
customer is automatically adjusted proportionately, according to the index.
(b) Revenue adjusted to include the specialty ingredients activities in
Healthcare previously consolidated in Other Activities.
(c) Excluding the natural gas impact. Explanation of the natural gas impact on
revenues and operating margin in appendix.
(d) Adjusted for the free share attribution in May 2012.
(e) Subject to the approval of the May 7, 2013 Shareholders’ Meeting.
(f) Including transactions with minority shareholders.
(g) Return On Capital Employed — ROCE after tax: (net profit after tax before
deduction of minority interests - net cost of debt after taxes)/weighted
average of (shareholders’ equity + minority interests + net indebtedness).
(h) Pro forma, including annualized profit impact of the acquisition of
LVLMédical and Gasmedi.

Summary

Group revenue increased by +6.0%, amounting to 15,326 million euros. Gas and
Services revenue totaled 13,912million euros, up +6.5%. In terms of
comparable growth, excluding the impacts of exchange rate differences, the
acquisitions of LVLMédical and Gasmedi and rising natural gas prices, Gas and
Services revenue rose by +2.8%. Group operating margin was stable at 16.7%.
Net profit (Group share) increased by +4.9%, amounting to 1,609million
euros.

Net cash from operating activities before changes in working capital
requirement amounted to2,913million euros, up +6.8%. Capital expenditure,
net of disposals, rose sharply to 2,848 million euros, due to the numerous
acquisitions carried out during the year and industrial investments which
remained at a high level. Net debt as of December 31, 2012 totaled
6,103million euros, and the debt-to-equity ratio increased slightly compared
to December 31, 2011, to 58%.

2012 highlights

Despite an uncertain economic context, 2012 was marked by customer confidence
in the outlook for the medium and long-term. Whereas the slowdown in global
demand led to short-term growth uncertainties, AirLiquide signed investment
decisions of more than 2.9billion euros over the period that will contribute
to growth in the years to come. This amount of investment decisions, close to
a record level, included industrial investments of 2 billion euros and
acquisitions of 887million euros.

Throughout 2012, the Group therefore on the one hand, pursued its organic
development strategy with the signature of numerous contracts worldwide and,
on the other, bolstered its current positions through targeted acquisitions.

HEALTHCARE: GROWTH DRIVER IN EUROPE

The contribution of Healthcare to Gas and Services revenue increased
significantly from 16%, as published in 2011, to 18% for the year 2012 due to
several factors:

  *The finalization of several acquisitions, of which two were of an
    important size, enabled the Group to reinforce its positions in the
    European Home Healthcare market. In August and September 2012, the Group
    acquired, respectively, the French activities of LVL Médical for
    316million euros and Spanish Gasmedi, ranked number three in its Home
    Healthcare market, for 330 million euros. The revenues of LVL Médical in
    France and Gasmedi amounted to 104 and 82million euros, respectively, in
    2011. The combined expertise of LVL Médical in France and Gasmedi in Spain
    and Air Liquide’s ability to innovate will enable the Group to improve the
    service rendered to all patients. These acquisitions bring the number of
    patients treated by Air Liquide to more than one million worldwide.
    To finance these two acquisitions, Air Liquide issued, under its EMTN
    program, 9-year bonds at a rate of 2.125%. This issue was qualified as a
    Socially Responsible Investment (SRI) based on a rating from the ESG
    agency Vigeo. This assessment was based on the social, environmental and
    governance criteria of Air Liquide’s Home Healthcare activity. The Group
    has thus become the first company to issue bonds that specifically meet
    the criteria of Socially Responsible Investors. This issue, placed mainly
    with SRI mandated investors, has enabled the Group to diversify its
    financing sources.

  *Furthermore, to optimize the synergies, in terms of the market or
    regulatory framework, at the start of the fiscal year AirLiquide
    integrated its Seppic subsidiary, recognized leader in healthcare
    specialty ingredients into its Healthcare world business line.

DEVELOPMENT OF ACTIVITY IN ALL REGIONS AND BUSINESS LINES

In 2012, Air Liquide pursued its growth strategy through industrial
investments and acquisitions. In developing economies, the Group extended its
operations in the fast growing regions of Eastern Europe and Latin America. In
advanced economies, Air Liquide leveraged its existing positions and, based on
its proprietary technologies, strengthened its presence.

  *In Russia, the Group accelerated its growth by starting up two new air
    separation units: the first will serve merchant customers in the Tatarstan
    region, while the second will supply the customer Severstal in
    Cherepovets. Air Liquide also acquired two regional industrial gas bulk
    and cylinder activities, Logika in Moscow, and Lentechgas in Saint
    Petersburg. These two initial investments will be supplemented by the
    commissioning of air separation units. In Poland, the Group also pursued
    its growth and signed a contract with KGHM Polska Miedz, leader in the
    copper industry. These new contracts are aligned with the contracts signed
    in 2011 with Metinvest in Ukraine and Severstal in Russia, and emphasize
    the Group’s interest in this rapidly developing region.
  *In South America, after having invested in Chile last year, Air Liquide
    intensified its development in the region. In Brazil, the Group has
    undertaken to build two new production units to satisfy the growing demand
    from local players such as FEMSA, the world’s leading bottler of Coca-Cola
    and Suzano Papel e Celulose, the leading paper manufacturer in Latin
    America. After an initial investment in Mexico in 2011, Air Liquide
    pursued its development in the steel industry by signing a gas supply
    contract in Pesqueria, in the state of Nuevo Léon, providing for the
    construction of an air separation unit and a hydrogen production unit.
  *In China, the industrial gas business, which has until now focused on
    steel production, is gradually diversifying with new opportunities,
    particularly in the electronics and chemicals sectors. After having
    commissioned a major hydrogen production unit in Shanghai, in January
    2012, the Group decided to build a new hydrogen unit in the Liaoning
    province.
  *The Group has expanded its coverage in South Africa and has signed a
    contract with the country’s second largest steel producer, Evraz Highveld
    Steel and Vanadium, by investing in a new air separation unit.
  *In Western Europe, the Group acquired the British company Energas &
    Engweld, a distributor in the cylinder market. In Germany, benefiting from
    the competitive advantage of its pipeline network, the Group won a major
    long-term contract with Bayer MedicalScience amounting to an investment of
    100 million euros for the construction of a new hydrogen and carbon
    monoxide production unit.
  *Finally, in the Electronics sector, in the United States, following the
    technological and commercial success of the ALOHA range, the Group has
    doubled its world advanced precursor production capacity.

HYDROGEN: THE ENERGY CARRIER OF TODAY AND THE FUTURE

Significant progress has been achieved in the promising development of
hydrogen energy. Today, this technology is already used for targeted
applications: back-up electric generators, supply of electricity to remote
locations, bus or forklift captive fleets. Recently, in the automobile sector,
several manufacturers have announced the planned sale of electrical vehicles
powered by hydrogen fuel cells by 2015.

Similarly, in 2012, Air Liquide inaugurated its first hydrogen filling station
accessible to passenger cars in Dusseldorf, and has entered into a contract
with the German government to build 10 new filling stations over the next
three years. The Group has also installed two new stations: in Oslo, Norway
and Brugg, Switzerland. At the year-end, the Group decided to build and
operate a public filling station in Rotterdam. These development projects have
extended beyond the boundaries of Europe; in Japan, Air Liquide set up a team
to respond to the Japanese government’s project to install 100 hydrogen
filling stations by 2015.

In order to offer its customers a complete hydrogen chain with no CO[2]
emissions - from well to wheel - the Group is actively working upstream on
various clean hydrogen production projects. Accordingly, Air Liquide acquired
biogas installations in the state of Georgia, United States. The recovery of
biogas from buried waste will enable Air Liquide to produce Blue Hydrogen
using renewable and carbon-free energy sources.

2012 income statement

Preliminary note: The consolidation of Seppic within Gas and Services at the
start of 2012 modified the Group revenue segment breakdown. The 2011 Gas and
Services and Other activities revenues have been revised to take account of
this change. Similarly, the 2011 operating income recurring breakdown has been
revised.

REVENUE

Revenue            2011            2011                       2012/2011       2012/2011
(in millions    As           revised    2012      change       comparable
of euros)          published                                                  change^(a)
Gas and         12,839       13,064     13,912    + 6.5%       + 2.8%
Services
Engineering
and             705          705        785       + 11.3%      + 9.4%
Construction
Other           913          688        629       - 8.4%       - 9.8%
Activities
TOTAL           14,457       14,457     15,326    + 6.0%       + 2.5%
REVENUE
(a) Excluding currency, natural gas and significant scope impacts.


Group

In 2012, Group revenue totaled 15,326 million euros, up +6.0% as published
compared to 2011, due to a +3.2% positive currency impact and the
contribution from two significant acquisitions progressively from the 3^rd
quarter. On a comparable basis, revenue increased by +2.5% compared to 2011.

Revenue by quarter                QI 12    Q2 12    Q3 12    Q4 12
(in millions of euros)
Gas and Services                  3,443    3,394    3,490    3,585
Engineering and Construction      178      188      167      252
Other Activities                  158      172      146      153
TOTAL REVENUE                     3,779    3,754    3,803    3,990
2012/2011 published change        +6.7%    +5.1%    +5.7%    +6.6%
2012/2011 comparable              +4.5%    +1.2%    +1.0%    +3.3%
change^(a)
(a) Excluding currency, natural gas and significant scope impacts.
                                                                         

Currency, natural gas and significant scope impacts

In addition to the comparison of published figures, financial information is
given excluding currency, natural gas price fluctuation 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. Fluctuations in natural gas prices are generally passed
on to our customers through indexed pricing clauses.

(in millions of euros)               Group     Gas and Services
2012 revenue                         15,326    13,912
2012/2011 % published change         + 6.0%    + 6.5%
Currency impact                      +464      +441
Natural gas impact                   +17       +17
Significant scope impact             +25       +25
Comparable change                    +364      +365
2012/2011 % comparable change^(a)    + 2.5%    + 2.8%
(a)  Excluding currency, natural gas and significant scope impacts.


Gas and Services

Unless otherwise stated, all the changes in revenue outlined below are based
on comparable data (excluding currency, natural gas and significant scope
impacts).

Gas and Services revenue totaled 13,912million euros, up +6.5% as published,
and benefited from a +3.4% positive currency impact. The net impact of the
sale of the Electronics equipment activity in 2011 and the acquisitions of
LVLMédical and Gasmedi was +0.2%. The impact of rising natural gas prices
was limited this year to +0.1%, with the decrease in prices in Americas and
Asia-Pacific offsetting the overall increase worldwide. On a comparable basis,
revenue increased by +2.8% compared to 2011, with growth in all regions and
business segments.

The renewed growth in the first quarter was of short duration, with a marked
slowdown in the second and third quarters. Growth improved in the fourth
quarter, due to a more favorable comparison base of the 4^th quarter 2011
which has already been affected by the global economic slowdown.

The activity level in 2012, which varied quarter on quarter, remained solid
throughout the year and was overall significantly higher than in 2011,
exceeding the 2008 benchmark level on average by 20%.

This annual performance was attributable to:

  *a +11% increase in sales in developing economies, where growth was
    sustained due to continued start-ups and ramp-ups, solid growth in demand
    and some small acquisitions;
  *a +1% increase in advanced economies, where the low demand growth in
    Europe and Japan was offset by the steady performance in North America and
    Australia.

Due to a higher growth rate, the contribution of developing economies to Gas
and Services revenue again increased to reach 23% of sales in 2012. This
contribution was even higher for industrial activities.

Despite a few start-up delays during the year, the contribution of start-ups,
ramp-ups, site takeovers and minor acquisitions to Gas and Services sales was
+3.5%, and +3.7% including the significant scope impact.

Revenue              2011                           2012/2011       2012/2011
(in millions      revised^(a)    2012      published    comparable
of euros)                                           change          change^(b)
Europe            6,810          7,025     + 3.2%       + 1.0%
Americas          2,859          3,108     + 8.7%       + 6.2%
Asia-Pacific      3,083          3,416     + 10.8%      + 2.2%
Middle East       312            363       + 16.5%      + 16.0%
and Africa
GAS AND           13,064         13,912    + 6.5%       + 2.8%
SERVICES
Industrial        4,892          5,193     + 6.2%       + 2.5%
Merchant
Large             4,585          5,015     + 9.4%       + 5.6%
Industries
Healthcare        2,301          2,482     + 7.9%       + 4.2%
Electronics       1,286          1,222     - 5.0%       - 8.4%
(a) Figures adjusted for the transfer of the specialty ingredients activities
to Healthcare
(b) Excluding currency, natural gas and significant scope impacts.


Europe

Revenue in Europe totaled 7,025million euros, up +1.0%. Demand for hydrogen
increased sharply, whereas the growth in volumes of other industrial gases
remained low, particularly in Southern Europe. The region continued to benefit
from regular growth in Healthcare and the strong momentum of the developing
economies, which generated growth of +25% due to ramp-ups, site takeovers and
minor acquisitions in Russia, Poland and Turkey.

Europe Gas and Services 2012 revenue

  *Large Industries revenue increased by +2.5%. This performance reflects
    sustained demand in the Chemicals and Refining sectors throughout Europe
    that offset the dwindling demand in the metals sector and some customer
    plant closures. Expansion in the major industrial countries of Eastern
    Europe has produced results: Large Industries revenue rose by +20% due to
    start-ups in Russia and a site takeover in Turkey.
  *Industrial Merchant sales declined slightly by –0.5%. Double-digit growth
    continued in developing economies due to new facilities, acquisitions of
    distributors close to new facilities and strong demand. However, business
    in advanced economies suffered from a difficult economic climate. Cylinder
    and bulk volumes are well short of 2008 levels, particularly in Southern
    Europe where business continued to decline. In Northern Europe, volumes
    were stable and business benefited from the acquisition of Energas, a
    local player in the UK. Pricing remained positive during the year at
    +0.9%.
  *The Healthcare development continued, with growth of +2.7%,  and +6.1%
    including the impact of the acquisitions since September of LVLMédical in
    France and, since October, Gasmedi in Spain. Excluding LVLMédical and
    Gasmedi acquisitions, Home Healthcare rose by +3%, driven by the steady
    growth of demand and the expansion of the portfolio of therapies provided
    to patients despite intense price pressure during contract renewals. The
    rise in medical gas volumes was hindered by the budgetary pressures of
    certain states. Hygiene activities developed steadily due to sustained
    demand. Specialty ingredients posted +1% increase in revenue due to a
    very high comparison base in 2011.
  *Electronics revenue decreased by –12.9% following record Equipment and
    Installations sales in 2011, mainly due to the construction of a new
    photovoltaic panel fab in Italy. Carrier and specialty gas sales growth,
    however, remained solid, benefiting from new contracts, including the
    start-up of the fab in Italy.

Americas

Gas and Services revenue in the Americas totaled 3,108million euros, up
+6.2%. Industrial activity remained sustained in North America, with strong
demand in hydrogen for Refining and greater Industrial Merchant price
elasticity than in Europe. In South America, regular growth of more than +
12%, was achieved during the year, in both the industrial and Healthcare
domains.

Americas Gas and Services 2012 Revenue

  *Large Industries posted solid +7.8% sales growth benefiting from site
    ramp-ups in Texas and Louisiana, a site takeover and particularly robust
    demand in the Chemicals sector which benefited from declining natural gas
    prices. Demand in the metals sector remained buoyant in South America and
    gradually recovered in the Northern economies. Cogeneration unit sales
    were affected by declining electricity prices.
  *Industrial Merchant sales rose by +5.7% with a consistent performance
    across the entire region. The business momentum was sustained by steady
    industrial demand, acquisitions of distributors in Canada and Brazil as
    well as the development of bulk gas sales for oil exploration. Cylinder
    activity also improved over the entire region and particularly in South
    America. Pricing campaigns continued throughout the year.
  *Healthcare revenue rose by +11.3% driven by the performance of Home
    Healthcare in Latin America (Argentina, Brazil and Chile). The more
    subdued growth in North America was attributable to the solid Home
    Healthcare growth in Canada, primarily due to minor acquisitions and a
    slight slowdown in medical gases in the United States at the end of the
    year.
  *Electronics activity, which declined by -5.0%, suffered from the end of
    the investment cycle in 2011. Equipment and Installations revenue declined
    after a very profitable first half of 2011, due to the installation of a
    new fab in the United States. A new installation project should begin in
    early 2013. Specialty gas sales, particularly those from the Aloha range,
    remained buoyant.

Asia-Pacific

Revenue in the Asia-Pacific region increased by +2.2% to 3,416million euros.
Performance remained very contrasted, with a decline of almost -8% in Japan
and an +8% rise in developing economies. The region, which represents
two-thirds of the Group’s Electronics business, was marked by the turnaround
in this sector’s investment cycle, as well as a certain prudence of customers
in their inventory management. The momentum remained strong in China, at
+15%, due to solid demand in all business lines which improved at the end of
the year, and despite a lower contribution from start-ups than in previous
years.

Asia-Pacific Gas and Services 2012 Revenue

  *Large Industries sales increased by +10.8%. Growth was less than in
    previous years due to fewer start-ups. Growth was more sustained in the
    fourth quarter due to the ramp-up of a major unit in China and strong
    hydrogen volumes across the region. Growth in China remained high at +25%
    for the year as a whole.
  *Industrial Merchant posted +1.5% growth during the year. The situation
    was contrasted from country to country. Activity in Japan declined, and
    showed no signs of the expected post-earthquake recovery. Sales growth was
    positive in all other countries in the region. Sales growth in China
    improved quarter by quarter to return to the level of 2011.
  *Electronics posted a – 8.1% decline for the year. Equipment and
    Installations sales declined throughout the region compared to very high
    levels in 2011. The Electronics sector restructuring continued in Japan
    and impacted the entire production chain, and particularly industrial gas
    demand. Excluding Japan, gas sales growth remained positive, particularly
    in China, due to new specialty and carrier gas contracts.

Middle East and Africa

Middle East and Africa revenue totaled 363million euros, up +16.0%. Large
Industries posted strong growth in the Middle East and South Africa due to
ramp-ups of new units. The construction of the major hydrogen unit in Yanbu
continued to schedule. Industrial Merchant growth bounced back after a subdued
2011 marked by the impact of the Arab Spring. Healthcare activities continued
to develop steadily, particularly in South Africa and Tunisia.

Engineering and Construction

Engineering and Construction revenue totaled 785million euros, up +11.3% as
published compared to 2011 reflecting progress of third-party sale of
equipment projects.

In 2012, total order intake rose significantly to 1.7 billion euros, a +69%
increase compared to the previous year. The vast majority of projects involve
air gas and hydrogen production units. This strong growth reflects an increase
in projects for third-party customers, particularly in North America, and an
amount of Group projects slightly up on the previous year.

Orders in hand totaled 4.0billion euros as at December 31, 2012, reflecting
the high order intake during the year.

Other Activities

Revenue                                                                 2012/2011
(in            2011            2011                     2012/2011       comparable
millions    as           revised    2012    change       change
of             published                                                ^(a)
euros)
Welding     469          469        450     - 3.9%       - 4.0%
Diving
and         444          219        179     - 18.1%      - 22.1%
other
TOTAL       913          688        629     - 8.4%       - 9.8%
(a) Comparable: excluding         
currency impact.
                                      

The -8.4% decline in revenue from Other Activities in 2012 was attributable to
the disposal of certain industrial activities from Specialty Chemicals in the
second half of 2011.

After a stable first half-year, Welding activity declined in the second half
of 2012, reflecting the problems in the European economy, particularly in the
metals, automobile and construction sectors.

Diving (Aqua Lung) posted +8.2% published growth for 2012, due to steady
demand in Asia and Africa.

OPERATING INCOME RECURRING

Operating income recurring before depreciation and amortization totaled 3,792
million euros, up +6.4%. Depreciation and amortization amounted to 1,232
million euros, up +6.7%, reflecting the impact of unit start-ups during the
year and acquisitions.

Group operating income recurring (OIR) totaled 2,560 million euros in 2012, up
+6.3% compared to 2011. Operating margin (OIR over revenue) was stable at
16.7% mainly due to the increase in the level of efficiencies. For the full
year, efficiencies amounted to 284million euros, exceeding the annual target
of more than 200 million euros. Excluding the effect of energy indexation,
pricing was positive over the period, and partially offset cost inflation of
+2.3%.

These efficiencies represent a 2.6% cost saving. More than 40% of this stems
from purchasing and the realignment in structures where activity has suffered
from falling demand, particularly in Japan and Welding. Other projects
designed to reduce energy consumption, optimize the logistics chain and roll
out worldwide or regional purchasing platforms continued.

Gas and Services

Gas and Services operating income recurring totaled 2,622 million euros, up
+6.1%. The published operating income recurring over revenue amounted to
18.8%, compared to 18.9% in 2011. Excluding the natural gas impact it remained
stable at 18.9%.

Cost inflation, excluding the impact of energy indexation, gradually decreased
in the second half and totaled +2.7% for the year. Prices continued to rise
by +0.4% due to persistent efforts in Industrial Merchant (+1.9%) and
despite continuous price decreases in Electronics and Healthcare. In addition,
efficiencies totaled 272million euros. A portion of efficiencies was absorbed
to offset the difference between cost inflation and rising prices. The
remaining efficiencies, i.e. the retention, helped sustain the margin. The
retention rate was 29% in 2012.

Gas and Services 2012 operating income recurring by geography

Gas and Services Operating margin      2010     2011            2012
^(a)                                                  revised ^(b)
Europe                                 19.1%    18.8%           18.3%
Americas                               21.5%    22.0%           24.0%
Asia-Pacific                           16.4%    16.3%           15.1%
Middle East and Africa                 25.0%    20.8%           21.2%
TOTAL                                  19.2%    18.9%           18.8%
(a) Operating income recurring/revenue
(b) Revised for integration of Seppic in Gas and Services


Operating income recurring in Europe totaled 1,285 million euros, up +0.6%.
The operating margin, excluding the natural gas impact, was broadly stable at
-20 basis points. Despite a gradual improvement in prices quarter by quarter,
the low level of activity in certain Western European countries and the time
lag between the increase in prices and inflation weighed on the margin in
Industrial Merchant. Margins for the other business lines slightly improved or
remained stable.

Operating income recurring in the Americas amounted to 745 million euros, up
+18.6%. Excluding the natural gas impact, the operating margin rose by +120
basis points due to business growth and non recurring items in 2012.

In Asia-Pacific, operating income recurring amounted to 516 million euros, an
increase of +2.8%. Excluding the natural gas impact, the operating margin as a
percentage of revenue declined by -120 basis points due to a change in
business mix with greater share of hydrogen sales in the region.

Operating income recurring for Middle East and Africa amounted to 77 million
euros, an increase of +18.3%. The operating margin rose by + 40 basis points,
due to a favorable comparison base following the Arab Spring of 2011.

Engineering and Construction

Operating income recurring for Engineering and Construction was 79 million
euros. The operating margin reached 10.0%, slightly down compared to the
exceptional 10.6% in the previous year.

Other Activities

The Group’s Other Activities reported operating income recurring of 37 million
euros, down - 33.5%, while the operating margin totaled 5.8%, a decrease of –
220 basis points. This decline reflects the sale of industrial activities from
Specialty Chemicals at the end of 2011 and the difficult context for Welding.
Margins increased slightly for the Diving activity.

Research and Development and corporate costs

Research and Development and corporate costs include intersector consolidation
adjustments and amounted to 177 million euros, down –8.6%. This decline
reflected the Group’s efforts to control corporate holding costs whilst
maintaining its research and innovation initiatives and investments.

NET PROFIT

Other operating income and expenses was a negative balance of -27million
euros in 2012 compared to a positive balance of 28million euros in 2011. They
include primarily higher restructuring and acquisition costs than in previous
years. As a reminder, in 2011, they benefited from capital gains on the
disposal of non-strategic subsidiaries.

Net financial expenses, at -312 million euros increased by + 4.6% compared to
– 298 million euros in 2011. Net finance costs, up +1.8%, excluding the
currency impact, reflected a slight increase in average debt over the year
offset by a decline in the average financing rate from 4.8% in 2011 to 4.6%.

Other financial income and expenses were virtually stable.

Taxes totaled 566 million euros, down – 1.8%. The effective tax rate was 25.5%
compared to 27.0% in 2011. This rate was attributable to a tax gain resulting
from the favorable evolution of tax audits. Excluding this impact, the
effective tax rate for the year would have been 27.7%.

Profit from associates amounted to 20 million euros, compared to 33million
euros in 2011. This decline was primarily due to the change to proportionate
consolidation of an Engineering and Construction subsidiary in Asia. Minority
interests rose by +10.6%, amounting to 66million euros.

Overall, net profit (Group share) amounted to 1,609 million euros in 2012, up
+4.9%.

Net earnings per share was 5.17euros, up +4.9% compared to 2011, after
adjustments for the free share attribution in May 2012. The average number of
outstanding shares used for the net earnings per share calculation as of
December 31, 2012 was 311,147,191.

Change in the number of shares

                                         2011               2012
Average number of outstanding shares      311,594,600^(b)    311,147,191
^(a)
(a) Used to calculate net earnings per share
(b) Adjusted for the free share attribution in May 2012.

                                                               
Number of shares as of December 31, 2011                        283,812,941
Options exercised during the year, prior to the free share      245,020
attribution
Cancellation of treasury shares                                 (1,200,000)
Free shares issued                                              29,003,797
Options exercised during the year, after the free share         419,401
attribution
Number of shares as of December 31, 2012                        312,281,159

DIVIDEND

At the Shareholders Meeting of May 7, 2013, the payment of a dividend of 2.50
euros per share will be proposed to shareholders in respect of fiscal year
2012, a +10.3% increase, taking into account the free share attribution in
May 2012. This represents an estimated distribution amount of 803 million
euros, up +10.2% and a pay-out ratio of 49.9%.

The ex-dividend date has been set for May 16, 2013 and the dividend will be
paid on May 22, 2013.

2012 cash flow and balance sheet

(in millions of euros)                                2011       2012
Cash flow from operating activities before changes    2,728      2,913
in working capital
Change in working capital requirement                 (193)      (67)
Other                                                 (109)      (137)
Net cash from operating activities                    2,426      2,709
Dividends                                             (721)      (781)
Purchases of property, plant and equipment and        (1,676)    (2,848)
intangible assets, net of disposals ^(a)
Increase in share capital                             52         37
Purchase of treasury shares                           (94)       (104)
Other                                                 (196)      132
Change in net indebtedness                            (209)      (855)
Net indebtedness as of December 31                    (5,248)    (6,103)
Debt to equity ratio as of December 31                53 %       58 %
(a) Including minority interest transactions.


CASH FLOW FROM OPERATING ACTIVITIES

Cash flow from operating activities before changes in the working capital
requirement amounted to 2,913 million euros, up +6.8% on 2011, compared to a
4.9% increase in net profit. This performance, which was partially
attributable to the rise in depreciation and amortization charges during the
year, mainly reflects the quality of the operating results.

CHANGE IN WORKING CAPITAL REQUIREMENT

The working capital requirement increased by + 67 million euros in 2012,
strictly managed relative to the growth in revenue. The working capital to
sales ratio, excluding taxes, was 7.1%, compared to 7.0% in 2011. A decline in
Engineering advances was compensated by an improvement in the performance of
Gas & Services, primarily due to the considerable rise in cash inflows in the
Southern European healthcare sector.

TOTAL CAPITAL EXPENDITURE

Following the significant level of investment decisions in 2010 and 2011,
totaling on average 2.1billion euros per year, total industrial capital
expenditure increased to 2.0billion euros in 2012. Acquisitions, intended to
strengthen the Group’s local presence in Home Healthcare and Industrial
Merchant, totaled nearly 890million euros, including buybacks of minority
interests.

Group gross capital expenditures

(in millions of euros)    Industrial     Financial           Total
                             investments       investments ^(a)       capex
2007                      1,359          1,308               2,667
2008                      1,908          242                 2,150
2009                      1,411          109                 1,520
2010                      1,450          332                 1,782
2011                      1,755          103                 1,858
2012                      2,008          890                 2,898
(a) Including minority interest transactions.


Industrial investment

Industrial investment amounted to 2.0billion euros in 2012, up +14% compared
to 2011. The amount of Gas and Services investment breaks down as follows:

Gas and Services Industrial investment by geographical area

(in         Gas and Services
millions
of             Europe    Americas    Asia-Pacific    Middle-East    Total
euros)                                                        and Africa
2011        690       387         510             137            1,724
2012        691       467         570             224            1,952

Industrial disposals amounted to 49million euros.

Financial investment

Financial investment amounted to 890million euros, including minority
interest transactions of 11million euros. This comprises two acquisitions in
Home Healthcare, LVLMédical in France and Gasmedi in Spain, for a net amount
of 632million euros, as well as numerous small acquisitions in Healthcare and
Industrial Merchant. Disposals of financial investments totaled 1 million
euros.

NET INDEBTEDNESS

Net indebtedness as of December 31, 2012 totaled 6,103 million euros, up 855
million euros compared to December 31, 2011, reflecting the acceleration in
the acquisition program. The debt-to-equity ratio was 58%, a slight increase
compared to December 31, 2011. The Group’s financial structure remained
extremely secure.

ROCE

The return on capital employed after tax was 11.7%. The pro forma ROCE,
including the annualized profit impact of the acquisition of LVLMédical and
Gasmedi, was 11.9%, compared to 12.1% published at the end of 2011. This
decrease reflects the substantial ongoing industrial investment, which will
contribute to medium-term growth.

INVESTMENT CYCLE AND FINANCING STRATEGY

The Group’s steady long-term growth is largely due to its ability to invest in
new projects each year. Industrial gas investment projects are widespread
throughout the world, highly capital intensive and supported by long-term
contracts, particularly for Large Industries. Air Liquide has thus tailored
its financing strategy to the nature of its projects, based on the
diversification of funding sources, the prudential management of the balance
sheet and innovative financing sourcing. This financing strategy is
fundamental for the Group’s continued development.

Investments

The Group’s investments reflect its growth strategy.

They can be classified into two categories:

  *Industrial investments, which bolster organic growth or guarantee the
    efficiency, maintenance or safety of installations;
  *Financial investments, which strengthen existing positions, or accelerate
    penetration into a new region or business segment through the acquisition
    of existing companies or assets already in operation.

The nature of the industrial investment differs from one world business line
to the next: from gas production units for Large Industries, to filling
centers, logistics equipment, storage facilities and management systems for
Industrial Merchant, Electronics and Healthcare. Capital intensity varies
greatly from one business line to another.

Long-term development is one of the key characteristics of the industrial
gases business. It is particularly evident in the investment cycle, where
there is approximately a 5-year span between the study of a new construction
project for a Large Industries customer and the first corresponding industrial
gas sales. Monitoring this cycle is essential to anticipating the Group’s
future growth.

PORTFOLIO OF OPPORTUNITIES

As at December 31, 2012, the 12-month portfolio of opportunities totaled
4.0billion euros, virtually stable compared to December 31, 2011. This level
of opportunities remains high, even though the investment decisions during the
year, and which were therefore removed from the portfolio, were very
substantial. This relative portfolio stability was attributable to the entry
of new projects, some of which were of considerable size, mostly located in
developing economies. Project reviews increased compared to 2011.

As at December 31, 2012, 64% of projects in the portfolio were located in
developing economies, very similar to previous year. In advanced economies,
there were renewals and also the commissioning of new facilities in the
world’s most competitive industrial basins (Northern Europe, United States,
etc.).

Projects are spread out over the Group’s four geographical areas, but the
percentage in the Americas and the Middle East and Africa is increasing. The
percentage of projects in China decreased slightly but was offset by the rest
of Asia. In Europe, projects are evenly spread between Western Europe and
Central and Eastern Europe.

The outsourcing of industrial gas production continued, both in advanced
economies when replacing old plants, and in developing economies for new
facilities. The 12-month portfolio of opportunities includes 12 planned site
takeovers, currently operated by the clients themselves.

The majority of the portfolio concerns Large Industries, since Industrial
Merchant, Healthcare and Electronics projects frequently amount to less than 5
million euros. The percentage of Large Industries projects relating to metals
was stable, while Chemicals sector projects declined. Energy-related projects
have increased significantly and tend to be individually much larger. They
generally take longer to negotiate and therefore remain longer in the
portfolio. The weight of Industrial Merchant, Electronics and Healthcare
projects remained close to that of the previous year.

INVESTMENT DECISIONS

The Investment decision process is at the heart of the Group’s growth strategy
and covers:

  *internal and external growth projects;
  *equipment renewals;
  *investments contributing to efficiency and reliability;
  *industrial safety improvement.

Strict discipline drives investment decisions, as they commit the Group over
the long term. A dedicated process is in place to ensure that selected
projects comply with the Group’s rules and sustain long-term growth with a
required minimum return on capital employed of between 12% and 13%.

The return on capital employed (ROCE) for a major Large Industries long-term
contract will change over the term of the contract. It is lower in the first
four to five years, due to the ramp-up in client demand, compared to a
straight-line depreciation over time. Return on capital employed increases
rapidly thereafter. The Group’s ROCE is calculated using net profit, after
taxes, depreciation, amortization and impairment.

Investment decisions

                   Industrial           Financial                Total
(in billions    investment        investment            investment
of euros)          decisions            decisions                decisions
                                        (acquisitions)
2008            2.2               0.2                   2.4
2009            1.0               0.1                   1.1
2010            1.8               0.4                   2.2
2011            1.9               0.1                   2.0
2012            2.0               0.9                   2.9

In 2012, industrial and financial investment decisions, representing Group
commitments to invest, rose by +45% amounting to a particularly high level of
2.9billion euros and were staggered over the four quarters of the year. They
include the still significant level of industrial investments of 2.0 billion
euros and almost 1 billion euros of acquisitions.

Large Industries, Industrial Merchant and Healthcare each represent around 30%
of investment decisions. Industrial investments in developing economies
account for 28% of total decisions, industrial investments in advanced
economies for 42% and acquisitions for 30%.

  *Industrial investment decisions were spread throughout the year. The
    percentage of decisions regarding investments located in developing
    economies declined compared to 2011. This change was due to several
    important projects won in Germany and the Netherlands. In developing
    economies, the most significant projects were located in Poland, Ukraine,
    China and Brazil.
    In geographical terms, industrial decisions were spread across all
    regions. This year, Europe represented 50% of decisions: new facilities
    for chemicals in Germany and the Netherlands and for the treatment of
    metals in Poland, contract renewals and CO[2] capture in France and a site
    takeover in Ukraine. The percentage for the Americas increased this year
    and reached the same level as Asia. Among the developing economies, China,
    Brazil and Poland are the leading countries in terms of 2012 decisions.
    In Large Industries, decisions were balanced between air gas and hydrogen
    units. In Industrial Merchant and Electronics, decisions mainly concerned
    on-site (customer sites) and carrier gas production units.

  *Financial investment decisions amounted to more than 887million euros in
    2012 and include two major acquisitions in Home Healthcare in France and
    Spain for a total of 646 million euros. The remaining amount involves more
    modest Home Healthcare acquisitions in Canada, Poland, Brazil and South
    Korea, and acquisitions of local Industrial Merchant players in the United
    Kingdom, Russia, the United States and Canada. The contribution of all
    acquisitions, less the impact of disposals, including those of
    insignificant scope, to Gas and Services sales was around + 1% during the
    year.
    With three consecutive years amounting to more than 2billion euros,
    investment decisions are in line with the Group’s medium-term objectives
    and will guarantee part of its future growth. The investment portfolio
    stability and the substantial level of decisions together illustrate the
    dynamism of the industrial gas investment cycle and customers confidence
    in the medium-term.

CAPITAL EXPENDITURE

In 2012, gross capital expenditure totaled 2,898million euros, including
minority interest transactions. This amount comprised several acquisitions
totaling 890million euros, including two of significant scope in Healthcare
and several reasonably-sized acquisitions in Healthcare and Industrial
Merchant, as well as a site takeover in Ukraine.

Asset disposals amounting to 49million euros concerned non-strategic
activities, and particularly two minor subsidiaries in Oceania.

Net capital expenditure therefore totaled 2,847million euros. Gas and
Services gross capital expenditure represented 20.3% of sales, compared to
14.2% in 2011.

START-UPS

In 2012, 17 units were commissioned, evenly split between advanced and
developing economies. Many of the start-ups were air gas production units for
the steel industry, in China, Russia and Egypt. There were also four
Industrial Merchant start-ups: in Canada and the United States to supply the
oil exploration services sector, in Sweden to extend Air Liquide’s coverage
and in Portugal to optimize logistics.

Certain start-ups initially scheduled for 2012 were postponed for periods
ranging from one month to a few quarters. The reasons for these delays were
mainly technical setbacks relating to customer unit start-ups. There should be
more start-ups in 2013 and 2014: 50 are expected for this period.

Financing Strategy

The Group’s financing strategy is regularly reviewed to provide support to the
Group’s growth strategy and take into account changes in financial market
conditions, while respecting a gearing ratio in line with a Standard & Poor’s
long term “A” rating (positive outlook since May 8, 2012).

In 2012, the existing prudential principles were maintained:

  *diversifying funding sources and debt maturities in order to minimize
    refinancing risk;
  *backing commercial paper issues with confirmed lines of credit;
  *hedging interest rate risk to ensure visibility of funding costs, in line
    with long-term investment decisions;
  *funding of investments in the currency of the operating cash flows
    generated, to ensure a natural foreign exchange hedge;
  *centralizing excess cash through Air Liquide Finance, a wholly owned
    entity of L’Air Liquide S.A.

DIVERSIFYING FUNDING SOURCES

Air Liquide diversifies its funding sources by accessing various debt markets:
commercial paper, bonds and banks.

Air Liquide uses short-term commercial paper market, in France through two
French Commercial Paper programs of up to an outstanding maximum of 3 billion
euros, and in the United States through a US Commercial Paper program (USCP)
of up to an outstanding maximum of 1.5 billion US dollars.

Air Liquide also has a Euro Medium Term Note (EMTN) program to issue long-term
bonds of up to an outstanding maximum amount of 6 billion euros. At the end of
2012, outstanding bonds issued under this program amounted to 3.9 billion
euros (nominal amount).

In 2012, the Group conducted several bond issues in US dollars, yen and euros
under its EMTN program for an amount equivalent to 770.4 million euros
(nominal amount), in order to finance its acquisitions and investments.

Air Liquide Finance carried out a US private placement in September 2012 for
700 million US dollars, to renew the US private placement issued in 2004, for
which the last tranche matured in August 2012.

As of December 31, 2012, funding through capital markets still accounts for
more than two thirds of the Group’s gross debt, for an amount of bonds
outstanding of 4.8 billion euros (nominal amount).

The Group also obtains funding through bank debt (loans and lines of credit).

To avoid liquidity risk relating to the renewal of funding at maturity, and in
accordance with the Group’s internal policy, the Group aims to limit its
short-term debt maturities to 2.1 billion euros, an amount which is covered by
committed credit lines.

These credit lines include a 1 billion euro 5-year syndicated credit facility
(with two one-year extension options) with the Group’s core banks, renewed in
advance in November 2011 to replace a syndicated credit facility that matured
in July 2012. On October 12, 2012, the participating banks renewed their first
extension option, extending the initial maturity by an additional year.

Net indebtedness by currency

                              2011        2012
EUR (euro)                    22%         35%
USD (US dollar)               30%         27%
JPY (Japanese yen)            23%         16%
CNY (Chinese renminbi)        12%         12%
Other                         13%         10%
TOTAL                         100%        100%

Investments are essentially funded in the currency in which the cash flows are
generated, thus creating a natural foreign exchange hedge. Air Liquide’s debt
is thus mainly in the euro, US dollar, Japanese yen and Chinese renminbi,
which reflects the significant weight of these currencies in the Group’s
investments and cash flow.

The share of the Group net indebtedness denominated in euros increased because
of the two significant home healthcare acquisitions in Europe.

In 2011, Air Liquide was the first French corporate to issue
renminbi-denominated bonds for a record total amount of 2.6 billion renminbis
(or 316.3 million euros equivalent) with 5 and 7-year maturities. In 2012, Air
Liquide continued to innovate in the bond markets, and became the first
corporate to issue a Socially Responsible Investment-labeled bond, for a total
amount of 500 million euros and a coupon of 2.125% with a 9-year maturity.
This bond was used to refinance the Home Healthcare acquisitions of LVL
Médical and Gasmedi. The attribution of a rating of the Group’s Home
Healthcare segment from the extra-financial rating agency Vigeo provided
qualification as a Socially Responsible Investment (SRI). More than 60% of
this bond was placed with investors holding SRI mandates.

CENTRALIZATION OF FUNDING AND EXCESS CASH

To benefit from economies of scale and facilitate capital markets funding
(bonds and commercial paper), the Group uses a dedicated subsidiary, Air
Liquide Finance. This subsidiary centralizes the Group’s funding activities,
particularly in Europe, North America, Japan and China. It also hedges foreign
exchange and interest rate risk for the Group’s subsidiaries in those
countries where it is permissible under law.

As of December 31, 2012, Air Liquide Finance had granted, directly or
indirectly, the equivalent of 6.3 billion euros in loans and received 3.3
billion euros in cash surpluses as deposits. These transactions were
denominated in 19 currencies (primarily the euro, US dollar, Japanese yen,
Chinese renminbi, British pound sterling, Swiss franc, Singapore dollar and
Brazilian real) and extended to approximately 200 subsidiaries.

The matching positions per currency within Air Liquide Finance, resulting from
the currency hedging of intra-group loans and borrowings, ensure that these
intra-group funding operations do not generate foreign exchange risk for the
Group.

Furthermore, in certain specific cases (e.g.: regulatory constraints, high
country risk, partnerships), the Group limits its risk by setting up
independent funding for these subsidiaries in the local banking market, and by
using credit-risk insurance.

DEBT MATURITY AND SCHEDULE

To minimize the refinancing risk related to debt repayment schedules, the
Group diversifies funding sources and spreads maturities over several years.
This refinancing risk is also reduced by the regularity of the cash flow
generated from the Group operations.

The 2012 bond issues (including the US private placement) have helped to
continue to extend the average maturity of the Group’s debt, which is now 5.1
years (compared to 4.6 years at the end of 2011 and 4.4 years at the end of
2010).

CHANGE IN NET INDEBTEDNESS

Net indebtedness stood at 6,103million euros as of December 31, 2012,
compared to 5,248million euros as of December 31, 2011, an increase of 855
million euros.

This increase primarily reflects the financing of acquisitions, particularly
in France and Spain, partially offset by the positive impact of foreign
currency fluctuations. The Group’s 2012 capital expenditure and the dividends
paid to shareholders were funded from the cash flows generated by the Group’s
commercial activities.

The net indebtedness to equity ratio stood at 58% at the end of 2012 (compared
to 53% at the end of 2011). The higher level is the result of a significant
increase in 2012 industrial investments and acquisitions. The equivalent ratio
calculated using the US method of net indebtedness / (net indebtedness +
shareholder’s equity), reached 37% at the end of 2012, compared to 35% at the
end of 2011. The financial expenses coverage ratio (operating income recurring
+ share of profit of associates)/net finance costs stood at 10.3 in 2012
compared to 10.5 in 2011.

The average cost of net indebtedness stood at 4.6% in 2012, a slight decrease
compared to 2011 (4.8%). Cost of net indebtedness is calculated by dividing
net finance costs for the fiscal year (274.1million euros in 2012, excluding
capitalized interest) by the year’s average outstanding net indebtedness.

The average cost of gross indebtedness also declined in 2012.

The reduction in the average cost of net indebtedness arises primarily from
lower interest rates on the portion of the variable debt and significantly
lower fixed rates on the new bond issues compared to those that matured in
2012.

BANK GUARANTEES

In connection with its Engineering and Construction activity, the subsidiaries
of the Group sometimes grant bank guarantees to customers, during tendering
period (bid bond), and after contract award, during contract execution until
the end of the warranty period (advance payment bond, retention bond,
performance bond, warranty bond).The most common bank guarantees extended to
clients to secure the contractual performance are advance payment guarantees
and performance guarantees.

The projects for which these guarantees are granted are regularly reviewed by
Management and, accordingly, when guarantee calls become probable, the
necessary provisions are recorded in the Consolidated financial statements.

CREDIT RATINGS

The Air Liquide long-term credit rating from Standard & Poor’s has remained
unchanged at “A” since 2007, with a positive outlook issued on May 8, 2012.

The short-term credit ratings of “A-1” from Standard & Poor’s and “P-1” from
Moody’s have remained unchanged for 10 years.

The main indicators analyzed by the rating agencies are net debt to equity and
the ratio of cash flow from operations before change in working capital to net
debt, adjusted primarily for pension liabilities.

OUTLOOK

In the context of the global economic slowdown in 2012, the Group’s
performance is solid. Its extensive geographic presence, the initiatives in
new markets and targeted acquisitions allow it to show further growth in
activity and operating results.

In 2012, the total amount of investment decisions rose to 2.9 billion euros,
the highest level since 2007. The increase in the Engineering & Construction
order intake, the high level of our 12-month portfolio of investment
opportunities and the scheduled commissioning of 50 plants in the next two
years confirm customer confidence in the medium-term.

The Group continues to strengthen its competitiveness and innovation to ensure
profitable growth over the long-term, based upon a sustained investment
program and upon efficiencies for which the 2011 -2015 objective is increased
+30% to 1.3 billion euros.

In the short term, the Group is actively working on controlling costs,
streamlining its internal processes and adapting its organization.
Accordingly, during 2013, an organization founded on a base in Paris and three
principal hubs in Houston, Frankfurt and Shanghai will gradually take shape,
in order to optimize the Group’s resources and be more agile in responding to
market trends.

Barring a degradation of the environment, AirLiquide is confident in its
ability to deliver another year of net profit growth in 2013.

Appendices

4^th quarter 2012 revenue

By geography
Revenues            Q4 2011           Q4           Published       Comparable
In millions      revised^(a)    2012      Change       change ^(b)
of euros
Europe           1,72           1,827     +6.2%        +2.3%
Americas         722            797       +10.3%       +7.6%
Asia-Pacific     787            868       +10.4%       +6.2%
Middle-East      84             93        +11.1%       +11.2%
and Africa
Gas and
Services         3,313          3,585     +8.2%        +4.6%
Revenues
Engineering &    258            252       -1.9%        -2.6%
Construction
Other            174            153       -12.1%       -12.1%
Activities
Group revenue    3,745          3,99      +6.6%        +3.3%


By World business line
Revenues            Q4 2011           Q4           Published       Comparable
In millions         revised^(a)       2012         Change          change ^(b)
of euros
Large            1,256          1,307     +4.1%        +2.2%
industries
Industrial       1,174          1,296     +10.4%       +7.7%
Merchant
Electronics      291            304       +4.6%        +1.7%
Healthcare       592            678       +14.3%       +5.0%
Gas and
Services         3,313          3,585     +8.2%        +4.6%
Revenues
(a) Restated for the integration of Seppic into the G&S activity.
(b) Excluding currency, natural gas and significant scope impacts.


Segment information

                  2011^(a)                                 2012
                                    Operating       OIR                         Operating       OIR
                 Revenue     income       margin    Revenue     income       margin
                                    recurring                                   recurring
Europe            6,810.3     1,278.0      18.8%     7,025.5     1,285.1      18.3%
Americas          2,859.0     627.8        22.0%     3,108.2     744.6        24.0%
Asia-Pacific      3,083.2     501.8        16.3%     3,415.6     515.6        15.1%
Middle-East
and               311.5       64.9         20.8%     362.7       76.8         21.2%
Africa
Gas and           13,064.0    2,472.5      18.9%     13,912.0    2,622.1      18.8%
Services
Engineering &     705.1       74.7         10.6%     784.6       78.7         10.0%
Construction
Other             687.8       55.2         8.0%      629.7       36.7         5.8%
activities
Reconciliation    -           (193.7)      -         -           -177.0       -
Total Group       14,456.9    2,408.7      16.7%     15,326.3    2,560.5      16.7%
(a) Restated for the integration of Seppic into the G&S activity.


Currency, natural gas and significant scope impacts

In addition to the comparison of published figures, financial information is
given excluding currency, the impact of natural gas price fluctuations and
significant scope effect.

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. Fluctuations in natural gas prices are generally passed
on to our customers through indexed pricing clauses.

Impacts for 4^th quarter 2012

(in millions of euros)                         Group    Gas and Services
Revenue Q4 2012                                3,991    3,585
Change Q4 2012/ Q4 2011 published (%)          +6.6%    +8.2%
Currency impact                                +63      +61
Natural gas impact                             +4       +4
Significant scope impact                       +54      +54
Comparable change                              +125     +153
Change Q4 2012/ Q4 2011 comparable ^ (a)       +3.3%    +4.6%
(%)
(a) Excluding currency, natural gas and significant scope impacts


For the Group, the currency impact is +1.7%, the natural gas impact is +0.1%
and significant scope impact is +1.5%.

For Gas and Services, the currency impact is +1.8%, the natural gas impact is
+0.2% and significant scope impact is +1.6%.

Explanation of the natural gas impact

Natural gas is an essential raw material for the production of hydrogen and
the operation of cogeneration units. All Large Industries hydrogen and
cogeneration contracts have clauses indexing sales to the price of natural
gas. Hence, when the price of natural gas varies, the price of hydrogen or
steam for the customer is automatically adjusted proportionately, according to
the index.

When the price of natural gas increases, revenue and costs rise by the same
euro amount, without significantly impacting Operating income recurring. This
mechanism has a negative effect on the operating margin.

Conversely, when the price of natural gas decreases, revenue and costs
decrease and operating income recurring is maintained, which has a positive
effect on the operating margin.

In both cases, natural gas price fluctuations do not change the intrinsic
profitability of the activity.

In 2012, considering the minimal fluctuations in the average price of natural
gas, Gas and Services operating margins were not impacted. Nevertheless, at
the regional level, the decline in prices in North America led to a decrease
in revenue and automatically increased the operating margin. Conversely, in
the rest of the world, the rise in the price of natural gas slightly increased
revenue therefore leading to a decrease in operating margin.

Consolidated income statement

In millions of euros                 2011         2012         Change
                                                                        12/11
Revenue                              14,456.9     15,326.3     6.0%
Other income                         139.3        134.5       
Purchases                               (5,761.6)       (6,098.6)
Personnel expenses                      (2,481.5)       (2,666.7)
Other expenses                          (2,789.5)       (2,903.2)
Operating income recurring before    3,563.6      3,792.3      6.4%
depreciation and amortization
Depreciation and amortization           (1,154.9)       (1,231.8)       6.7%
expense
Operating income recurring           2,408.7      2,560.5      6.3%
Other non-recurring operating           123.1           13.4
income
Other non-recurring operating           (95.3)          (40.5)
expenses
Operating income                     2,436.5      2,533.4      4.0%
Net finance costs                       (235.5)         (248.1)         5.4%
Other financial income                  68.7            69.2
Other financial expenses                (131.4)         (133.0)
Income taxes                            (576.4)         (566.0)
Share of profit of associates           32.8            20.0
Profit for the period                1,594.7      1,675.5      5.1%
• Minority interests                    59.8            66.1
• Net profit (Group share)           1,534.9      1,609.4      4.9 %
                                                            
Basic earnings per share (in         4.93^(a)     5.17         4.9%
euros)
(a) Adjusted for free share attribution in May 2012


Consolidated balance sheet

                                           As at December       As at December
In millions of euros                    31                31
                                           2011                 2012
ASSETS                                                   
Goodwill                                4,558.5           5,132.7
Other intangible assets                    638.2                726.5
Property, plant and equipment              12,096.9             12,784.7
Non-current assets                      17,293.6          18,643.9
Non-current financial assets               398.3                435.8
Investments in associates                  211.1                221.7
Deferred tax assets                        290.3                365.5
Fair value of non-current                  63.6                 53.8
derivatives (assets)
Other non-current assets                963.3             1,076.8
TOTAL NON-CURRENT ASSETS                18,256.9          19,720.7
Inventories and work-in-progress           784.1                775.8
Trade receivables                          2,779.3              2,826.5
Other current assets                       444.8                422.3
Current tax assets                         52.0                 71.3
Fair value of current derivatives          45.2                 33.2
(assets)
Cash and cash equivalents                  1,761.1              1,154.2
TOTAL CURRENT ASSETS                    5,866.5           5,283.3
TOTAL ASSETS                            24,123.4          25,004.0
EQUITY AND LIABILITIES                                   
Shareholders’ equity                    9,758.6           10,211.7
Minority interests                      237.1             232.6
TOTAL EQUITY                            9,995.7           10,444.3
Provisions, pensions and other             1,897.0              2,216.1
employee benefits
Deferred tax liabilities                   1,204.9              1,134.8
Non-current borrowings                     5,662.5              5,789.0
Other non-current liabilities              190.4                195.6
Fair value of non-current                  126.1                85.1
derivatives (liabilities)
TOTAL NON-CURRENT LIABILITIES           9,080.9           9,420.6
Provisions, pensions and other             190.6                243.2
employee benefits
Trade payables                             1,992.5              1,896.1
Other current liabilities                  1,244.4              1,325.6
Current tax payables                       162.3                176.6
Current borrowings                         1,373.5              1,484.7
Fair value of current derivatives          83.5                 12.9
(liabilities)
TOTAL CURRENT LIABILITIES               5,046.8           5,139.1
TOTAL EQUITY AND LIABILITIES            24,123.4          25,004.0


Consolidated cash flows statement

For the year ending 31/12
In millions of euros                    2011              2012
Operating activities                                         
Net profit (Group share)                   1,534.9              1,609.4
Minority interests                         59.8                 66.1
Adjustments :
• Depreciation and amortization            1,154.9              1,231.8
• Change in deferred taxes                 99.6                 52.0
• Increase (decrease) in                   5.1                  (19.7)
provisions
• Share of profit of associates            (17.9)               (6.1)
(less dividends received)
• Profit/loss on disposal of               (108.3)              (20.9)
assets
Cash flow from operating
activities before changes in            2,728.1           2,912.6
working capital
Changes in working capital                 (192.8)              (67.3)
Other                                   (109.5)           (136.8)
Net cash flows from operating           2,425.8           2,708.5
activities
                                                        
Investing activities                                         
Purchase of property, plant and            (1,755.0)            (2,007.9)
equipment and intangible assets
Acquisition of subsidiaries and            (99.5)               (879.4)
financial assets
Proceeds from sale of property,
plant and equipment and intangible         180.9                49.1
assets
Proceeds from sale of financial         1.3               1.2
assets
Net cash flow used in investing         (1,672.3)         (2,837.0)
activities
                                                        
Financing activities                                         
Dividends paid
• L'Air Liquide S.A.                       (679.2)              (722.6)
• Minority interests                       (42.2)               (58.0)
Proceeds from issues of share              51.5                 37.3
capital
Purchase of treasury shares                (93.8)               (104.2)
Increase (decrease) in borrowings          237.2                373.5
Transactions with minority              (3.3)             (10.5)
shareholders
Net cash flows from (used in)           (529.8)           (484.5)
financing activities
                                                                
Effect of exchange rate changes
and change in scope of                  6.5               (12.9)
consolidation
Net increase (decrease) in net          230.2             (625.9)
cash and cash equivalent
NET CASH AND CASH EQUIVALENTS AT        1,482.2           1,712.4
BEGINNING OF PERIOD
NET CASH AND CASH EQUIVALENTS AT        1,712.4           1,086.5
END OF PERIOD

The analysis of net cash and cash equivalents at the end of period as follows:

In millions of euros                    2011              2012
Cash and cash equivalents                  1,761.1              1,154.2
Bank overdraft (included in             (48.7)            (67.7)
current borrowings)
Net cash and cash equivalents           1,712.4           1,086.5


Net indebtedness calculation

In millions of euros                    2011              2012
Non-current borrowings (long-term          (5,662.5)            (5,789.0)
debt)
Current borrowing (short-term              (1,373.5)            (1,484.7)
debt)
TOTAL GROSS INDEBTEDNESS                (7,036.0)         (7,273.7)
Cash and cash equivalents                  1,761.1              1,154.2
Derivative instruments (assets) –          26.8                 17.0
fair value hedge of borrowings
Derivative instruments
(liabilities) – fair value hedge           0                    0
of borrowings
TOTAL NET INDEBTEDNESS AT THE END       (5,248.1)         (6,102.5)
OF THE PERIOD


Statement of changes in net indebtedness

In millions of euros                    2011              2012
Net indebtedness at the beginning          (5,039.3)            (5,248.1)
of the period
Net cash flows from operating              2,425.8              2,708.5
activities
Net cash flows used in investing           (1,672.3)            (2,837.0)
activities
Net cash flows used in financing
activities excluding increase              (767.0)              (858.0)
(decrease) in borrowings
Total net cash flow                     (13.5)            (986.3)
Effect of exchange rate changes,
opening net indebtedness of newly          (195.3)              132.1
acquired companies and others
Change in net indebtedness              (208.8)           (854.4)
NET INDEBTEDNESS AT THE END OF THE      (5,248.1)         (6,102.5)
PERIOD


Reallocation of Specialty ingredients within Healthcare
business line - 2011

Revenue            Q1 11           Q2 11           Q3 11           Q4 11           2011
In millions     published    published    published    published    published
of euros
Large           1,133        1,121        1,157        1,174        4,585
Industries
Industrial      1,2          1,199        1,238        1,256        4,892
Merchant
Electronics     343          336          317          291          1,286
Healthcare      509          515          511          539          2,076
Revenue Gas     3,185        3,171        3,223        3,26         12,839
& Services
Engineering
&               134          156          158          258          705
Construction
Other           224          246          216          227          913
Activities
GROUP           3,543        3,573        3,597        3,745        14,457
REVENUE


Revenue            Q1 11           Q2 11           Q3 11           Q4 11           2011
In millions        revised         revised         revised         revised         revised
of euros
Large           1,133        1,121        1,157        1,174        4,585
Industries
Industrial      1,2          1,199        1,238        1,256        4,892
Merchant
Electronics     343          336          317          291          1,286
Healthcare      564          579          564          592          2,301
Revenue Gas     3,24         3,235        3,276        3,313        13,064
& Services
Engineering
&               134          156          158          258          705
Construction
Other           169          182          163          174          688
Activities
Group           3,543        3,573        3,597        3,745        14,457
REVENUE

Contact:

Air Liquide
Corporate Communications
Corinne Estrade-Bordry, + 33 (0)1 40 62 51 31
or
Garance Bertrand, +33 (0)1 40 62 59 62
or
Investor Relations
Virginia Jeanson, +33 (0)1 40 62 57 37
or
Annie Fournier, +33 (0)1 40 62 57 18
 
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